What and When to Buy
A recent poll conducted by Brokerchoice asked investors which services and tools offered by online brokers required greater instruction in their use. Investors were most interested in instruction in the use of technical analysis (use of charts) and research, or put another way, how to find out what to trade and when.
Technical analysis refers to the use of charts to pick trends in a share price based upon price and volume indicators. Those who use technical analysis believe that these indicators can alert the user to increasing momentum in a stock or declining support levels and therefore indicate the appropriate time to enter or exit a stock.
Research, or fundamental analysis, allows the investor to compare company data such as earnings per share and comparative industry statistics which helps the investor decide whether or not a stock is competitively priced.
Technical analysis and research and now offered in varying degrees by all online brokers. Once these were only available to clients of full service brokers and institutional investors. Our poll would indicate that retail investors are having difficulties in applying these tools to their portfolios and investment decisions and hence require greater instruction in their use.