How to choose the perfect stock market course?
Choosing the right stock market course is an important decision. There are a few providers of stock market courses some are free and some can be very expensive. Understanding what you will be getting is very critical so you do not part with your hard earned money and realize that what you purchased does not meet your needs.
When looking for stock market courses you need to make sure that the training:
- Is designed to meet your needs – Day Trading or Investing Training
- Offers a rich learning experience – Video Lessons or In person Training
- Covers Technical Analysis – How to use Stock Charts and Indicators
- Covers Fundamental Analysis – Analysis of Profit and Loss Statements, Cash FLow Statements and the Balance Sheet
- Shows you how to create your own system – how to approach the market with your own strategy
- Has a good no quibbles money back guarantee for at least 60 days, so you can get a refund if it does not suit you
Typically most training courses available focus on Technical Analysis, this can be a problem, because you need to understand is the stock you are buying is currently over valued or undervalued by the market. Your training course has to tech Technical Analysis and Fundamental Analysis.
What is Technical Analysis?
Technical Analysis is the study of supply and demand in the stock market, by comparing the history of stock price movements and volume (the number of shares traded). Understanding the way the price moves in relation to the Open, High, Low and Closing Prices on a given minute, hour, day, week or month and comparing that to the volume can give an insight into future market direction. The data required is usually displayed in a Stock Chart so it is easily consumed.
The science / art of technical analysis usually falls into different areas of study:
- Supply & Demand – Stock Price Movement vs Volume
- Trend Following – understanding what trends are
- Waves & Cycle Analysis – understanding how markets move
- Stock Charts – Price – plotting price in charts to understand the history of the Stock, Share or Market Index using Bars, Candlesticks or Point and Figure Charting.
- Trend Interpretation – Drawing Trend Lines – Support and Resistance Lines
- Price Indicators – the study of price based chart indicators or Oscillators know as Stochastics,”Relative Strength Index” (RSI), “Rate of Change” (ROC), “Moving Averages” (MA), “Moving Average Convergence Divergence” (MACD), Parabolic SAR, ADX Average Direction Movement Index.
- Study of Volume – understanding how the level of volume has a relationship with price – and how price has a relationship with volume.
- Study of Price Volume Indicators – “On Balance Volume” (OBV), Chaikins Money Flow, “Time Segmented Volume” (TSV), MoneyStream.
- Market Sentiment – understanding the madness of crowds
What are the Positives Of Technical Analysis Courses?
If taught correctly they can help your understand one side of the stock market equation. This is the “effect” part of the cause and effect equation. Technical Analysis Studies:
- the What – What has just happened
- the Effect – Not the cause
- the Market Action – what is happening “real time” at the moment
- the Price
- the trends
What is Fundamental Analysis?
Fundamental Analysis is what Warren Buffet has used so effectively over the last five decades to make himself a billionaire. The effective analysis of company accounts in the form of the annual reports it critical here. Any good stock market course should cover at a minimum the following topics:
- Company Accounts
- The Income Statement
- The Balance Sheet
- The Cash Flow Statement
- Earning per Share
- The Price Earnings Ratio
- Book Value, Price to Book
The Liberated Stock Trader provides an excellent short course covering Fundamental Analysis here. http://www.liberatedstocktrader.com/upgrade
Of course this is all covered in depth with videos and books in the Liberated Stock Trader Pro Training here. http://www.liberatedstocktrader.com/pro
Where do most Stock Market Training Courses fail?
Most stock market training courses focus exclusively on Technical Analysis, this can be misleading. I support technical analysis and am myself a Certified Technical Analyst, however having only an understanding of technical analysis can cause problems for the trader or investor. The main issues are:
- No grasp of economics – no understanding of basic economic facts of life can cause an investor to be trading in a business or economic climate that is fundamentally bad, reducing any probability of success.
- No grasp of company fundamentals – trading a stock that is on the edge of financial suicide reduces the odds of success of you are buying long. Of course if you are shorting a stock you also need to be able to understand the financial situation of a company.
Many stock market technical analysis courses also do not cover vitally important questions such as:
- Economic Health & the Business Climate
- Company Fundamental Analysis
- Risk Management
- Portfolio Management
- Tracking Trades
- Creating a system
Also most stock market training is extremely expensive, usually $2000 + for a weekend seminar.
Stock Market Education Summary
Now you know what to look for when deciding on an stock market education provider. Ensure the Technical & Fundamental Analysis is there, combined with a splash of economics and a good dose of Money Management, Risk Management and Psychology / Mindset.