Module 8 2.0

• fundamental analysis. is a method of assessing a security’s intrinsic value by analyzing various macroeconomic an microeconomic factors. The ultimate goal of quantify a security’s intrinsic value. Its intrinsic value can then be compared to its current market price to help with investment decisions.
• technical analysis. which concentrates on forecasting a security’s price movements
• fundamental analysis. aims to determine the “correct price” (true value) of a security. By knowing the right price, an investor can make an informed investment decision. Security can be overvalued, undervalued, or fairly valued.
• Top-down. starts the analysis with the consideration of the health of the overall economy. By analyzing various macroeconomic factors such as interest rates, inflation, and GDP levels, an investor tries to determine the overall direction of the economy and identifies the industries and sectors of the economy offering the best investment opportunities
• Bottom-up. This approach immediately dives into the analysis of individual stocks. The rationale of investors who follow the approach is that individual stocks may perform much better than the overall industry.
• Technical analysis. is a tool, or method, used to predict the probable future price movement of a security – such as a stock or currency pair – based on market data.
• Past Price as an Indicator of Future Performance Technical traders believe that current or past price action in the market is the most reliable indicator of future price action.
• Charting on Different Time Frames . Technical traders analyze price charts to attempt to predict price movement.
• Candlestick charts. display the high, low, open, and closing prices of a security for a specific period.
• Candlesticks originated from Japanese rice merchants and traders to track market prices and daily momentum hundreds of years before becoming popularized in the United States.
• Candlesticks can be used by traders looking for chart patterns.
• Candlesticks. reflect the impact of investor sentiment on security prices and are used by technical analysts to determine when to enter and exit trades.
• Support and resistance are two foundational concepts in technical analysis. Technical analysts use levels to identify price points on a chart where the probabilities favor a pause or reversal of a prevailing trend.
• Support occurs when a downtrend is expected to pause due to a demand concentration.
• Resistance occurs when an uptrend is expected to pause temporarily, due to a concentration of supply.
• moving average is a simple technical analysis tool that smooths out price data by creating a constantly updated average price. The average is taken over a specific period of time, like 10 days, 20 minutes, 30 weeks, or any time period the trader chooses
• Pivot Point. is a technical analysis indicator, or calculations used to determine the overall trend of the market over different time frames
• Daily pivot point indicators. which usually also identify several support and resistance levels are used by many traders to identify price levels for entering or closing out trades.
• Fibonacci was a 12th-century mathematician who developed a series of ratios that is very popular with technical traders.
• Fibonacci ratios. or levels are commonly used to pinpoint trading opportunities and both trade entry and profit targets that arise during sustained trends.
• Fibonacci retracement and extension levels. can thus be created by connecting any price points on a chart. Once the levels are chosen, lines are drawn at percentages of the price range selected.
• Pivot points. do not use percentages and are based on set fixed numbers: the high, low, and close of the prior day.
• Trendlines and Chart Patterns. These strategies involve entering long positions when a security is trending higher and placing a stop-loss below key trendline support levels. If the stock starts to reverse, the position is exited for a profit.