What is trading and investing? What is long and short?
- Long means buy first (at a low price) and sell later (at a high price) while Short means sell first (at a high price), buy later (at a low price).
What is Fundamental Analysis?
- Balance Sheet: Measures company’s financial leverages: Debt-Equity Ratio : Total Liabilities/Total Equity . if less than 20%, considered low.
- Cash Flow Statement: cash from operations > net income => high quality earnings => operating efficiently
- Income Statement = market cap/no. Of shares
A company is overpriced or underpriced?
Price/Sales => market cap / most recent revenue number
What is Technical Analysis? What is Support and Resistance?
There are 2 building blocks of Technical Analysis which are Support and Resistance. They are like glass floors (Support) and ceilings (Resistance) that seems to be limit a market’s range of movement.
Moving Average: gauge momentum as well as to confirm trends, and define areas of support and resistance.
Pro: Moving Averages smooth out the “noise” when trying to interpret charts. Noise is made up of fluctuations of both price and volume.
Con: Because a Moving Average is a lagging indicator and reacts to events that have already happened, it is not used as a predictive indicator but as an interpretive one for confirmations and analysis.
Common Types of Moving Average: Simple Moving Average (SMA), the Exponential Moving Average (EMA), the Weighted Moving Average (WMA) and the Hull Moving Average (HMA).
Learn more about Moving Average in Trading View. https://www.tradingview.com/wiki/Moving_Average#Simple_Moving_Average_.28SMA.29