There are a couple of ways to go about this. The first question to ask yourself is. Do you want to keep this for the long or short term? If you’re focusing more on the short-term, it’s a better idea to focus on technical analysis. On the flip side, fundamental analysis is the way to go for something long-term.
Technical analysis studies charts and indicators that portray a stock’s movement within different periods. Usually found on stock trading platforms.
Fundamental analysis studies a company’s financials, such as balance sheets, income, and cash flow statements. These are very important to learn When it comes to an understanding fundamental analysis. There are also other details, like earnings reports, 10K, 10Q, and important news.
Let’s say you are just looking to buy and hold a stock for a day or two. Using Technical analysis will help. You can search for a stock that reaches your desired criteria. You can purchase shares at the best time in your consideration, then when you see the stock’s momentum may be coming to an end is when to sell. Over time you will be able to improve this technique drastically.
Focusing on fundamental analysis applies to long term holding of shares of a company. First, you should pay attention to various financial statements to indicate if everything behind the company’s scenes checks out. Then to research the history of the stock and the direction it is heading towards, Understand that even though it is a great company, sometimes the share price may dip. Don’t let things like this scare you into selling because it is usually temporary.
In conclusion, both ways of analyzing a stock have their application. Of course, one isn’t necessarily better than the other. But, if appropriately used, both methods can help change your portfolio for the better. It just understands which way is more advantageous for you at the time.
