- Identify the trend line. This is that blue line you see every time you hear about a stock – it’s either going up or down right?
- Look for lines of support and resistance. The next thing you’ll want to look at is the lines of resistance and support. ...
- Know when dividends and stock splits occur. A dividend is when the company (the board of directors) decides to give a portion of its earnings back to its shareholders.
- Understand historic trading volumes. At the very bottom of the chart, you can see many small, vertical lines. ...
How to read financial statements for beginners?
What to Look for on the Balance Sheet
- Assets. The assets section covers all economic resources owned by a company. ...
- Liabilities. The liabilities section summarizes all of the financial obligations a company has to outside parties.
- Shareholders’ Equity. The shareholders’ equity section represents the total value of the company that is available to shareholders after all debts have been paid.
How to read stocks for Dummies tutorial?
What Is a Stock Chart?
- 52-Week High and Low. The 52-week high and low are key metrics when looking at the trajectory of a stock in a given period (in this case, one year).
- Ticker Symbol. ...
- Dividend per Share. ...
- Dividend Yield. ...
- P/E Ratio. ...
- Day High and Low. ...
- Open Price. ...
- Close Price. ...
- Prev. ...
- Net Change. ...
How to read stock market numbers?
- Ticker: The ticker shows the published flow of transactions in any given stock issue. ...
- Dividend: The stock’s dividend consists of the amount of money per share that a company pays out on the ex-dividend date to shareholders of record on a specific date. ...
- Yield: A stock’s yield is the percentage of its price that is paid out as a dividend. ...
Why do shareholders need financial statements?
Why Do Shareholders Need Financial Statements?
- Understanding the Need for Financial Statements. Financial statements are the financial records that show a company’s business activity and financial performance.
- Profitability Ratios. ...
- Liquidity Ratios. ...
- Debt Ratios. ...
- Efficiency Ratios. ...
- The Bottom Line. ...
What does it mean when you look up a stock quote?
When you look up a stock quote, there a variety of numbers, prices and diagrams that will appear. Understanding what they all mean will help you make an informed decision when purchasing a stock.
What is stock chart?
stock charts come in a variety of formats and have a whole investing technique based around them. They all track pricing data, usually the OHLC (open, high, low close), but they can display this information in different styles (lines, bars, candlesticks), different date ranges (day, week, month, year, 5 years, 10 years) and other information like volume, moving averages and dozens of other indicators.
What does volume mean in stocks?
Volume. This indicates the number of shares that have traded hands today. Some stocks may trade millions of shares each day, and others only trade a few hundred or even zero (the higher the volume, the more liquid the stock is).
What is market cap?
Is the total dollar market value of all of a company's outstanding shares. Market cap is calculated by multiplying a company's shares outstanding by the current market price of one share. This figure determines the company's relative size.
Where can I find stock charts?
Stock charts are freely available on websites such as Google Finance and Yahoo Finance , and stock brokerages always make stock charts available for their clients. In short, you shouldn’t have any trouble finding stock charts to examine.
What is it called when you own stock?
An individual who owns stock in a company is called a shareholder and is eligible to claim part of the company’s residual assets and earnings (should the company ever be dissolved). The terms "stock", "shares", and "equity" are used interchangeably. price movement from any stock chart.
Why do investors use technical indicators?
In analyzing stock charts for stock market investing, investors use a variety of technical indicators to help them more precisely probable price movement, to identify trends, and to anticipate market reversals from bullish trends to bearish trends and vice-versa.
What does YY mean in financial analysis?
YoY (Year over Year) YoY stands for Year over Year and is a type of financial analysis used for comparing time series data.
What is equity trader?
Equity Trader An equity trader is someone who participates in the buying and selling of company shares on the equity market. Similar to someone who would invest in the debt capital markets, an equity trader invests in the equity capital markets and exchanges their money for company stocks instead of bonds.
What is technical analysis?
Technical Analysis - A Beginner's Guide Technical analysis is a form of investment valuation that analyses past prices to predict future price action.
What is a death cross in stocks?
You can probably figure out on your own that a “death cross” isn’t considered to bode well for a stock’s future price movement.
How to understand a company's financial position?
To understand a company’s financial position—both on its own and within its industry—you need to review and analyze several financial statements: balance sheets, income statements, cash flow statements, and annual reports. The value of these documents lies in the story they tell when reviewed together. 1.
What is financial statement?
Financial statements offer a window into the health of a company, which can be difficult to gauge using other means. While accountants and finance specialists are trained to read and understand these documents, many business professionals are not. The effect is an obfuscation of critical information.
Why should cash flow be positive?
Ideally, cash from operating income should routinely exceed net income, because a positive cash flow speaks to a company’s financial stability and ability to grow its operations.
What is an annual report?
Beyond the editorial, an annual report summarizes financial data and includes a company's income statement, balance sheet, and cash flow statement. It also provides industry insights, management’s discussion and analysis (MD&A), accounting policies, and additional investor information.
What is the purpose of a cash flow statement?
The purpose of a cash flow statement is to provide a detailed picture of what happened to a business’s cash during a specified duration of time, known as the accounting period. It demonstrates an organization’s ability to operate in the short and long term, based on how much cash is flowing into and out of it.
What is included in an income statement?
The document is often shared as part of quarterly and annual reports, and shows financial trends, business activities (revenue and expenses), and comparisons over set periods. Income statements typically include the following information: Revenue: The amount of money a business takes in.
Why is it important to understand the financial health of a company?
An ability to understand the financial health of a company is one of the most vital skills for aspiring investors, entrepreneurs, and managers to develop. Armed with this knowledge, investors can better identify promising opportunities while avoiding undue risk, and professionals of all levels can make more strategic business decisions.
How to find the time period of a financial report?
1. Identify the time period covered by the financial report. Usually, the top of the report or statement lists the time period. ...
What is financial report?
Most businesses and organizations provide financial reports to their Boards of Directors, shareholders and investors on a monthly, quarterly or annual basis. They are reviewed to identify trends, successes and problems within a company's finances.
What is a wikihow article?
Download Article. X. wikiHow is a “wiki,” similar to Wikipedia, which means that many of our articles are co-written by multiple authors. To create this article, volunteer authors worked to edit and improve it over time. wikiHow marks an article as reader-approved once it receives enough positive feedback.
How long does it take to report long term liabilities?
Long term liabilities will take more than a year. A balance sheet must always balance that is, the sum of assets must be equal to the sum of liabilities and equities. If that is not the case, it is usually the first sign of a badly reported financial Statement. ...
What is gross profit?
The Gross profit which is the difference between the sales/revenue figure and the cost of goods sold represents the profit made by the business before operational expenses are deducted. This figure is always a positive number, if it is negative, it means the business is not viable. Review the operating expenses.
What are assets in accounting?
Assets include cash, investments, property and other things owned by the company that have value. The assets are listed in order of liquidity. The most liquid assets, such as cash, are presented first. Review the liabilities. Liabilities are debts or obligations that the company owes to others.
What is the equity section of a business?
The equity section gives a break down of the value of money invested and re-invested in the business.
What is stock chart?
In its most basic form, a stock chart is exactly what I said above – a chart with historic prices of a particular stock.
What does dividend mean on stock chart?
At the bottom of the chart, you’ll see if and when the company issued a dividend, as well as if there was ever a stock split: A dividend is when the company (the board of directors) decides to give a portion of its earnings back to its shareholders. If you own the stock, you get a small chunk of the profit.
What is public stock trading?
Public. Public makes stock trading a social event – literally. When you use Public, you’ll have access to a community of investors – both long-time, experienced investors and beginner investors. This allows you to chat with others and get a sense of which investing strategy may work best for you.
What happens when a stock splits?
Many times when a stock split happens, more people invest (since the share price is often lower) which increases demand and, in many cases, the overall share price. 4. Understand historic trading volumes. At the very bottom of the chart, you can see many small, vertical lines.
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Can I read stock charts?
A great starting point is being able to read and understand stock charts. Yes, that doesn’t sound all that exciting, but doing this gives you an advantage when you want to truly analyze a stock to buy. In the article, I’ll break down the essentials of a stock chart and explain the key things you need to focus on.
Is Robinhood a good news stream?
It’s pretty sweet, actually. Also, Robinhood has a really nice news stream. It’s kind of like a Facebook stream, only for stock news and great for staying up-to-date on market trends. If you’re looking to invest on your own, trades cost $0 with Robinhood.
How to invest in dividends?
The book is titled Dividend Investing Your Way to Financial Freedom and features a number of resources to help you invest for financial freedom, including: 1 Improve your portfolio returns 2 Understand the pros and cons of a dividend investing approach 3 Develop and craft your own dividend investing strategy 4 Build wealth through a long-term compound interest plan
Why is financial analysis important?
Financial statement analysis is crucial because it will tell you information about a potential investment not otherwise seen through valuation/pricing, qualitative analysis, and more. A company might have an outstanding product with great growth, but have completed mismanaged their financial standing.
What is the conclusion of financial statement analysis?
Conclusion on Financial Statement Analysis. Of course, investing is more than just reading and correctly interpreting financial figures. And there’s no doubt that financial statements are a key source of information regarding the financial health of a company, but they are not a means to an end.
What is net profit margin?
1. Net Profit Margin. This is the Net Income after tax divided by Total Gross Revenue. For instance, if a company’s income statement contains an after-tax income of $100,000 and a gross revenue of $1,000,000, then you’ll analyze its Net Profit Margin by doing the following:
What is return on equity?
Return on Equity reflects the amount of net income as a percentage of a shareholder’s equity. This metric is also known as the Return on Net Worth and is expressed as a percentage as follows:
What is the purpose of the metric of net physical assets?
This metric is used to measure how a company earns from its investment in physical assets. It is evaluated by taking a company’s Total Assets less Intangible Assets such as Goodwill – the difference represents a company’s net physical assets.
How to calculate EPS?
It is calculated by dividing the net after-tax income by the number of outstanding shares, and the resultant figure shows a company’s ability to distribute profits to its shareholders.
Learn how to sift through the mountain of data to invest better
Morgan Housel is an economics and finance columnist for Fool.com. Analyst, Motley Fool One. More Articles
Read things you know you're going to disagree with
There is so much media content today that you can always find someone who agrees with you. Bullish on Apple ( NASDAQ: AAPL )? Thousands of writers are, too. Think the government is a giant conspiracy? There are countless blogs for that.
Read old news
As Black Swan author Nassim Taleb writes, "To be completely cured of newspapers, spend a year reading the previous week's newspapers."
Read a mix of professional and amateur content
Professional journalists -- those at The Wall Street Journal, New York Times, Financial Times, and so on -- will always be more factually accurate, have better access to reputable sources, and can dig deeper into a subject than most amateur bloggers.
Don't think every news story is actionable
This might be the most important. There are thousands of news articles published every day. Very, very few of them should ever compel you to action.
The good reads
Opinions vary, but here's a short list of my favorite financial writers and websites (besides, of course, Fool.com).
Stock Chart Construction – Lines, Bars, Candlesticks
Looking at A Stock Chart
The Importance of Volume
Basic Volume Patterns
Using Technical Indicators
The Importance of The 200-Day Moving Average
Trend and Momentum Indicators
Analyzing Trends
- When reviewing a stock chart, in addition to determining the stock’s overall trend, up or down, it’s also helpful to look to identify aspects of a trend such as the following: 1. How long has a trend been in place?Stocks do not stay in uptrends or downtrends indefinitely. Eventually, there are always trend changes. If a trend has continued for a lo...
Identifying Support and Resistance Levels
Conclusion – Using Stock Chart Analysis