CFD, Options, Warrants, Forex, Shares, Products & Services, Psychology, Fundamental Analysis, Technical Analysis

Trading with Breakouts

Steps in trading breakouts.

Breakout trading is utilised by active traders who prefer to take a position in the early stages of a trend. This strategy can provide limited downside risk if done properly. They can be the starting point for major movements in price and expansion of volatility.

Trends 101

How to use trends.

It is often said that you can't predict what will happen in the market, the best you can do is ride it and get out when needed. As a newbie you may have heard experienced traders something about ''riding the trend''. Identifying and interpreting trends is one of the basic concepts in technical analysis, so its no wonder that its often used by traders when they establish general rules when trading. Even though a trend can be easily illustrated through a line graph, it has different parts that have different implications in an going trade. However what is really important in looking at a trend?

The Basic Foundation of Financial Independence

What you do first before you trade.

A lot of traders talk about strategies and pitfalls of trading, but all of that isn't possible when you miss a key component. Budgeting is the very core of all financing ventures. Saving up two grand will let you trade, but it won't earn you money in the long run when you don't know how to organise and maintain your cash flow. More importantly, even before you save up, you must have budget plan in hand so that you won't go flat broke when you jump into share trading.

Technical Analysis: The Moving Average

What is a moving average?

The moving average is another component associated with Technical Analysis. It is a common tool known by most investors and traders. In simple terms it is the average of the closing prices for the last 'n' days. The 'n' equals the number of periods. Therefore if you have a 30 day moving average, it represents the average of the of all closing prices in the last 30 days, which are then rolled forward one day a time.

Introduction to Fundamental Analysis

Everything about fundamental analysis.

You know you are wading into stock market deep waters when you wish to know what fundamental analysis means. Perhaps your goal in life is to become a hotshot stock analyst, or maybe you just want a basic understanding of securities. In the simplest terms, fundamental analysis is the study of factors that affect a company's earnings.

Fundamental Analysis: In Summary

Learn about fundamental analysis in a nutshell.

In addition to company financials as contained within the annual report, an additional resource for the investor is the share appraisal form. This form serves as indicator of the company's health and provides a method to help you in decision making.

Points in Summary

  • When buying shares, you invest capital and you become part owner of a company. Evaluating the company beforehand thus becomes necessary. Fundamental analysis is the study of factors that affect a company's profits.

Fundamental Analysis: Earnings Per Share and Price Earnings Ratio

Learn about earnings per share and price earnings ratio.

Earnings Per Share

Earnings per share (EPS) is a part of the company profit allocated to each outstanding share and indicates a company's profitability. The EPS value is used to calculate price to earnings ratio. The formula for EPS is net profit after tax (NPAT) divided by number of shares on issue, with the results expressed as cents per share.

EPS (cents per share) = Net profit after tax ÷ Number of shares on issue.

Fundamental Analysis: Financial Ratios

Learn about ratios and per share data.

Analyst reports are created by professionals who interpret annual reports. Analysts use annual report data to create forecast and calculate financial ratios. Financial ratios are used to compare a company's performance for a specific period to its previous results, competitor results and market averages.

Although there are disadvantages to using ratio analysis (imperfect data or too much data), reviewing analyst reports will add objectivity to your interpretation. An objective approach avoids knee jerk reactions and takes out the emotion from the equation.

Per Share Data

Fundamental Analysis: Getting Information

Learn where to get data to analyse companies.

So where do you get all the data to analyse a company? You look at financial statements. Financial statements are documents containing an incredible amount of information about a company's activities. The sheer volume of data in these reports can be confusing at first, but like all things, practice makes reading them easier.

Fundamental Analysis: Analysing Companies

Learn about analysing companies.

Calculations can put off the beginner trader or stock market student. It's good to remember that calculations are a way to distill raw market data into a manageable value. Think of numbers as a way to simplify rather than complicate things. In case you get scared off by balance sheet analysis, you can always employ the services of a stockbroker or a professional analyst. Before crunching numbers, list the facts you are trying to learn.

  • Growth. Is growth from mergers and acquisitions or is it organic?
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