Stock Picking (Fundamental & Technical Analysis) Flashcards
What is fundamental analysis in stock picking?
Fundamental analysis involves evaluating a company’s financial health and economic factors, such as revenue, earnings, P/E ratio, and industry conditions.
Which financial metric is often used in fundamental analysis?
The P/E ratio (Price-to-Earnings ratio) is a key metric, showing how much investors are willing to pay for each dollar of earnings.
What is technical analysis in stock picking?
Technical analysis involves analyzing historical price movements and chart patterns to forecast future price action.
Which tool is commonly used in technical analysis?
Moving averages (e.g., 50-day and 200-day) help identify trends in price direction over time.
What is a key chart pattern to look for in technical analysis?
A head and shoulders pattern signals a potential reversal of the current trend.
How does the RSI (Relative Strength Index) help with stock trading?
RSI measures whether a stock is overbought (above 70) or oversold (below 30), helping traders identify potential buy or sell signals.
How does momentum trading work?
Momentum traders buy stocks that are trending up and sell stocks that are trending down, based on the idea that trends continue for a while.
What does a moving average tell you in technical analysis?
A moving average smooths out price data to show the trend direction and can help identify potential buy or sell signals.
How does swing trading work?
Swing trading involves holding stocks for a few days or weeks to capitalize on short-term price movements or trends.
How does day trading work?
Day trading involves buying and selling stocks within the same trading day, capitalizing on small price movements throughout the day.
What is position trading?
Position trading is a long-term strategy where you hold positions for weeks, months, or even years based on fundamentals.
