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Analyst reports are created by professionals who interpret annual reports. Analysts use annual report data to create forecast and calculate financial ratios. Financial ratios are used to compare a company's performance for a specific period to its previous results, competitor results and market averages.

Although there are disadvantages to using ratio analysis (imperfect data or too much data), reviewing analyst reports will add objectivity to your interpretation. An objective approach avoids knee jerk reactions and takes out the emotion from the equation.

Per Share Data

So where do you get all the data to analyse a company? You look at financial statements. Financial statements are documents containing an incredible amount of information about a company's activities. The sheer volume of data in these reports can be confusing at first, but like all things, practice makes reading them easier.

Calculations can put off the beginner trader or stock market student. It's good to remember that calculations are a way to distill raw market data into a manageable value. Think of numbers as a way to simplify rather than complicate things. In case you get scared off by balance sheet analysis, you can always employ the services of a stockbroker or a professional analyst. Before crunching numbers, list the facts you are trying to learn.

  • Growth. Is growth from mergers and acquisitions or is it organic?

Fundamental analysis introduces the concept of intrinsic value. Intrinsic value is the "real" value of a security. This implies that market prices are not true reflections of a stock's worth. This is where fundamental analysis comes in. For example, Trader X is following stock ABC, which is trading at $25. After doing his analysis however, he finds that stock ABC has an estimated value of $30, its 'intrinsic' value.

Once you understand what trends are and learn how to interpret them, the next concept will be resistance and support. These levels show the interplay of supply and demand in the stock market, dictated by traders when they are buying or selling.


Technical analysis may intimidating. Most often newbies get turned off by this method because it takes a lot of work and patience. Imagine having to go over multicoloured charts for days on end, trying to determine where you should make your entry and exit in future trades. However, if your the type of person who prefers to have a visual interpretation of figures then technical analysis works for you. Interpreting charts may take time, but they plot price movements that are important for trading.

Analysing Trends

You won't be able to predict market changes, but there are ways to gain insight on its movements. Traders can use indicators that can help them in future trades. If you prefer to keep an eye on price movements, you will be using technical analysis. In simple terms, its the use of charts to interpret price movements of a particular stock or the market as a whole. This analysis believes that buying, selling, information and psychology of traders play a factor in the movement of a stock price.

CFD is an agreement between a buyer and seller, to exchange the difference in value of a share between the time that is opened and closed. CFD allows you to trade in a range of markets without actually buying the share, and profit whether the market goes up or down. Traders can benefit from the change in stock prices without havign to pay for the full price. CFDs are also leveraged financial instruments,which means you can earn big profits for a small initial outlay.

CFD Advantages:

Before you delve into share trading, you have to ask yourself if you have the qualities of an investor. Making consistent profits from the stock market isn't about discovering some ultimate strategy that will guarantee money. Ultimately all your decisions will determine whether you will earn money or blow your account.

Am I Suited for Investing?

Starting early in the stock market is a good way to take advantage of compounded interest. Its also a good opportunity to sidestepping a regular 9 to 5 job, and eventually earning money. But the thing is, making money out of the stock market is not as exciting as what the Wallstreet or Boiler Room movie portrays it to be. Sure you have the chance to earn a lot of money, but being successful at share trading takes a lot of work, and long hours in front of the computer on your own. So before you commit to trading for a living there are still some points that you have to consider.

When it comes to share trading, its certainly great to have a mentor that can point you the right direction. Objective criticism is helpful in exposing mistakes that you missed. An advice from an expert can earn and save you money. But the problem is how do you seperate the expert from the average joe with a gift of gab? A good marketing strategy can easily manipulate people into forking over their hard earned cash, without them knowing it. The media has been doing since the dawn of time.

When share trading, you earn capital gains (positive) or losses (negative) when you sells shares that you hold on to for capital growth. Holding shares for more than 12 months may entitle you to a capital gains tax (CGT) discount.

Australian capital gains tax applies to profits made on the sale of a capital asset that was acquired after 20 September 1985. Legislation defines capital gains as "any kind of property" or a "legal/equitable right that is not property."

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