Stock Market Forecasting – Fundamental and Technical Analysis

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Market forecasting is a challenging part of stock market analysis as market prediction has become the most complex task of an analyst. Market forecasting helps a trader to choose the type of security, the time of buy or sell a security and the amount that they should invest on that security.

The type of analysis used by the traders or market analysts falls into two major categories-

1. Fundamental Analysis

2. Technical Analysis

Both of the above methods rely on certain information that comes from various news sources, analytical data or investments charts.

Fundamental Analysis-

Fundamental analysis involves careful study of company’s financial operations, economic condition, assets, debts, management, products and completion. Thus fundamental analysis is based on the study of financial and industry information of a company to predict the movement of the price of its stock. Fundamental analysis is usually helpful in long term investment and day traders do not rely much on it. However some believe that the simultaneous study of fundamentals and technical can result better for day trading.

Technical Analysis

Technical analysis is the method of evacuating securities by analyzing stock charts. It includes the analysis of market data, volume and open interest in order to predict the future trend of a stock. The analysts study the company’s past performance and study the charts to analyze if there are any patterns in the price of that security. Information about a stock’s price, volume and other important information can be displayed on a graphical chart. There are various software where study of such graph can be done very effectively and easily to study the patterns and trends. These patterns further used to determine when to buy or sell a security.

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Keys to Securing Market Intelligence

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If you are responsible for managing investments or financial portfolios the value of industry expertise and market intelligence cannot be understated.

Many fund managers, investment brokers, private equity firms, and private placement organizations, both large and small, possess either in-house expertise or utilize the services of industry advisors to provide and augment insight into the markets and players that is not often found though traditional research. Many national expertise firms exist to provide platforms for analysts and fund managers to tap into this knowledge base and gain the information necessary to fill in the gaps and enhance their understanding of the industries and companies in which they have holdings or seek to make entry.

Another useful and beneficial tactic used by many investment firms is to maintain a list of qualified industry experts that can be called upon when needed. Many competent firms specialize in particular industries and even geographies to provide expedited and very relevant information for a simple phone consultation or can be retained for specific periods of time. The firm’s information is typically retained in-house for the primary markets and industries that pertain to the investment profile of their firm and clientele.

While there are reams of information available online, much of it will require extensive investigation and vetting in order to be considered valuable. The sourcing of much of this information is provided from companies that have not actively participated in these markets and is oftentimes derived from the review of financial statements and resources available in the public domain. Some also conduct industry surveys and generate reports that are available for purchase.

The other factor in online research is time. As we all know, timing is critical and the sooner you can have confidence in the information you possess, the greater the opportunity for success and more responsive your investment decisions can be.

When it comes to investment decisions it is often wiser to seek council from those with a first-hand exposure to the specific industry in question. The information can typically include insights on competitive pressure, company leadership, pricing, market share, strategic advantages, new products in development, expansion estimates, industry and company exposures, and of course provide confidence and verification of going forward estimates and projections made by the company.

In today’s economy knowledge is king, and the information you need to make the best decisions possible is readily available to support your company and your customers.

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