subject: Introduction To Stock Market Investment Strategies [print this page] Everyone wants to make moneyEveryone wants to make money. And when it comes to making money in stock market, it fascinates a lot of people. Stock market investment is a very common but tricky trade. Most of the people investing in stock market do not actually follow any Investment Strategy. They invest in the shares of a company which is making profits and whose market price is going up, without thinking too much of the fluctuations and market dynamics. In such cases, people may incur huge losses. So, it makes sense to understand some of the basic Stock Market Investment Strategies to avoid incurring losses.
Stock Market Investment Strategies
1.Fundamental Analysis: Fun damental Analysis basically means analyzing from the scratch. It is also called top-down approach. It involves an extensive research of the company in which money is being invested. This Investment Strategy involves E-I-C framework, where E-I-C stands for Economy-Industry-Company. Under this Investment Strategy, first of all investor selects the economy he wants to invest in. Here, he would also decide on the time which would be appropriate for investment. After selecting the economy and the time, investor shall look for the best industry for his investment. Here, he can consider the most profitable industry or the industry with maximum potential or any other industry. After selecting the industry, investor shall scrutinize various companies falling under that industry. Finally, Investor will select the preferred company for investing his hard-earned money. This Investment Strategy is preferred by big investors and corporate.
2.Technical Analysis: Technical Analysis is not as elaborate Investment Strategy as Fundamental Strategy. This analysis, basically involves studying the trends in the stock market. It is done by charting. Charts are drawn to understand the movement of stock prices in the market. Various types of charts drawn here are bar chart, candlestick chart, points and figure chart, etc. This Investment Strategy may be followed by small investors.
Stock Market Investment Strategies provide some assurance against risk. However, they are not full proof Investment Strategies which guarantee profitability. It is advised that the investors should retain stock for a longer period. This is because losses are more likely in shorter period. Small investors who want to have a diversified portfolio may invest in mutual funds as well.
