Understanding the stock market for beginners can seem difficult at first, particularly if you start looking at a lot of information all at once. To help you, the fundamental stock market trends are explained below in detail.
Fundamental Analysis
Fundamental is the term given to economic information. It is a broad group of news and information that will reflect what is happening in the stock market. It assesses macroeconomic, microeconomic, and political forces in the USA that can drive stock market trends to continue or change.
Economic Data Reports
Economic data reports are just the beginning. Several data reports come out on a monthly basis including employment numbers, GDP, company growth reports, and national debt reports. How the market views the information released is shown in the confidence or fear of traders. If a report is negative, such as unemployment numbers increasing, traders may remove their investment or hesitate to invest in the stock market. On the other hand, positive news can drive more investors to feel confident about the market and invest.
Interest Rates Relating to Stocks
There are many similarities to different types of investing from equities to currency trading when it comes to stock market trends. Interest rates are a driving force in the entire stock market including currency trading. It is due to the same confidence and fear investors may feel. In 2008 and throughout the recession, the base interest rate was dropped. It was used to re-establish stability. Now that stability has returned to the nation and the recession is over, the interest rate will slowly start to climb. It is seen as a positive note and invites investors back into the market. As a trader, we capitalize on the psychology of buyers and sellers and either buy or short-sell stocks depending on Technical Analysis.
National Trade and Investment Flows
The stock market is grounded in national companies for the most part. The NASDAQ stocks allow you to trade on companies you know, but how do they stack up against international trade and investment flows? Are companies in the US becoming financially stronger or weakening? Are there certain industries where there is strength versus weakness? These are questions to ask as you examine national and even international trade to determine if a company will firmly remain on a good trend if you are paying attention to Fundamental Analysis.
Profit can only be amassed when the trends are read correctly based on the fundamentals above. It will take time and this stock market for beginners guide only touched on the surface of what you need to know. See more here- http://www.alphatrends.net