Fundamental, technical and situational analysis of the stock market
In this Chapter, we will tell you about the methods of making investment decisions, rather on the assessment of the market situation. You refresh the memory information on the case, the fundamental and technical analysis and understand with what purpose and through which the strategies of their optimal use. Let's move on order.
Fundamental analysis is the estimation of a financial condition of the company and macroeconomic conditions. Through this analysis it is possible to give the forecast of development of the enterprise, industry, or country. For carrying out of fundamental analysis does not need to look at the schedules of stock, here is a comparison of the many indices and indicators. Fundamental analysis is used for long-term investment, when the work passive strategy.
Technical analysis - is an analysis of the dynamics of quotations of shares and other securities. Roughly speaking - an analysis of the graphs and charts. The technical analysis of the resort traders, using short-term aggressive investment strategy, because it allows you to make a choice not in the long run, but in the given moment of time.
Situational analysis - the analysis of all possible changes in the company's work, which takes into account the influence of external factors. As the factors situational analysis can be any type of data, ranging from the weather and foreign policy of the risks and ending with the changes in the Board of Directors of the enterprise. As a rule, a situational analysis is produced by professionals, but also private investors can take advantage of its benefits in the form of finished analysts from the specialized agencies.
As a rule, in order to obtain objective conclusions and informed decision-making use of all three types of analysis: fundamental analysis, technical analysis and situational analysis. Due to the extreme complexity of the fundamental and situational analysis, a reasonable use of available analytical materials, created on the basis of these types of analysis and are in free access.
On the basis of the analysis, conclusions, and decisions are made on the investment strategy. As an example we will use a strategy based on the idea of choosing the best issuers on the basis of fundamental analysis of the securities and the choice of the points of entry/exit on the basis of data of the technical analysis. The strategy will be reviewed in the next Chapter.
