Once the basics of the stock market have been learnt the student needs to dive deep and learn more about the functioning of the market and derive a deeper understanding of its function.
People need to be sure that they are treading on the right path and for doing so the right kind of understanding needs to be developed. Technical know-how of the current trends and patterns to accurately predict stock prices is necessary to predict prices of shares. The knowledge helps to segregate investments in the long term, short term and mid-term investments.
Analyze and identify different trading opportunities
People operating in the stock market use different kinds of analysis to analyze buy or sell opportunities of stock market trading. Some of the top methods of analysis are technical analysis in which the historical data is used for predicting stock prices. Through this analysis the trader takes functional decisions relating to his future trading. The analysis helps investors to understand the market psychology and sentiments of other fellow traders.
Learning evaluation of different financial statements
Financial data of any company is an important record which needs to be analyzed before any actual transaction is made. The analysis is made based on the actual performance and the projected performance of the company. The three major financial statements analyzed are the balance sheet, income statement and the cash flow statement which actually gives the financial position of the company. By keeping an eye on the performance of the company over a period of time people can make out the financial health of the organization and how well it has moved towards its stated objective. The external and the internal stakeholders can evaluate the real value of the stock and decide on their investment strategy. This holds good for new and old investors who would like to invest in the shares of any particular company.
Learning the major trading strategies
- News trading strategy
Many investors keep themselves with the latest news in the market which includes news regarding companies and investor expectations and sentiments. This helps them in investment on a day to day basis.
- End-of-day trading strategy
End-of-day traders trade at the end of the when the stock prices have settled down. It also requires the study of prices of the previous day of stocks and shares.
- Swing trading strategy
It focuses on making profit in a short term period. The profits compound over a period of time giving the investor higher returns. An investor following this pattern of investment tends to change his position in short periods.
- Day trading strategy
Day trading strategy is again a short term trading strategy in which the buying and selling of stocks and shares happens by the end of day to close the position of the investor for small profits with the help of small price movements.
- Trend trading strategy
Trend trading strategy is a long term trading strategy in which the customer tries to capture the ongoing trend of investment in the market. At times when the market is moving up the investor takes a long term position and stays invested.
- scalping trading strategy
A trader who follows the scalping trading strategy usually has a very strict policy of exit from the market. They are usually working on very small profits on investments and a wrong exit time can result in losses and erode away all the profit that they have made. Therefore these traders are stringent about their exit timings.
- Position trading strategy.
It is a common trading strategy followed by traders in which they hold their position for a long period of time. The chances of profit with this strategy is higher.
Formulating trading plan according to the goal
After learning the trading technique and understanding the various ways in which the market works, now is the time to go ahead and understand the various reasons the investor for which the investor has become a trader. Basically the investor needs to identify his goal which he intends to reach by staying invested. The time he would like to put in for the work and identify his risk appetite. This will help him to identify the instruments in which he would like to trade. The savings which would be used as capital for investment would need to be identified and the measures he would like to take to protect his capital needs to be neatly inches in his mind before he starts investing.
Learning advanced training is an interesting and financially rewarding measure. However it needs to be done with the right set of people who know the business thoroughly. Getting enrolled with a good institute in Chennai for understanding the different trading techniques is a great strategy for learning. You can log on to the website www.sharemarketprofile.com