If you are looking to really learn how the stock market works, then you are probably looking around for a Stock Market Training Course. There are many training courses out there, but there are a few things you need to know before selecting the right one for you.
Most training courses available focus on Technical Analysis.
What is Technical Analysis? Technical Analysis is the study of supply and demand in the stock market, by comparing the history of stock price movements and volume (the number of shares traded). Understanding the way the price moves in relation to the Open, High, Low and Closing Prices on a given minute, hour, day, week or month and comparing that to the volume can give an insight into future market direction. The data required is usually displayed in a Stock Chart so it is easily consumed.
The science / art of technical analysis usually falls into different areas of study:
- Supply & Demand – Stock Price Movement vs Volume
- Trend Following – understanding what trends are
- Waves & Cycle Analysis – understanding how markets move, the Business Cycles, Seasonal Cycles, Fibonacci Waves.
- Stock Charts – Price – plotting price in charts to understand the history of the Stock, Share or Market Index using Bars, Candlesticks or Point and Figure Charting.
- Trend Interpretation – Drawing Trend Lines – Support and Resistance Lines
- Price Indicators – the study of price based chart indicators or Oscillators know as Stochastics,”Relative Strength Index” (RSI), “Rate of Change” (ROC), “Moving Averages” (MA), “Moving Average Convergence Divergence” (MACD), Parabolic SAR, ADX Average Direction Movement Index.
- Study of Volume – understanding how the level of volume has a relationship with price – and how price has a relationship with volume.
- Study of Price Volume Indicators – “On Balance Volume” (OBV), Chaikins Money Flow, “Time Segmented Volume” (TSV), MoneyStream.
- Market Sentiment – understanding the madness of crowds
What are the Positives Of Technical Analysis Courses If taught correctly they can help your understand one side of the stock market equation. This is the “effect” part of the cause and effect equation. Technical Analysis Studies:
- the What – What has just happened
- the Effect – Not the cause
- the Market Action – what is happening “real time” at the moment
- the Price
- the trends
Where do most Stock Market Training Courses fail. Most stock market training courses focus exclusively on Technical Analysis, this can be misleading. I support technical analysis and am myself a Certified Technical Analyst, however having only an understanding of technical analysis can cause problems for the trader or investor. The main issues are:
- No grasp of economics – no understanding of basic economic facts of life can cause an investor to be trading in a business or economic climate that is fundamentally bad, reducing any probability of success.
- No grasp of company fundamentals – trading a stock that is on the edge of financial suicide reduces the odds of success of you are buying long. Of course if you are shorting a stock you also need to be able to understand the financial situation of a company.
Many stock market technical analysis courses also do not cover vitally important questions such as:
- Economic Health & the Business Climate
- Company Fundamental Analysis
- Risk Management
- Portfolio Management
- Tracking Trades
- Creating a system
Also most stock market training is extremely expensive, usually $2000 + for a weekend seminar.
Stock Market Training Summary Now you know what to look for when deciding on an stock market education provider. Ensure that Technical and Fundamental Analysis is included, combined with a splash of economics and a good dose of Money Management, Risk Management and Psychology / Mindset. Also ensure is has a lot of hands on practical examples and teaches YOU how to build YOUR OWN stock trading system.