Actually I got a query to understand equity (stock) investing, i guess this is an even better starting point.
Before investing one needs to know, the following:
1. Time horizon, one is investing for
2. trading style, depending on lifestyle and money to invest
3. purpose, is this your long term savings, is this risk capital (meaning u cud lose it, without much effect in your life style).
The answer to your third question, will impact the kind of investment vehicles you will get into, and cannot be answered in a general basis....lots of variables need to be considered, and a custom solution has to be got for each induvidual.
The answer for the second (and first) is much easier, on one extreme is a daytrader who buys and sells using Technical analysis, holding the equity for no longer than 15 minutes, while on the other extreme are people like Warren Buffet who do just loads of Fundamental Analysis and plan to hold the stock forever...untill the fundamentals change.
Since i cant possibly teach Technical Analysis here...check out www.stockcharts.com and then go to chart schools tab. Technical Analysis works because most players in the market use them, the trendlines, support and resistance levels are basics every trader must know.
Fundamental Analysis, this is what is used to really pick stocks to invest in, then technical analysis must be used to time the entry and exit into these stocks.
Fundamental Analysis: simply put, its finding the true value of the share, if the true value is less the market value, then this stock must be in your buy list (but buy it only when your technical indicators indicate "time to buy").
Best Tip ever heard in the market: "Buy Low Sell High"
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