Trading is a process whereby the selection of stocks and the timing of entry and exit aims to achieve a superior return over the more traditional buy and hold philosophy.

There are two methods an investor can use – Fundamental and Technical analysis. Fundamental analysis is a process of what should occur to the share price. Technical analysis is a process of what is occurring to the share price.

Fundamental analysis – Fundamental analysis relates to the fundamentals of the company. These are the performance figures and include everything from company reports to news releases. Put simply, a fundamental analyst examines factors such as earnings history and key financial ratios, then attempts to calculate the future value of a share for comparison with the current market price. The objective is to identify shares undervalued in the market, and this takes time, skill and effort. Additionally, there are around 1500 companies on which you could perform this time consuming analysis. Such analysis is most commonly associated with a long-term buy and hold strategy from institutional investors.

Technical Analysis - Every day, five pieces of information are regularly published about a company on the share market. These are volume of shares traded, open price, highest price paid during the day, lowest price during the day, and closing price. Within the price/volume data there is a wealth of trend information that reflects how a company is performing.

To illustrate this, if the closing share price for a company over a series of week was $1.00, $0.90, $0.70, $0.60 and $0.40, you would conclude the company is in significant trouble. You would make this assessment simply by noting the adverse trend in price. This process is technical analysis or charting, and is the focus of IntegraStock.

Critics frequently have the misconception that technical analysis uses historical price and volume data to predict future price movement. There is no prediction, just probability and confirmation. Purchasing a stock is a process of confirming an uptrend and the probability that the trend will continue. Equally, selling is a process of confirming the end of a trend or the start of a downtrend.

Technical analysis is attracting an increased following with the rapid development of computer technology. Ten years ago, drawing charts was done by hand or with the aid of a very slow computer. With enhanced speed and ease of data processing, it has brought decision making tools within the reach of every day investors.
Regardless of how you select a stock, the end process for fundamental and technical traders is the same. That is to provide a short list of stocks to apply a trading plan to. The trading plan contains the procedures that you will follow rigorously to make buy and sell decisions, and is a vital part of successful trading.