Two Ways You Can Approach The Stock Market

By Shaun Rosenberg.

If you are looking for a brief Stock Market Tutorial you are going to have to be more specific. There are two ways to approach stocks.

1. Fundamentals

Most people in the stock market focus on fundamental analysis because it just makes more sense to most people. That is because it focuses on how the company is doing and the idea is to invest into stocks that are backed with strong companies.

Over the long term this does seem to be the case. Fundamental investors will look for stocks that are backed by companies that are making money and have a good potential to grow. Also if the company offers dividend paying stocks and pays investors a small portion of their income that only sweetens the deal.

2. Trading With Technical Analysis

Another school of thought is technical analysis. While it might be nice to think that the short term ups and downs are all about how much money the company made, it really isn´t.

Instead stocks move up and down based on supply and demand. If more people buy the stock then sell it the price goes up. If more people sell it then buy it the price goes down. Luckily this creates certain patterns that occur in stocks over and over again. By learning these patterns and trading the price of the stock you can make money.

So, what should you focus on? Well this kind of depends on how you see the stock market and what your goals are going to be.

There is one thing however, the shorter the time frame is the more powerful technical analysis is. Over the long term it all comes down to the fundamentals of the company. So, if you want to trade stocks over the short term, look into technical analysis.

However if your goal is to find solid companies to invest into over the long term then fundamental analysis is normally the way to go about it.

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