Why Do You Buy Shares?

Obviously, for profit. But the real question is, why buy shares of a particular company? What do you look for? how can you know that its worth buying? The answer lies in the main two types of analysing stocks but there is no right or wrong answer. Each is used by different traders and implemented in different ways. And as every trader will tell you there is no one way to earn huge amounts of money in the market. Everyone has their own strategy that works for them.

For people who prefer technical analysis, they buy shares because of the price action. These type of people prefer to read charts that will tell them the movement of a particular stock. They feel that they don't need to do any research on the company, because the chart itself will tell you if it has potential or where its headed.

For people who prefer fundamental analysis, they buy shares because of the value of the company. This is called “intrinsic value”. These are the type of people who prefer to look and examine companies to see if they are worth investing. This considerably takes more research than technical analysis because there are hundreds of companies that you can look into.

Both of these methods have their advantages depending on your investment portfolio and how you trade. Some traders take different aspects from both and combine them. Ultimately, any method and any strategy is correct as long as you fulfil the primary reason on why you buy shares, to make money.