Basics of Stock Analysis

To summarize, Stock price is driven by demand and supply in the market. When there are more buyers for a stock than sellers, the price goes high and when there are more people selling a stock than the number of buyers the price goes down. A stock that is traded very often will see its price change frequently. There are two types of stock analysis – Fundamental and technical. Fundamental analysis of a stock is done based on the actual performance metrics of the company. This involves scrutinizing the cash flow, balance sheets, profit-loss statements, company reports etc. to determine how much a company is worth and if a company is over or under priced. Technical Analysis involves looking at how the stock of the company has performed in the secondary market. Technical analysis uses charts such as Bar, Line or Candlestick charts to analyze stock performance and used theories to determine if a stock price will move up or down.