Stock Trading

Investing has changed a lot in the last couple of years, being an Investor in the stock market meant to buy stocks and hold them for long periods of time, from one to twenty years. But this may not be the best strategy; you never know what’s going to happen one year from now, even less in twenty years. As a result, a new type of investor was created, they are known as Traders. Traders invest in shorter time periods, Traders are not investors; they are more like players in the stock market, players for money.

A Trader would find a stock at a good price, buy its shares, wait for the price to go up, sell them and take the profit and then move to the next good stock at a good price, as simple as that. They don’t care much how the company is doing, they would just profit from a quick price movement. That’s the difference between an Investor and a Trader.

There are two ways to analyze stocks, Fundamental Analysis or Technical Analysis.

An Investor would use fundamental analysis about the company to determine whether to buy its shares. If the fundamental data looks good the investor would keep the stock for a long period of time.

A Trader would use technical analysis about the company using Stock Charts to make buy and sell decisions, if the chart looks good, the trader would make a quick profit and then move on to the next trading opportunity.

Fundamental Analysis: Is examining the numbers or financial statements that a company generates. All companies issue quarterly financial statements about their financial situation, a fundamentalist believes that by knowing the numbers they can determine the value of a company. A company’s financial report can be overwhelming with all the data involved, some of that financial data includes revenues, earnings, projected earnings, earnings per share (EPS), profit, expenses, past growth, projected growth, management effectiveness, and many others.

Technical analysis: Is the forecasting of future financial price movements based upon examination of past price movements, technical analysis can help investors anticipate what is likely to happen to prices over time. Technical analysts use a wide variety of Charts that show price over time. Traders use technical analysis to get in and to get out of the trade, by simply reading a stock chart, traders can anticipate future stock price movements.