The price of every stock or financial product fluctuates over time, and no matter how strong a stock is or how solid its fundamentals, you can only make money when the stock goes up in price relative to where you bought it. That’s why it’s so important to read the market accurately and buy stocks at the right time.

The goal for any investor is to buy a stock just before it makes a big move, and sell it just before it starts to decline. The question is how do you do it?

For starters, you want to look at the big players on the financial landscape, like banks and financial institutions.

These are the organizations who determine the direction of a stock more than any other. If they start to buy a certain stock in large numbers, chances are other investors will follow suit, leading to a rise in value. And if they start to dump a stock, then other shareholders will likely do the same, causing a decrease in value.

By keeping a close eye on what these institutions are doing, you’ll be able to spot shifts in the market before they happen.

This study of market behavior is known as behavioural analysis and encompasses three main schools of thought: classical technical analysis, indicator-based technical analysis, and price action and volume analysis.

Classical technical analysis is all about reading charts. The goal is to identify the trend lines of a particular stock and pinpoint the support and resistance zones, where buying and selling usually takes place.

Classical technical analysis also includes pattern recognition techniques, used to identify shapes on the chart which have a certain predictive value.

Then, there’s indicator based technical analysis in which you take price and volume data and plug it into a mathematical formula to figure out when to buy or sell. Unfortunately, most indicator signals tend to be lagging, which can result in misleading or inaccurate analysis.

Finally, there’s price action and volume analysis, in which a trader leverages their deep understanding of market movements to interpret price and volume data directly. It’s the methodology that most professional traders use as it allows faster, more accurate predictions.

Those are the basics.

Over the next few videos, we’ll dive a little deeper and teach you how to identify market trends and most importantly how to pinpoint the right time to buy and sell.

If you really want to know how a company is doing, you need to read their financial statements. It’s the fastest and most reliable way to know if a company is doing well or struggling to survive.

There are three different kinds of financial statements: the balance sheet, the income statement and the cash flow statement. First, let’s start with the balance sheet. This summarizes a company’s assets, liabilities and equity at a specific time.

Assets are broken down into two categories: current assets which include cash and highly liquid investment securities, and non-current assets which include any property buildings plants equipment & company software. Next, are the company’s liabilities which are also broken down into two categories: current liabilities which include bank loans accounts payable and other payables like payroll and accrued expenses and non-current liabilities which include any long-term loans or financial obligations. If you subtract the total liabilities from the total assets, you get the total shareholders equity.

Now, let’s move to the company’s income statement. This measures how much profit or loss the company has made over a specific period of time, which is why it’s also referred to as a P&L statement. First, you have revenue which is the amount of money the company makes by selling products or providing services.

Next, come cogs or cost of goods sold which is the amount spent producing or acquiring the products or services, including material and labor costs, subtract cogs from revenue and you’ve got gross profit. Then, come the operating expenses which include day-to-day things like marketing costs, indirect labor costs and so on, subtract that from gross profit and you’ve got operating income. Next, take that number and subtract all other miscellaneous expenses and you’ve got the company’s profit before taxes, subtract the taxes and you’ve got the net profit.

And that leads us to the third financial statement, the cash flow statement. This measures how much cash flows in and out of a company over a specific period because a company’s revenue and expenses can be delayed or deferred. This shows the actual cash flowing in and out of the company. First, you add together the cash flows from all operating activities including profit before taxes, trade and other receivables, and trade and other payables then you add the cash flows from investment activities along with the cash from financing activities. You then, compare the cash at the beginning of the financial year to the cash at the end, to determine if the company had a positive or negative cash flow and that’s how you read a company’s financial statements.

In our next video we’ll go even further and learn what these numbers actually mean.