Moving averages are a great way to gauge where your equity is trading in relation to the averages over specified time periods. Typically there is the 200 period moving average, the 100 period moving average, and then the 30 period moving average.
If you take a look at any mutual fund, odds are you will see that it is being compared to a benchmark in the industry. For example, the S&P mutual funds are compared with the S&P 500 as the benchmark.
When looking at stock and their fundamentals, people tend to get held up on the past and use that too much in predicting the future. If you are looking to invest in a company or equity, you want to know how it is going to do in the future.
This is fairly straight forward, as the lowest value over a specific period is the lowest price, price level, or data point over a specified period you have chosen.
Balance of power is simply the battle between the bears and the bulls and which one has greater control at the current moment. This can help you to begin to formulate your directional opinion on the market.
Market cap is the total amount shares times the current price of the stock. This is important to know because many traders and investor categorize companies by their market cap.
When a company goes into business or if you yourself go into business, you want to ensure you have earnings. With that, there is also the retained earnings number, which is beginning retained earnings minus dividends.
When you look at a stock and it slowly is rising or even staying steady, and then all of sudden it begins to rise and appreciate to only drop off quickly, this is the work of people accumulating stock and ties to our analysis tool, the accumulation distribution.
A typical data point many review before investing is the return of an equity. Of course you look as far back as you would like, but typically there is the year to date, one year, three year, and five year, which is what we will be talking about in this article.
Total assets are interesting because not every company has the same under the category. Total assets are a culmination of all tangible and intangible assets, giving you a nice number to then go forward researching.
There are a set number of shares that are made when a company decides to go public. With that comes different classes and other differing factors, but for this explanation, we are focusing on outstanding shares.
Debt to equity is a measure used to compare the financials of a company to others within the same industry along with measuring its leverage. This is calculated by taking the companies debt and dividing it by the equity in the company, giving you a number expressed in a percentage.
Many people are technical traders and analysts, which means they study the price patterns of the chart using candlesticks. Always looking for a pattern or trend to give them direction, a pattern that many could be looking for is the three black crows pattern.
Value at risk is a way to measure how risky your investments may or may not be. Many places use this to figure out how much a current or potential investment could lose given the current market conditions.
Moving averages are an important aspect to many investing strategies, and a great way to determine where the market is in respect to averages. The eight period moving average is a tool that will plot the average of the last eight period on your chart.
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