Analyzing all the reasons that influence the behavior of the stock market is a rather complicated process, there are too many factors that can affect this behavior. There are two directions of stock market analysis in the world. Some economists prefer to investigate the state of play in the field of production, to which the issuer belongs, to study its financial condition, the dynamics of production and sales growth. This method of analysis is called fundamental analysis. Others believe that one should only study the behavior of stocks on the stock exchange, analyze the change in their price and predict future behavior. These are the proponents of technical analysis of the stock market. We will focus on a more detailed study of the second method.
Stock market analysis methods
Stock market technical analysis method
The method of technical analysis of the stock market assumes that all the fundamental results of the company’s work are already automatically reflected in the value of its shares in the market. It is difficult to fully agree with this, since the securities market depends much more on the actions of stock speculators than on the real value of shares. In addition, the stock market reacts very quickly and sharply to any actions of politicians, rumors, and even a careless word can significantly reduce or increase the value of the shares of a company, although, as you understand, the cost of its assets and financial performance in one day can not undergo such changes.
But this method does not require much mental effort and monotonous work with the initial data. All indicators of technical analysis of the stock market can be changed overnight exactly on the contrary by the order of large stock market speculators and thus bring them substantial profits at the expense of small players.
Method of fundamental analysis of the stock market
Adherents of technical analysis very simply advertise the market for their services: the speed of analysis, the ease of its implementation, and it is suitable for any inventory, regardless of the type of activity of the enterprise. But they “forget” to emphasize that all serious stock players use fundamental analysis and are willing to pay a lot of money for it, serious players play for a win, not for a “ball”. For them, technical analysis is an entertaining literature that they produce for beginners in order to quickly get their profits at the expense of illiterate and lazy brokers. Now you have to make your own decision about which analysis to use.