HOW TO EVALUATE STOCKS: AN INVESTOR’S GUIDE

Courtesy of AskTraders

Stock evaluation is one of the most essential aspects of trading and investments. Many people who trade on the stock market prefer to trade in stocks because they are by far the simplest investment vehicles to understand and are also less volatile, making them good for long term investments. Their risk levels can also be diversified across industry lines, among other factors. One of the reasons stocks, or shares, are so popular is because they are straightforward in the way their values are determined.This stock evaluation guide will cover the following elements of how to evaluate stocks:
 
  • - Understanding what stock evaluation is
  • - The four ways to evaluate a stock
  • - What the value of the stock signals to the market
  • - Factors and elements to look out for when investing in a stock
  • Before you can venture into all the techniques and methods available for stock trading, you need to first familiarise yourself with the concept of stock evaluation. As mentioned above, a stock is an investment vehicle available for trade on the stock exchange. Companies list their stocks on various stock exchanges at an initial price per stock referred to as an initial public offering (IPO). Although the company lists an initial price per stock, the market itself starts to value the share based on a number of factors, the most prominent being company perceived performance.

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