Approaching The Stock Market

If you have just started learning about the stock market then you will quickly find out that there are really two schools of thoughts out there.

1. Fundamental Analysis

When it comes to most stock market for new investors courses it focuses around fundamental analysis. That is because the common wisdom is if a company is fundamentally strong then sooner or later it’s stock will follow.

And over the long term this does seem to be the case. So most fundamental investors will look for fundamentally strong stocks and buy and hold those stocks for the long term. And if the company offers stocks that pay dividends then so much the better.

2. Technical Analysis

Another school of thought is technical analysis. While it might be nice to think that the short term ups and downs are all about how much money the company made, it really isn’t.

Instead stocks go up and down due to supply and demand. If there are more people who are buying a stock then are selling it then the value will increase. If more people sell it then buy it the price goes down.

Luckily this creates certain patterns that occur in stocks over and over again.By learning these patterns and trading the stock based off of it’s price patterns you can make extra money.

So, what is the better strategy?Well that depends on what your goals are.Everyone is just a little bit different and will require a strategy that is a little bit different.

I will say this however, the shorter the time fram is the more powerful technical analysis becomes and vice versa.So, if your goal is to trade stocks in a shorter time period such as a few days, a few weeks, or less then technical analysis is going to be more powerful and will help you understand it a little bit better.

On the other hand if you want to buy and hold good quality companies for the long term then fundamental analysis is a better way to go and can help you a lot more.