Analysing stocks, step-by-step we will prepare you to embark confidently when buying and selling shares. As an investor in the stock market, it is very crucial that we become self-reliant.
This means that you either make your own educated investment decisions, or critically analyse those who forecast for you.
Although VintagEducation recommends trading for oneself, we also know that some traders have teammates and groups. Therefore we give analysis based on both types. This post puts much attention and concentration on what to buy and sell and our members will know when the good times occur.
Analysing Stocks (1st Steps)
Firstly as stated above, beginners will have limited understanding about stocks and this puts you in a peculiar position. Until you have a firm grasp and understand what you are doing, you are prey for exploiters. These companies patiently wait for you to find their site.
You will then be at the mercy of brokers and other companies who want nothing more than your money. And who will pull out so many tricks to get it.
Be at peace that right now you have taken the right steps and are building an education.When you learn you will certainly be able to hold yourself and trade stocks like a pro.
Let us now look at some key things we need to know about stocks.
Spread: the difference between the bid price and the offer price of shares.
Price/Earnings Ratio (PER): a performance ratio used to evaluate growth potential. This is calculated as the share price divided by the earnings per share.
Blue Chip: a large company, quoted on indexes such as the FTSE, these such companies have a typical market capitalisation (share price times number of shares in issue) of several billion pounds.
Dividend: a quoted company's pay-out of income to shareholders. This typically happens twice a year.
Earnings Per Share: This is used when calculating the PE ratio. It is calculated by dividing the company's earnings by the total number of shares in issue.
Execution-only: this is the broker who does not give advice, but they simply take your buy or sell instructions.
London Stock Exchange (LSE): the market where UK stocks and shares are bought and sold.
Initial Public Offering (lPO): this is similar to a flotation, which is when a company is launched on the stock market for the first time.
Bid Price: the price at which you can sell a share