Stock trading: Some essential fundamentals you need to know
Before you know how to trade stocks or shares, you need to know some basics. There are two types of companies mainly. Few companies are owned by their existing shareholders, and they do not offer their stocks in exchanges for stock trading 유흥알바 by the individuals. So, you cannot buy/sell stocks of such companies. And there is another type, whose shares are available in the stock market and you as an individual can trade their shares freely. Every company, when they form, start as the first type as I mentioned above. Then some company decide to go “public”, means they offer their company stocks to the public, it’s called “IPO” or “Initial Public Offering”; hence they become as the 2nd type. Not every company goes public though, and it depends on many factors why a company wants to go “public”. However, the main reason is the need for fund. Companies want to expand and want to invest in new opportunities; hence they need fund to support their new ventures and expansions. So, they go public and offer their shares to the general public to raise the necessary funds.
To do stock trading as an individual, you have to join under a stockbroker. You can use low-cost online stockbrokers, and they will allow you to access the stock market. As long as you have got a computer, then you can be anywhere in the world, and you need to connect with your broker via the internet to start trading stocks of any companies listed in the stock exchange. Let’s take a look at Facebook. The first thing you should look at the stock chart and there you’ll see the price performance of the Facebook share. Currently, it’s being sold at 170 USD for each share, and it was at 150 USD about a year ago. As we can see the price has increased quite a bit since last year, and you can see the stocks are on a very clear uptrend. So, we have bullish on this stock, and there is clear, strong support at the current price of 170 USD. We will talk more about the chart patterns shortly here.
What should you look for as a short term trader?
A common question people may ask here would be – “what’s important that I need to look out for?” Well, it depends on whether you are a short-term trader or a long-term trader. If you’re a short-term trader, then you would only be interested in the short-term price movement. And for that, you’ll be only concerned about the price action pattern of the chart, and the trend. As far as fundamentals are concerned, you can just look at, for example, earnings growth for the next five years, earnings growth this year as well as sales growth in the last few quarters. Because obviously when a company has got strong earnings growth and sales growth, that will give the particular stock a momentum to move up faster. So, again if you’re a short-term trader, then you’re only concerned with growth – earnings growth and sales growth. We will talk about the long-term trader in the next part.