In order to understand the principles of value investing, a thorough understanding of the difference between “investing” and “trading” is important. A trader takes long and/or short positions in order to gain short-term profits by capitalizing on price movements caused by short-term disparities in the supply and demand of the moment. To a trader, the fundamental wellbeing of the underlying corporation (or economy in the case of the forex market) matters not. A trader’s only concern is the
When a trader or investor calls up a price chart on a trading platform to perform analysis for the purpose of making a trading decision, most platforms will usually include a volume indicator along with price. If a survey among successful traders is taken that asked what are the most important factors that influence a decision to execute a trade, there’s a very high probability the one of the top three factors will be volume. For any tradable
Every financial market is subject to the extreme price fluctuations that result from the announcements of major economic indicators, or unexpectant news. Macro-level economic indicators such as consumer price index (CPI), Gross Domestic Product (GDP), and unemployment numbers are just a few of the indicators that have a broad impact on all financial markets. Very often however, it’s not the announcement of the actual economic indicator data that moves the markets, it’s whether the number announced met market
The concept of owning shares of a company can be a very abstract concept. Unlike owning a home that you live in, or a car that you drive daily, owning shares in a company does not entitle a person to claim ownership in the traditional sense, as with the home or car. Owning shares (stock) in a company entitles a person to a share of the ownership of the company, and therefore a claim on the company’s earnings.
As a new business develops and grows, changes in the structure and direction of the business must be periodically made to match company’s goals. Even the company’s goals should be re-evaluated from time-to-time to prevent stagnation, and potentially missing opportunities. Many successful businesses start off as a simple part-time sole-proprietorship or partnership in someone’s garage, and eventually end up as an industry-leading multinational titan (i.e. Microsoft), or somewhere in between. What’s important is that as a business grows
When the owners, or founders of a business decide to organize it as a corporate entity, ownership of the company is then realized via the possession of the corporation’s stock. A stock certificate, often referred to as a “share”, represents a share of the ownership of a corporation. Each share also grants its owner voting rights on matters concerning the corporation, and for those stock holders that own the majority of the shares, it allows them to have