If you are looking to really learn how the stock market works, then you are probably looking around for a Stock Market Training Course. There are many training courses out there, but there are a few things you need to know before selecting the right one for you.
Most training courses available focus on Technical 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 or art of technical analysis usually falls into different areas of study:
- Supply & Demand – Stock Price Movement vs Volume
- Trend Following – understanding what trends are, will they continue or will they change direction
- 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
All of these elements of Technical Analysis are viewed using stock charts. It is very visual and it is aimed at interpreting and predicting the future movements of stock price.
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 Courses Cover:
- the What – What has just happened in the market
- the Effect – What will be the effect of what just happened
- the Market Action – what is happening “real time” at the moment (strength of buying and selling)
- the Price – what direction will it go, up or down
- the trends – will it continue in this direction
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 with IFTA, 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. If the business climate is bad most stocks will fall so the probability of catching a rising stock to make a profit is low. You would need to adapt your strategy based on the economic and business situation.
- No grasp of company fundamentals – trading the stock in a company that is on the edge of financial suicide reduces the odds of success if you are buying long (to make a profit if the stock goes up). Of course, if you are shorting a stock you also need to be able to understand the financial situation of a company.
- Too Expensive. Many Stock Market Courses cost more that $1,000 or even $4,000 for 2 to 4 days of training. It need not be so expensive but it is considered a premium area of knowledge. The Liberated Stock Trader Pro Training is extremely cost effective and allows you to study and restudy at your own speed you full instructor led video training and a print book to back it all up. If also covers all the important topics that a certified stock market analyst needs to know.
Many stock market technical analysis courses also do not cover vitally important questions such as:
- Economic Health & the Business Climate – this determines your investing strategy, buy & hold, short term trades, selling short or investing in cyclical stocks
- Company Fundamental Analysis – how to determine if a company is financially fit and healthy and worth an investment
- Risk Management – there are special techniques to risk management, cutting losses, how many stocks to invest in, how long to hold, when to buy
- Portfolio Management – How many stocks should you own to be diversified enough, what industries do you invest in, what Exchange Traded funds do you invest in.
- Tracking Trades – how often should you check your stocks, hours, daily, weekly, keeping a detailed log. how should you track your trades, why did you buy them, how many stocks did you buy, why did you exit the stock. This enables your continual learning
- Creating a system – very important. What are the criteria you use to screen for stocks. Do you select companies with strong EPS (earnings per share) growth and a low P/E (price earnings ratio) meaning they are fast growing and undervalued. Or, do you go with stocks that are technically strong on the chart, displaying strong short term buying for a quick trade. Which indicators suit your system the best?
- Psychology – how do you handle the trade. When you have invested your money in a stock the game changes from passively watching, to being actively involved. Your investment win / loss moves up and down. When it lurches down you feel negative, when it moves up you feel like a hero. You need to be able to understand these emotions or they may cloud your judgement. Establishing under what circumstances you will sell the stock, before you even buy the stock, will help considerably towards removing some emotion form the trade.
Stock Market Training 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.
Next Steps – Keep Reading for further great information.
Take a Tour of our Liberated Stock Trader PRO Technical Analysis & Fundamentals Training
This video will give you an idea of what to look for in a good training course.
Read the following excerpts from Chapters of the Liberated Stock Trader PRO Book
These excerpts are from the Pro Training Book and covered in our videos also. The should give you an idea of the quality of content and lessons you should expect from a good stock market training.
This chapter sets the stage for the two key areas of stock market technical analysis and the fundamental analysis of companies including macro and micro economics
This chapter looks at what REALLY makes the markets move, what causes boom and bust cycles and how to spot them.
What are stock market cycles and the cycles of business and economies. Important information that you need to appreciate as part of your core analysis.
Next we move into fundamental analysis and the financial fitness of a company. All the major indicators and measures are covered.
Stock screening means using criteria to short list the kind of stock that you want to purchase. A vital part of any stock market training
Once you know the business climate, the state of the economy and you have shortlisted the stocks you want to buy. The next thing to do is the technical analysis. Even if the company looks great on paper, if the stock price is plummeting you do not want to buy it until it has bottomed out. This is called catching a falling knife. This is what chart patterns and technical analysis helps with.
Here we get into the art of drawing on charts to help you visualize the Supply and Demand on the stock, the direction of the trend and estimate how long the trend will last. Vital for you to establish buy and sell signals.
Which indicators should you use, there are literally hundreds of stock chart indicators. Each have a specific use case and application, which should you use?
Volume is a vital indicator along with price. Both of these you need to understand in granular detail, you will learn everything you need to know.
Moving to advanced technical analysis we cover indicators such as parabolic SAR and point & figure charts.
How are the market participants feeling? Positive, Negative or indifferent. Consider that 90% of people fail to beat the average market returns, sentiment indicators can be a great contrary indicator. Lean how to use them to your advantage.
Understanding how you want to invest, how much time you have and your time horizon. These questions all help you to understand what type of investor you want to be, this then enables you to select the right strategy for you. Then we move on to building your stock investing system, a critical element to your plan.