Until recently, investing in the stock market was not something “average” people did to increase their wealth and savings. Investing in stocks was something only the very wealthy could afford to do. Investment firms and stockbrokers charged high fees and commissions, draining modest accounts of any profits. With the introduction of online trading platforms and discount brokerage forms, as well as the wide variety of financial information available online and on television and the radio, anyone with some money can invest in stocks, bonds, and mutual funds. While many investors utilize and leverage the information and analysis available when they invest with a full service brokerage form, many investors opt for a less expensive alternative; and, with the some basic information, they can be just as successful as the professionals.
First, you need to understand that a stock represents your share in the ownership of the company and it is your claim on any future earnings and dividends. Buying stock in a company shows that you are interested in its long-term success. Profits are eventually paid out in dividends, and the more stock you own, the more dividends you receive. Choosing a successful stock means that an investor should have a basic understanding of basic business principles and models.
Investors should pay attention to earning statements, sales numbers, debt, and equity, and be familiar with annual reports, quarterly reports filed with the Securities and Exchange Commission (SEC) and any third party publications like the Wall Street Journal. There are a number of sites dedicated offer research analysis and other important data on the major market exchanges. They can provide important details from any of the markets as well.
What exactly is a stock chart?
Before we proceed, let’s quickly take a look at what a stock chart is. Then you will be able to proceed without having any doubts or second thoughts in your mind. Most of the people prefer to take a look at Google Finance, so that they can quickly get an understanding about stock information. Back in the day, they used to refer Yahoo Finance. However, Google Finance has been able to catch up the audience due to the presence of a slicker interface.
Now let’s take a look at an ordinary stock chart. You can head on to Google Finance and select Apple for the training as an example. In case if you don’t know, you need to understand that the series of letters, which are being used after the company name is identified as the ticker symbol. It provides a clear identification of the company in stock exchange. The ticker symbol for Apple is AAPL. You can simply begin by searching for it. Then you can click on the button that you can see on your screen. Then you will be able to see a comprehensive chart on the screen.
In here, you are provided with the opportunity to filter out the years. For your convenience, it is recommended to filter out only the previous 10 years. Then you will be able to get hold of important information in a convenient manner. Once you do it, you will be taking a look at the last 10 years of Apple stock.
With that in mind, let’s deep dive and take a look at how you can proceed with reading the stock quotes.
Once you have decided to invest, you should understand how to read a stock quote, so you can make informed decisions about buying or selling your stock. The price of any stock is quoted on an exchange (like the New York Stock Exchange or the Japanese Nikkei). A basic quote for a stock provides information about the stock’s activity, like bid price, ask price, last traded price, and volume traded.
Many online sites provide more detailed information about the stock. This information helps the investor see a bigger picture.
• 52 Week High and Low: The highest and lowest price at which the stock has traded over the past year. These are the first two columns in a stock quote, and generally don’t include the previous day’s trading.
• The third column indicates whether the stock is general or preferred stock.
• The Ticker symbol is identified in the fourth column.
• Column 5 notes the dividend paid per share. If the column is blank, the company is or does not pay dividends. This information is followed by the dividend yield, the percentage return on the dividend.
• Price to Earnings Ratio (P:E) is an important figure for investors. It represents the stock prices divided by the earnings per share and a healthy P:E represents a solid company.
• The trading volume shows the number of shares traded for the day.
• The Daily High and Low identifies the highest and lowest prices paid during that trading session.
• Column 11 shows the price at which the stock closed for the day. If the closing price is up or down by 5% or more, the closing price will be bolded.
• The net change shows the dollar value change in the stock price from the previous day’s price.
Before executing a trade, it is important to get a real time stock quote. Most free financial sites and online resources provide a delayed stock quote, which may be as old as 20 minutes. Brokers have access to real time quotes, as do investors who subscribe sites with members’ only areas.
Now you are aware about the basics of reading a stock quote. You can keep these basic tips in your mind and then proceed. It is recommended for you to master these basics, before you proceed with the advanced concepts. Then you will find it as an easy task to catch up learning with minimum hassle. You should also understand that the past performance is not related to the future indications that are linked with the price. You can never predict the future and it is up to you to act wise.