TOPIC: Two methods of stock analysis
When trading stock there are two main ways of looking at how people decide on a stock to invest in
The first is technical which is looking at chart patterns
And the other, is fundamental analysis which are news reports, earnings, earning reports and so on.
1) The first way of looking at chart patterns is through technical analysis.
According to Lo, Andrew the first signs of technical analysis occurred in the seventeenth century in the Dutch market
They came a long way from that.
In more recent times people can apply a thing called studies which help read charts more efficiently
Some studies don’t regard charts but in fact help with volume, the most common one is called RSI which stands for relative strength index it essentially says if a stock is being over sold or over bought (Its purpose hope is that the market corrects itself and the prices adjust accordingly)
On the other side, there are studies that directly appear on the chart such as SMA which stands for simple moving average, it essentially compares where the stock is at now and what the average of it should be at for a certain time such as 50 days and so on.
2) The second way of looking at equity is through fundamental analysis
According to Jasmina Hasanhodzic in her co published book “The Evolution of Technical Analysis: Financial Prediction from Babylonian tablets to Bloomberg terminals.” Fundemental analysis is the much more common trading method and is used over technical analysis by Sales and Trading people analysts al the way to hedge funds alike.
Fundamental analysis looks at things such as Research and development, Dividends, Earnings, Research and development and much more.
There are an infinite number of ways people can employ fundamental analysis into their trading since there are so many variables to choose from.
The most common factor is looking at their earnings since it is one of the best indicators whether a company is doing well and manages to…