All You Wanted to Know About Stocks

I have been trading in stocks for a year now. I must say i have matured alot. but there are still alot of things i have no idea about. I made money and lost money, learned important lessons on the way.

All you newbees to stocks, before buying a stock, one should try to analyse the stock.

There are 2 basic analysis which can help one understand more about the stock.

1. Fundamental Analysis

2. Technical Analysis

What is fundamental analysis ?
To understand a stock, you should understand the company fundamentals. One should try to answer the following questions. Answering these questions will open your mind to whether is it worth investing in the company stock. Company with solid profile, brand, business/revenue model is always a good buy.

- What does the company do ?
- What is the business model of the company ?
- What sector does the company fall in ?
- Is the sector hot in the current market trend ?
- How efficient is the business model of the company in that sector ?
- How good is the management ?
- What is the company market capital ?
- How many projects/deals have they won ?
- What is the cash flow of the company ?

What is technical analysis ?
There are alot of analyst/traders who buy/sell/short stocks based only on technical analysis. Technical analysis helps one understand the direction of the stock. Stock movement is predicted based on past performance. Also future estimated growth of the company is used a factor to look for long term stocks.

- What is the company earnings ? What is EPS ?
- What is P/E ratio ?
- What is PEG ?
- What is SMA ? What is EMA ? What is MA ?
- What indicators to monitor ?
- Was there any insider trading ?
- What is resistance level and support level ?

Lets cut the crap with buzzwords, and try understanding what they actually mean.

EPS = Earnings per share.
EPS = (Earnings of the company - Dividend paid to investors)/Outstanding shares.
P/E = Price per earnings.
P/E = Price of the stock/EPS
PEG = Price per future earning growth
SMA = Simple Moving Average
EMA = Exponential Moving Average
MACD = Moving Average Convergence Divergence
ROC = Rate of Change