Share market study/analysis involves going deeper into the world of stocks to research which stocks are worth buying and which ones should be sold. Essentially you try to figure out the intrinsic value, that is, the real value of a stock you are willing to buy or sell.
You do that by looking into the historical data and prospects of future growth and to what extent the market has already priced it. There are two ways to execute Share Market Study/Analysis – fundamental analysis and technical analysis.
Fundamental analysis deals in evaluating what the intrinsic value of a company is. If a company is valued below its intrinsic or potential value, it signals a buying opportunity.
The analysis not only dwells into the company’s historical earnings, debt and working capital requirements and past corporate actions, but also the company’s competition, strengths and weaknesses, industry prospects and macro factors that could influence the intrinsic value of its shares.
There are various Fundamental Analysis Tools/Parameters.
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Price to Earnings Ratio
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Return on Equity Ratio
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Debt-Equity Ratio
Technical analysis assumes that the prevailing stock price reflects all information available in the public domain and, thus, focus on the statistical analysis of price movements.
Technical analysts believe that past prices can help predict future price action. For intraday analysis, a 15-minute technical chart of an index or stock would be more important than a tactical trader who might take into consideration weekly charts to get most of his investments.
There are various Fundamental Analysis Tools/Parameters.
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Moving Averages
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Relative Strength Index
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Fibonacci Retracements
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Fibonacci Extensions