Author Archives: Isabella Carter

The Top Five Free Stock Screeners

Searching for new stock ideas doesn’t have to be complicated and time-consuming. You just need to use the right tools. Today, we’ll take you through the top five free stock screeners that will provide you with the information you need to make good trading decisions.

The list of free stock screeners we will show you today is based on the following criteria:

  • Ease of use
  • Number and range of filters offered
  • Filter criteria depth and quality
  • Additional functionalities
  1. MarketWatch

MarketWatch screener is a very basic stock screener. What we like about it is the interface which is very clean and easy to use. MarketWatch offers a limited number of fundamental and technical filters. Even though the selection of filters is very limited, they are all very high quality. They will allow you to do various stock scans according to your needs and build a targeted watch list.

In conclusion, this tool might not be useful to a professional investor looking for advanced functions, but it’s a great, simple tool for beginners that allows you to perform reliable stock scans.

  1. Morningstar

Morningstar is also a free stock screener with basic functions. It stands out among other stock screeners because it uses its own proprietary rating system. It allows you to narrow the search results based on three Morningstar’s ratings. The three ratings are growth grade, profitability grade, and financial health grade and they are all rated on a scale from A to F.

When you go to the Morningstar website, you’ll need to create a free basic account and you can start scanning. The results of the scan will be displayed in a new window once you choose your criteria. This can be slightly inconvenient since you have to go back to the previous page in order to adjust your criteria and run a new scan. Overall. Morningstar is a basic screener but does offer several useful criteria that are rarely found in free stock screeners.

  1. Yahoo Finance

Yahoo Finance offers a free HTML stock screener that runs in your browser window. The free version lets users fine-tune their searches with a limited number of criteria. You’ll get used to the interface quickly, and there are even a couple of preset screenings to help you get an idea about how it all works and develop your own strategy.

One good thing about this stock screener is that you can click on any ticker to be taken to the corresponding page on Yahoo Finance. You can also save your results for later use which is very useful.

  1. Google Finance

Google offers a free stock screener as part of Google Finance. What makes it stand out is the visually pleasing and easy to use interface. It’s great for beginners because learning how to use it is really easy, even for beginners. Furthermore, speed will never be a problem because the results show up almost instantly.

The main problem with the Google Finance stock screener is the limited number of filters, with hardly any technical filters offered. Just like with Yahoo Finance, the results can be clicked on in order to access the quote page on Google Finance.


The stock screener is first on our list because of three important reasons. It offers a wide variety of selection criteria and the interface is very user-friendly. The third reason is the overall functionality of the stock screener, which is very good.

The scan filters offered by FINVIZ include both technical and fundamental filters and the results are generated very quickly. There is also a very convenient feature that makes FINVIZ stand out among other stock screeners – just hover your cursor above any stock ticker and a stock chart for that stock will pop up. FINVIZ allows you to perform in-depth scans with a focus on quality. Overall, it is one of the best stock screeners available today and it will be useful to any investor.

9 Simple Tips for Margin Trading to get you Started on the Road to Success

Margin trading has become a very popular form of investing in the stock market. Buying on margin gives you a leverage with your investments by allowing you to purchase a larger number of stocks. Margin trading is a double-edged sword, but if you follow our tips you should be able to do it with success.


  1. Think about the interest rate.

 Margin trading is essentially a type of loan, so naturally, there is always an interest rate for what is borrowed. You’ll need to account for interest rates in your strategy in order to make successful investments. Online stockbrokers generally charge an 8% a year interest rate, although the rates vary depending on the value of your portfolio.

  1. Buy slowly over time.

 It’s always wise to buy into a position gradually instead of doing it with one large order. This will keep your risk minimized at the beginning, and you can buy more stocks when you have stronger chances of a profitable trade.

  1. Know the rules of the game.

 Always read through your broker’s guidelines carefully and make sure you understand all the rules before you make your first trade on margin. For example, day trades can borrow more than 100% of their accounts with some brokers. 

  1. Beware of margin calls.

 Getting a margin call on your account is the last thing you want as an investor. Margin calls are issued when the equity in your account falls below the maintained margin. There is a specific price level for every position initiated that needs to be reached in order for a margin call to take place. When this happens, the investor is required to either sell a position or to deposit more funds into their account.

  1. Minimize risk by using stop loss orders.

 Stop loss orders are a very useful tool that can be helpful in various trading situations. Using a stop loss order will help you prevent losses that are too big and thus allow you to avoid margin calls. Stop loss orders are essentially a form of insurance, so there is no reason not to use them.


  1. Be extra cautious when dealing with the upcoming news.

 When you hold a position on margined funds, you are very exposed to risk. This is why you should be very cautious when dealing with news such as earnings reports. Some investors might see a positive trend and buy stocks on margin just because they believe the news will be positive. However, anything can happen in the stock market so the investors should always be prepared for the worst case.

  1. Avoid speculations.

 Speculating with money is never a good idea. With margin trading, it’s even worse. The best thing you can do for yourself as an investor is to maintain discipline at all times and stay away from speculations. You’ll never need to speculate if you follow a well-defined profit vs loss ratio.

  1. Don’t risk losing all of your funds.

What’s the worst thing that could happen to an investor? Well, you could risk all of your funds, lose it all, and end up with a huge debt. Just don’t do it. It’s always a good idea to have backup funding in cash in case the worst happens.

  1. Stick to your strategy.

A great strategy stands behind every successful investor. Warren Buffett’s advice for reaching sound trading decisions is to focus only on the fundamentals. You don’t have to agree with him but you should definitely develop your strategy and stick to it.


CANSLIM Trading Style Explained

CANSLIM is an acronym which describes seven characteristics that stock usually have before making the biggest price gains. The approach was developed by the founder of Investor’s Business Daily, William O’Neil. In this article, we will explain what CANSLIM means and how to incorporate it into your trading strategy.


CANSLIM – What do the Letters Stand for?


C – Current earnings. The earnings should always be accelerating and this is never a bad sign. Furthermore, according to the CANSLIM trading style, current earnings per stock should be up no less than 25% compared to the same financial order last year.

A – Annual earnings growth. Yearly earnings should also be up at least 25% compared to the previous year. When it comes to annual returns on equity, they need to be at least 17%.

N – New product or service. This refers to the idea that companies should always innovate their products and services and develop new ones. This allows the stocks to reach new high prices.

S – Supply and demand. The relation between supply and demand has the power to make stock prices soar. If the supply is relatively scarce and the demand grows strong, excess demand is created which makes the prices rise.

L – Leader or Laggard. Be the leader and purchase “the leading stock”. This is quite relative and not easy to measure, but Relative Price Strength Rating of the stock can help. It should always be at least 80. The stocks should also be in a leading industry.

I – Institutional sponsorship. This means you should always buy stocks that are increasingly owned by large institutions, like mutual funds and banks. You can measure this by using the Accumulation/Distribution Rating.

M – Market Direction. Nasdaq and S&P 500 market indexes should be consulted in order to determine the market directions. It’s best to invest when you notice definite uptrends.


CANSLIM Strategy Explained

So far, we have explained the basic principles of the CANSLIM trading style. However, they might seem too rigorous if you are a newcomer to stock trading. So what exactly should you look for in a stock?

C: You don’t really have to set the bar at 25%, but you should always look for stocks that have earnings increasing quarterly. Any stock that has earnings steadily increasing might be worth keeping on your watchlist.

A: Annual growth becomes more important if you are searching for stocks with a steady growth that you can keep in your portfolio for longer periods of time. It’s a good idea to always look at returns on equity, but you don’t really have to set the threshold at 17%.

N: Nobody can deny the importance of new products and services of a company for creating a growth pattern. Some investors like to go even further and look for stocks that are new in general.

S: Our advice regarding supply and demand is to always look at the trade volume. It’s a good sign if the trading volume is 50% greater compared to the 50-day average.

L: This one is really a question of style. Choosing a leading stock in a leading industry is definitely the safest choice. However, choosing a stock outside of leading industries which has the Relative Price Strength Rating steadily increasing might also turn out to be a good investment.

I: This one is very important, and it’s a great piece of advice even if you are not using CANSLIM in your strategy. The ones who move the market are the big institutional investors, so it’s always a good idea to look for stocks with increasing institutional sponsorship.

M: This is probably the most important characteristic of the CANSLIM trading style. Be informed about the market trends and avoid trading in the opposite direction. It’s a good idea to make a personal index of the stocks you feel are most successful in the market and monitor their action.

Dividends 101: Investing in Dividend Stocks

A lot of people already know about basics of dividends and invest in them to benefit from regular payment. These also leave an option to reinvest the payments and buy more shares of the stock. Want to learn more about it?

The Value of Dividend-Paying Stocks

Most stocks that pay dividends belong to companies that are evolved and financially stable. This usually means that the stock prices will rise, barring any unforeseen events. It definitely makes it sound like a win-win situation. You will both get payments and keep the stock.

Let us take Coca-Cola as an example. If you buy a stock at around 46 dollars, you can expect an annual dividend payment of $1.48. While no one can guarantee what the future of the market will look like, a reliable company is a safe choice. You can always be sure that they will try to not disappoint an investor.

Essentially, these stocks are lower risk stocks. With a company that is paying consistently and has the dividends that are rising, you can assume financial health. After all, the dividends come from the cash flow of the company.

The Value of Compounding

When you invest in dividends you will have an option to benefit from compounding. In essence, that happens when you reinvest your earnings and start making money from the earnings. Basically, dividend compounding is what happens when you use the dividends to buy extra shares of the same stock, which then leads to you receiving greater dividends.

While you can enjoy the dividends yourself, reinvesting them into the same, rising stock makes more financial sense. The more time you can wait, the more value you will get out of your investment So, let’s delve a bit deeper into it.


To benefit from the power that compounding gives you, you require 4 things.

  1. The initial investment
  2. Dividends (earnings from said investment)
  3. Reinvesting of those dividends
  4. Time

When it comes to dividend investing, the more you reinvest, the higher your return is.

However, to illustrate this better, let’s do some quick math. Let’s say you buy a hundred shares of a company for 50 dollars per share. Now, you just put in 5,000 dollars. However, this company is paying $1.50 as an annual dividend. This means it earned you 150 dollars this year. Let’s assume you were reasonable and chose a company that is stable and on a rise. So, let’s say the dividend increases by 5% per year and the stock doesn’t change at all. This means that you would have just made $8,776 dollars in 20 years. From dividends alone. Now, add to that the stock increase you were expecting and you have a hefty profit.


DRIP (Dividend ReInvestment Plan) is an option given to you by a company that will allow you to automatically purchase additional shares on the date you would receive the dividend. This way, you can automate the process. This is a really handy option to take that will make trading a lot easier. However, that is not all.

A lot of DRIPs will allow you to buy shares without having to pay commission fees. And many will give you a discount on the price of the share. For an example, if the DRIP is run by the company itself, there are no commission fees. You can even set up a plan that will let you use the discount to buy shares in cash. There is a flaw to consider though. When reinvesting, you still have to pay taxes on the dividends. However, this way, you are buying shares directly from the company, and not through a brokerage. Making it both easier, and a lot cheaper.

DRIPs are also beneficial to the company. After all, they do not have to give you cash for your dividends immediately. Meaning that the outflow of cash is decreased significantly.


ETFs: Basic Facts and Explanations

ETFs, or exchange-traded funds, are similar to mutual funds. Both try to replicate the movement of a specific index. In addition to that, neither of them requires a portfolio manager to select stocks. Instead, they are passively managed.

However, ETFs are similar to stocks when it comes to buying and selling during the day. Their price changes throughout the day, and you can buy them on margin or sell them short. In contrast, mutual funds have only one price a day. That means that, if you decide to buy them after the market closes, you will have to use the next day’s closing price.

Even though ETFs track a particular index, sometimes they can cause the underperformance of that same index. This may happen because there are administrative costs involved. Also, some ETFs can have higher or lower market value. The principle of supply and demand determines this, and it applies to less heavily traded ETFs.

History of ETFs

After the Investment Act of 1940, mutual funds couldn’t participate in active trade during the day. However, the Securities and Exchange Commission could grant exemptions to all those who want to offer ETFs on the market.

The first ETFs that participated in the exchange were Toronto Index Participation Units in 1989. A few years later, in 1993, the American Stock Exchange introduces their own ETFs – “spiders” or SPDRs. Their main goal is to track the movement of the S&P 500 Index.

ETFs and Mutual Funds – technical contrast

Trading ETFs is more complicated than using mutual funds to buy and sell securities for cash.

Firstly, trading ETFs does not include cash exchange, in contrast to mutual funds. Therefore, there is a minimal chance of capital gains and the trade itself may not be a taxable event.

Second, an investor creates an ETF when he assembles a variety of security holdings in a portfolio. This participant then exchanges them with the ETF’s manager. In return, he gets large blocks of ETF shares. Those blocks are creation units, and the investor can keep them in his portfolio, or break them up and sell some shares to other investors.

Supply and demand directly influence the creation and redemption of creation units. However, investors should bear in mind that the competition affects the ETF prices. Because of that, most of them usually have similar prices to the NAV of the underlying securities.

Buying ETFs

If you looking into buying ETFs, you do not have to be a large investor. Individual investors can also participate, but they would need to buy them through a broker.

Benefits of ETF trading

  • You can trade them throughout the day.
  • They offer a high level of diversification. By trading ETFs, investors can hold a variety of securities in their portfolio.
  • They are cheaper than mutual funds. In addition to that, they require passive management, and there is a chance of lower taxable distributions.
  • By trading creation units for ETF’s index securities, you are participating in an in-kind trade. Therefore, there aren’t any cash lags or capital gains and losses.
  • The investors can sell them short.
  • No minimum investment requirements.
  • No redemption fees if you happen to hold them for only a brief period.

Disadvantages of ETF trading


  • You need to purchase them through a broker, and that requires a brokerage commission.
  • Often, ETFs are composed of securities that have a similar behavior pattern. You would need to make other investments as well so that you could have a diversified portfolio.
  • There is a chance of wide bid-ask spreads.


How to evaluate an ETF?


Before investing, it is vital to consider certain factors regarding your ETF of choice:

  • Research the index it tracks, and see what it consists of.
  • Check the history of the fund and its underlying index. It is essential to know their previous performances and when they were established.
  • Understand the expenses and research the investing strategy.
  • Make sure that you know how the ETF will be taxed. For example, gold bullion ETF has the maximum tax rate of 28%. In addition, a bond ETF is taxable because of the interest it pays. Lastly, ETFs that use futures contracts, as well as some commodity ETFs, may have both long-term and short-term capital gains.


Stock Splits: Everything You Need to Know


How to know if a stock split is a good thing or not? Will they bring something positive or something negative to the company? On one hand, reverse splits are something people fret about, while regular ones are a reason for cheer. How to know the difference?

Let’s define stock splits for start

When a company takes all of its shares and divides them into less or multiple shares – that’s a stock split. The total money value of that stock won’t change, but the number of shares you have. The total price of that particular stock then becomes higher or lower, depending on the type or magnitude of the split.

Most of the time, the goal of a split is to lower the price of the stock so it becomes more affordable.

So, if you own 100 shares at $10 per share – $1000 dollars, a 2 for 1 split would mean that you now have 200 shares at $5 each.

Stock split types:

1. Standard split

This happens when the price of a stock becomes too steep, and the company wants to make it lower. This is good for the company because it’s a sign that it has been growing. Depending on the situation, the split can be 2 for 1, 10 for 1, or any other combination.

2. Reverse split

This only happens when the stock price of a company is so low that they have to do it in order to get the price back up. This has to be done when share value is under $1. When this happens, the company has to do a reverse split in order to meet listing conditions, so it can remain publicly traded. This can also happen with any magnitude, 1 for 2, 1 for 10, again, depending on the situation in question.

Stock split strategy

It’s rather simple – just steer clear of reverse splits, and look for standard ones. If you own a stock that’s been split twice in the last year, it’s almost guaranteed that its value has also been on the rise.


*Steer clear of stocks that had a reverse split in the past two years. Even though it might seem like a good investment, there must have been an internal problem that caused the stock to plummet in the past.

*Check each stock to see if there were splits. Some use Yahoo Finance for this, as it’s the simplest tool. Find the date of the last split as well as the magnitude of it. This will paint a nice, quick picture of how that stock performed lately.


When a valuable stock splits late into a huge run-up, it might be the time to step back and take your profits. If, for example, a stock is on a steady rise for the past 2 years, and it split once 2 for 1 during that period it’s a good sign. But, if that is all of a sudden followed by its price getting doubled, tripled or quadrupled, and the company performs a 5 for 1 split – you might want to walk away. This might mean that that stock is nearing its maximum, and a climax may be near.

In the end

A standard stock split is a good sign, while a reverse split is a bad one. If you check the stock at Yahoo Finance, you’ll find out if you need to invest or steer clear.

But, if you read the signs incorrectly, you stand to lose a lot. That’s why a stock split is both something to hope for and something to fear. It all depends on how acquainted with a stock you are, and how well you can predict its future.



Growth Investing: Factors You Should Consider


When trying to define growth investing, the easiest way is to compare it to value investing. Value investors try to find stocks which they can trade for less than their intrinsic value. In contrast, growth investors are looking to increase the company’s potential in the future.


In addition, growth investors look for stocks that are trading higher – but they expect the intrinsic value to grow and surpass expectations. Furthermore, one of their main goals is to earn a profit through long-term and short-term capital appreciation.

Capital Gains and Profit

Growth investors try to find new and exciting companies that have a potential to grow. They are not after the dividends. Instead, they expect their investments to advance.

Furthermore, the main idea is to grow their wealth by reaching higher stock prices in the future. Because of that, they typically invest in new technologies and focus on capital gains instead of dividends. In addition, they are usually after the young companies that are expected to succeed in the near future.

What to Focus On?


There isn’t a formula that will help you evaluate the potential for all types of growth stocks. It requires you to trust your judgment and a high level of individual interpretation. Even though there are certain methods that growth investors use, they cannot apply them to all industries.

You would, therefore, have to take into consideration the past performance of a company. In addition to that, you would also have to evaluate the industry’s performance as well. Because there is no “one size fits all” solution, it is vital to have at least a framework for your analysis.

You can trade growth stocks anywhere, but the best ones are usually in the fastest-growing industries. Here are a few factors you should consider and include in your own strategies:

Look for healthy historical growth. Before you select your stocks, make sure that the company has a decent track record. They should have had a steady earnings growth during the last five to ten years. However, bear in mind that the minimum of growth depends on the size of the company. If a company is worth more than $4 billion, look for at least 5%. However, if the value is under $400 million, the growth should be 12%. If they grew in the past years, there is a higher chance of them continuing to prosper.

  • Check their forward earnings growth. Companies use an official public statement to announce how much they have profited in a specific period. However, the part you should also be interested in is the earnings estimate. That determines whether or not the company will continue to grow.


  • Find strong profit margins. It is essential to evaluate the pretax profit margin before you invest in growth stocks. This metric will allow you to see if the company controls their costs and revenues well. If they exceed their previous five-year average, then they might be an excellent growth candidate.


  • Look for a fantastic return on equity. ROE evaluates the profitability, and it reveals how much profit the company is making. If the company’s five-year average ROE stays stable, or it increases, then that company is doing a good job.

  • Stable stock performance. If you cannot see the stock doubling in five years, then it probably isn’t material worthy of growth investing. Remember that the price would double at a growth rate of 10% in just seven years. Therefore, if you invest in a young company that has significant growth potential, their stocks must double at a rate of 15% in five years. Although it might seem challenging, this is entirely possible if you pick an excellent up-and-coming company.


5 Tips for Part-Time Stock Traders


You want to reach your trading goals and boost your portfolio quickly? Just follow these 5 clever tips that we got from pro traders who have been researching strategies and trading for years.

When someone who has decades of success and experience behind them, you can’t argue with that. These are some pro tips that most successful traders swear by.

1. Develop your “go to” moves

You know that every good athlete has a signature move, and it’s no different when it comes to trading. The very best traders rely heavily on their bread and butter strategies when they want to maximize profit potential. Post earning trades, break out pullback, and trend pullback are among the most popular. You need to master strategies you choose so well, that you know them like the back of your hand. Don’t try to be a jack of all trades, because that will make you the master of none. Choose a few strategies that suit you, focus on them. Don’t let every trend sweep you. Stand your ground, and in time, it will all pay off.

2. Reach profits with swing trade

This means that you will hold stocks for a few days or a few months depending on your strategies and the market. Sure, there are many strategies, but most people look to recognize and capture a “sweet spot” of a trending stock. This is perfect for part-timers, as your goal won’t be precise entry or exit, and you won’t have to look at the ticker all the time.

3. Recognize entry points as well as the exit ones of your main watchlist stocks

When you’re choosing stocks for this watchlist, note down prices that would make you enter those stocks. Also, write down expected stop-out and target prices. Base all of this on your go-to strategies. Consider the amount you’re ready to lose, and target that as your stop-out level. Traders are usually looking for this level to at the very minimum be equal their target level. That means that you don’t risk more than 0.5-4.5% of your portfolio.

4. Have a strong watchlist

Believe it or not, the key to successful part-time trade is a strong, well developed watchlist. Every night, choose 15-20 primary watchlist stocks, stocks that will get the most of your attention the following day. Those stocks should be refined from your main focus list. You will develop that list over time organically, by choosing stock based on your go-to strategies.

5. Make your stop and target levels do your work for you

Once you enter a trade, you’ll be tempted to constantly watch what’s going on. This isn’t the best thing for you, as it can make you over trade, and that can be bad if you’re a swing trader and you want to hit the sweet spot. That’s why part-time traders need to shut down the feed once they make the trade. You did your research of your positions, you set your stop and target levels. Now, it’s time to trust yourself and let the analysis you did work for you. Once you analyzed the risk, and you placed a stop loss order, the chance that your portfolio will suffer a significant loss is minimal. Don’t fret. Lay back, and let it all play out. Or, even better, focus on that full time job of yours!



Maybe these tips don’t seem like much, but, if you follow them, they will work miracles for your development as a part-time trader, your portfolio, and your capability to manage stress and time.


Consider, focus, and start following these – you’ll see improvement quickly!



A Brief History of the S&P 500


If you are a trader, or just have an interest in the stock market, you probably already know what S&P 500 is. However, not many know the history of it. So, if you want to know more, read on.

What is S&P 500

The S&P 500 found its beginnings in 1957 when Standard & Poor’s decided to introduce a market index that will be used to track the value of the largest corporations that were listed on the NY Stock Exchange and the NASDAQ Composite. It represents the composition of the general economy. The exact combination and priorities of certain constituencies changes as it follows the economy. As the time passes, some stocks find their way onto the list, while others fall off.

A lot of people consider this index to be the most important indicator for the US economy. In essence, becoming the bellwether of it. Also, a lot of investors who aim for exposure to the US via index funds will use it. Ever since its beginnings, the performance of S&P 500 has been remarkable. It usually outpaces every other major asset class.

Stock Movement

The steady increase in the price of S&P 500 always went hand-in-hand with the economic growth of the US. Looking into the price movements of S&P 500 will also give you an insight into turbulent periods. You can simply look for price swings. And, the long-term charts will allow you to check emotional highs of investors.

When this index opened in 1957, it was valued at 386.36. However, in the first decade, it came up all the way to 700. However, this was mostly due to the boom following the World War II. And, after that, it was on a steady decline. It took over two decades to rise back up to that level. In fact, from 1969 to 1981, it fell below 300. This period was also not very good for the economy in general. The growth was stagnant while the inflation was very high.

It took some time, but the Federal Reserve found success in reducing the pressure by early eighties. It was done through high interest rates. These rates were one of the bigger contributors to the rising market until the year 2000, when S&P 500 rose by 1,350%.The fact that the inflation rates went down meant that interest rates went down too. That, and other tailwinds helped the bull market a lot. This lead to billions of people all over the world experiencing globalization and entering the middle class.

However, overvaluations, emotional decisions and enthusiasm of the public lead to a creation of a market bubble. Not to mention the amount of speculations regarding high-tech sector as the Internet became popular. As you can imagine, the bubble did burst during the early 2000s. And, while NASDAQ fell to almost only 10% of its value, the S&P 500 fell to 60%. It took it five years to recover and reach new heights. Thanks mostly to the new strength in financial stocks, housing, and commodity stocks.

Unfortunately, a lot of the gains fell back as the housing prices went down. This even lead to debt defaults and ripple effects in the entire financial system. At that time, the general public started avoiding the market in general. The S&P 500 fell to the new bottom by March 2009. However, the year 2009 was a brand new turning point for S&P 500. Much like in the early eighties, it has climbed. Right now, the S&P 500 is at a new all-time high as it rose over 250% since 2009.


Stock-Picking and Technical Analysis: Basic Facts

When developing a stock-picking strategy, it’s vital to define the type of analysis. There are two types you can choose from: fundamental and technical.

Fundamentalists estimate the intrinsic value of a security, and there are more patience and monitoring involved. In contrast, technicians use indicators and chart patterns to predict future price moves. By using these tools, they can determine which strengths and weakness the stocks have.

Does it work?

Many experts claim that technical analysis does work – if you do it correctly. The idea is to see how the prices move on the market when they’re shaped by external factors. Those can be natural disasters, and even political events. Because of that, the prices are bound to change and show up in the results, and they can only go up or down.

Technical analysts believe that this method works because market prices always reflect certain information. In addition to that, trends influence their movement. Lastly, history tends to repeat itself, so there is a pattern they can follow.

Still, you can analyze the historical market action, but the analysis needs to be high-quality. Furthermore, the investor has to be able to respond to the results. The profitability depends on his abilities and the tools he uses while doing the analysis. Therefore, he must be agile and responsive so that he could make money.


Who can use it?

Anyone with a basic knowledge of price charts can do technical analysis. It’s even better if they use an online or mobile platform. However, it’s not usually the first choice for buy-and-hold investors. They prefer fundamental analysis, whereas active traders depend on the technical one. They aim to take advantage of the fluctuations, no matter if the market is rising or falling.

What are they interested in?

The main difference between the fundamental and technical analysts is the fact that the latter doesn’t care about the intrinsic value. Instead, they look at past data trends. In addition to that, they also do not care about business models or management. Hence, they sometimes make a huge profit by trading companies they know nothing about.

Is this a long-term strategy?

The purpose of this analysis is to benefit from the fluctuations. If a technician sees that his stocks are not doing so well, he will waste no time to exit his position. Usually, they use stop-loss orders to minimize their losses.

Depending on the direction and the information he’s getting, he can either go short or long on a stock.

In contrast, a value investor has to practice patience and wait for improvements on the market.

Supply and Demand

One of the most important concepts regarding this analysis is the movement of supply and demand. It’s shown through support and resistance.

By using these concepts, they can determine points where a trend may chance. It could go both ways – either pause or reverse itself.

Therefore, analysts will know whether or not there will be an opportunity to trade. If the price reaches a certain point (support or resistance), then there are two possible scenarios. Either the price will bounce back, or it will push through and continue advancing.

Whichever the case, investors can place a bet on the direction they think it will go. If they fail to predict it correctly, they can exit their position with a small loss. However, if they’re correct, the move might be substantial.


They can choose a public domain indicator or a commercially available tool. However, there are four basic types: trend, momentum, volatility, and volume indicators.

In addition to that, they can use a stock chart to monitor the price movement. That way, if the price goes above its 200-day average, they can quickly respond to it.

Also, they can also use a stock screener to search for financial instruments. The stock screener shows data and price patterns, and it’s based on metrics that were defined by its users.

By using this tool, technicians can input conditions which they would like their stocks to have. For example, they could search for strong volume gainers and high average crossovers.