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The goal of every investor is to increase investment profits. Doing this without a great increase in investment risk is important. To increase investment profits over the long term an investor needs to do both fundamental and technical analysis of his stock investment. The fundamentals are important because they are the underlying drivers of intrinsic stock value. Technical analysis of stocks is important because it guides investors and traders in buying stocks and selling stocks at optimal stock prices. By discovering a stock with a low price to earnings ratio and a large margin of safety the investor will have found a potential multiyear income stream. By using Candlestick analysis of stock prices, an investor can buy stock and sell stock using limit orders and thus greatly increase investment profits over both the short and long term.
Which fundamentals are most important when an investor wants to increase investment profits? The point of long term investing is to find stocks that grow their earnings steadily over the years. Thus the investor will look for companies with good research and development, companies that have a strong track record of turning ideas into products and successfully marketing those products. The price of a stock should be closely tied to the discounted value of its future income stream. Finding stocks that fit this picture is a reliable way to increase investment profits. A company with a high price to sales ratio or price to earnings ratio has probably already been bid up by the market and will only be a good buy when its stock price corrects downward.
How and when should the investor apply technical analysis in order to increase investment profits? For long term investment profits the investor needs to be picking stocks with strong fundamentals. However, the market will take a stock price up and down depending on the economy and the psychology of investing of each and every investor. By using technical analysis tools such as Candlestick chart analysis the investor will be able to profitably anticipate stock price movements in order to buy and sell at the best prices. Using applied technical analysis the long term investor can increase investment profits. Picking the right stocks can lead to buy can lead to long term profits. Picking the right time to buy the right stocks, like after stock market crashes, can, at times, lead to two and three times the profit on the same stock.
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