Investing Overview
Introduction to Investing
Many people turn to the markets to finance a home, provide higher education for their children, or to build a secure retirement. However, participating in the market is not a surefire way to build a better future. Markets are volatile components of our economy; the value of stocks, bonds, and other securities fluctuate alongside market conditions. Investing in the market is risky; no one can guarantee that you’ll make money from your investments and your securities may even lose value. However, you do not have to enter the market completely blind. With a basic understanding of key methods and tools, you can feel equipped to strategically enter the market and plan for the future. Listed below are the basics of investing:
- Investing Risk Ladder
- Invesment Products
- Technical Analysis
- Fundamental Analysis
- Psychology of Investing
- Technical Indicators
- Market Indicators
- Financial Analysis
- Order Types
Education is an essential component of becoming a wise and profitable investor. Acknowledging your lack of education when it comes to certain investments is also an essential component of evading avoidable losses. Spending the time necessary to gain a better understanding of the market will tremendously aid your investment strategies. However, it is also crucial to consult professionals. Recommendations from financial advisors will propel your investments in the right direction, increase your profits significantly, and slow your losses.
Technical Analysis
Technical Analysis is the forecasting of future financial price movements based on an examination of past price movements. Like weather forecasting, technical analysis does not result in absolute predictions about the future. Instead, technical analysis can help investors anticipate what is “likely” to happen to prices over time. Technical analysis uses a wide variety of charts that show price over time.
Fundamental Analysis
Fundamental analysis is the examination of the underlying forces that affect the well being of the economy, industry groups, and companies. As with most analysis, the goal is to derive a forecast and profit from future price movements. At the company level, fundamental analysis may involve examination of financial data, management, and competition.
Psychology of Investing
It would be far from the truth for an investor to claim that they have never made investment decisions utilizing their emotions. In fact, many would argue that it is impossible for one to participate in the economy without bearing aspects of their psyche. Humanity’s increasing grasp of psychology has led to vast developments in how we perceive ourselves and our actions.
Technical Indicators
Technical Indicators are signals, often derived from mathematic formulas, that are based upon patterns related to the price and/or volume of a security. By analyzing the historical price, volume, etc. of a security, an investor can more accurately predict future price movements. Before attempting to learn Technical Indicators, one needs to be well-versed in the principals of Technical Analysis.
Market Indicators
Market Indicators can best be understood as a sub-category of Technical Indicators. The primary purpose of employing Market Indicators is to interpret and forecast a security’s market moves. Similar to Technical Indicators, they are normally composed of formulas and ratios that provide insight into a stock’s health and future profitability. Before attempting to bring Market Indicators into your investment strategy, it is important to be aware of the principles of Technical Analysis.
Investing Risk Ladder
Learning the ins and outs of investing can seem overwhelming and discouraging, yet those who take the time to grasp its most basic components benefit in the long-haul. Let’s take the first step together and explain what is known as the investment risk ladder, which defines groups of different assets based upon their riskiness. There are six main asset classes a new investor should be aware of; below, they have been listed from the least to the greatest risk.
Investment Products
An investment product is a product offered to investors based on an underlying security or group of securities that is purchased with the expectation of earning a favorable return. Investment products are based on a wide range of underlying securities and encompass a broad range of investment objectives.
