Stock analysis for beginners sounds like a daunting task, but this article will break down the process and make it easier for you. You might be wondering: what is stock analysis? Stock analysis is the process of evaluating stocks by analyzing their fundamentals such as trading volume, liquidity, market capitalization, and dividend yield.
This is an important process that can help you determine whether or not a stock will be profitable for you to invest in. In order to be a peak professional investor, you can consider online, free investment tools to get stock insights, such as Financial Modeling Prep. Or if your inclination is towards manual stock analysis, catch the guide below.
Table of Contents
Resources you should consider for successful financial analysis:
Fundamental Analysis
The first step in determining the best resource for new investors: fundamental analysis. Fundamental analysis is one of the four main approaches to understanding and predicting the future of stock and it covers topics such as earnings per share, trade volumes, sector balance, and management abilities.
Fundamental analysts look at the financial statements of companies and make decisions on whether the future price of the stock will go up or down based on these reports.
Trading View
TradingView is an excellent resource for any investor to use. This resource allows you to research stocks in-depth, giving you access to their charts and many other features that allow you to make well-informed investment decisions. This resource is especially helpful for pattern and trend traders. If you’re looking to make a trade using these types of strategies, this tool can help!
Where do we go after fundamental analysis? Technical analysis is another one of the four main approaches to understanding and predicting the future of stock. The best way to describe technical analysis is through the following quote:
“Stock analysis is the process of forecasting prices by analyzing statistical records of past prices and volumes.”
Technical analysts believe that stocks will move in trends and every stock has a set range of price movements. This approach uses charts, order books, candlestick patterns, and market indicators to make predictions about the best resource for new investors.
Quantitative trading takes the technical analysis one step further. This method uses computer algorithms to adjust pre-defined trading conditions based on what is happening in the market at that moment.
Stock Screener
The screener is a very useful tool for investors. It allows you to filter out certain stocks that meet your requirements and focus on those that are of interest to you. You can use this tool to focus on specific sectors, find companies within a certain geographic region, or find shares that have the potential for growth.
The screener also saves time and energy by allowing you to easily re-screen stocks with different parameters while still considering all variables.
Online Brokerage Accounts
Some of the advantages of online brokerage accounts are that they generally offer more tools and resources than traditional brokerage accounts, such as investment advice and trading tools.
Furthermore, they provide broader access to securities, which may make it easier for you to invest in securities that interest you. However, online brokers also have a few disadvantages:
- Lack of personal touch: Online brokers lack the personal touch of traditional brokerage firms. This can be particularly troubling when you’re making your first investment; it’s hard to get any advice on your trade without paying a fee.
- Trading Charges: Trading fees will cost investors who engage in frequent trading, so this becomes an important thing to consider when choosing what type of account to open with your broker.
Conclusion
Investing Tools and Apps are very helpful for investors because they typically offer more tools, advice, research materials that traditional brokerage firms don’t have. Some of these apps allow you to invest your money with just a few clicks on the app.
Investors have a lot of tools at their disposal these days. There are many different forms of investing, but one thing they all share is the need for great resources to help make decisions on what stocks will perform best in the future based on past performance data.
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