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Share Market is a wealth generator. It is like any other business. While you earn from the share market, it is also important to learn. Every businessman has to learn to continue in his business and adjust to the changing markets. Share Market is not different. In the Share Market there a variety of businesses being bought and sold every day.
Understanding: Why, What, Who, When, Where, and How is very important. Every single piece of information can play an important part in whether a trade is a profitable trade or a loss-making trade.
Some essential parts to understand, on Share Markets:
The How part:
There is a need to buy and sell shares. How to do it? Is understood. How to decide which share to buy?
While news and other information sellers are available, it is important to understand the reason behind a sell or a buy. By following someone else’s information, it is difficult to become successful in the share market. Doing anything without reasoning is not a good decision.
Share Market learning can be learned in two parts:
1. Fundamental Analysis
2. Technical Analysis.
Fundamental Analysis tells about the value of a share. Technical Analysis talks about the demand/supply of the share and its effect on the price.
Fundamental Analysis is required for a medium to long term investment. A share is held for a long period of time and fundamentals are the report card of a share from a company. Fundamentals give the confidence to invest in a stock. There are various fundamentals that are different for different industries. It is important to understand these differences and look at the right details in every share of a particular industry.
With the help of fundamental analysis, one can stay invested for longer periods of time. Staying invested requires timely analysis and tracking of the stock performance. Understanding the different industries, different parameters to be followed per industry are important. Determine if the share is doing well or not. A fundamental study will not help, in predicting or give detail into what happens on the next trading day.
Technical Analysis helps in understanding the demand and supply of a certain share in the markets. Demand and Supply help in determining the price of a stock. The price of the stock goes up and down, based on market sentiments, news of the day, broader global markets, and the situations not in control of the market.
Technical Analysis and Fundamental Analysis are two faces of the same coin. Both Technical and Fundamental Analysis capability makes a share market participant, capable of handling short-, medium- and long-term ups and downs of the market. It is important to understand the topics in detail and keep learning. Learning is the only way to stay ahead and gain the required knowledge to keep moving ahead and achieve the goals.
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