How to invest in stock market wisely
What are problems with using
fundamental analysis in online trading & investing
People want to know how to invest in stock market and make money. This is really important question for everybody who is involved in stock market investing. There are different ways to invest money in stock market. The question is how to invest wisely and make our online trading & investing activities profitable.There are generally two ways to invest money in stock market. Two different approaches. One is fundamental approach that is based on detailed study of company so called "fundamentals" i.e. economic results and business development. This type of approach is based on assumption that good company has its own fair value and it pays to have companies with good value in portfolio. Second option is technical approach. This one is based on detailed analysis of price development on stock price charts. This type of online trading,investing approach expects that it is not necessary to study detailed economic reports and estimate business development to know how to invest in stock market and make money. When I started my learning how to invest in stock market 10 years ago I thought about both ways to invest money using fundamental or technical analysis. Finally I decided to use
technical analysis
as I found that using fundamental analysis has several flaws.
Fundamental analysis is not ideal way
how to invest in stock market
I owned and run private company before I started with stock trading. I know how to prepare and read economic reports of any business. But to really understand any business one has to study it a lot. Any investors must spend a lot of time with reading and analyzing of many company reports. And these reports also do not tell anything about future. They only represent previous results. There is plenty of companies available for online trading and investing on US stock markets and also on other international markets. It takes a lot of time to study materials of all companies in details. you can do it properly and then you could find that there is not spare time to make real investment. We, as private traders and investors, are only individuals. We cannot produce so much work like huge staff of investment funds or asset management companies around the world. We cannot compete with them in this area. But do not worry, we have
another advantages.
How to invest wisely
using fundamental analysis ?
So the question is how to invest in stock market if we want also to use some principles of fundamental analysis. I personally think that there are only few ways how to do it.First one is to make analysis as simple as possible. The only option is to select most important parameters from economic reports and check and analyze them. If you want to find some global macro opinion check only few
best stock trading sites
that you will read. I personally do not do fundamental analysis of individual companies, I use another options - mostly
stock chart analysis
and global macro analysis - as my primary stock analysis tools. But if I will be forced into fundamental analysis I want to check this one parameter. I want to see positive cash flow and positive cash flow development. Cash is life blood for every company. Company without cash cannot do anything. So it pays to check how cash flow in and out of the company. There is also important to check future possible cash flow changes as they will have direct impact to future results of the company.
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