Classification by Methods of Stock Analysis
Fundamental Analysis
Fundamental Analysis refers to investing or trading based on the core stability of a company with is reflected in its financials like revenue, income, net profit, capital expenditure etc. The core genesis is to identify a company that is stable and has high prospects of consistent growth in the future. It can be used to identify both value and growth stocks.
A list of popular company financials is as follows:
- Revenue
- Retained Earnings
- Total Current Liabilities
- Non-Current Liabilites
- Short-Term Debt
- Long-Term Debt
- Total Non-Current Assets
- Inventories
- Cash And Equivalents
- Goodwill
- Amounts Receivable
- Amounts Payable
- Operating Expenses
- Profit before Taxes
- Cost of Goods Sold
- Net Revenue
- Net Income
- Capital Expenditure
Technical Analysis
Technical Analysis is trading activity based on study of recent movement of stocks, i.e. whether the stock is moving up or down. The price-volume data like Opening price, closing price, the high or the low of a stock for a particular time frame ranging from a minute to a day are considered before making any trade.
It usually falls in the short term trading activities which can be intraday or a weekly holding activities. Mostly the key decision to buy or sell is made based on what is called “Technical Indicator”. These are fixed formulas which have a particular value. Basing on that value leads to a decision. It is very important to note the logic behind a particular technical indicator.
Without have the key knowledge of the logic behind in indicators might lead to lack of innovation which holds the key in the stock markets. A list of popular technical indicators and their definition is given in the next section
