- PPF Points
- 10,072
The rule followed by all investors in all markets worldwide is that they are looking to earn money. However, if they closely analyse and assess the movement of the foreign exchange market or the stock market, they would discover that the nature of the investments being made in these markets, and the nature of the money being placed, is similar to an activity that is well known for either providing heavy losses or enormous profits. This activity is gambling.
Businessmen who gamble for too long often find that they have run out of luck, and this loss of luck eventually leaves them on the streets after they lose everything. This is because gambling is an extremely high risk activity, and is partly based on luck. The high risk nature of this activity can result in profit if the gambler has good luck. However, the balance of probability states that the gambler’s luck will eventually run out, and when the gambler’s luck runs out, he will find that he has lost everything that he had previously earned.
Hence, the smart businessman does not gamble often, and definitely never gambles with everything that he owns. Businessmen who become rich and remain rich usually take a more analytical approach to their investments, especially when these investments are applied in volatile markets such as the stock or foreign exchange market.
In order to minimize risk, businessmen employ analysis techniques so that they can gather information to assist them in making investments that would be profitable.
There are two main analysis techniques that are implemented by traders:
1) The first analysis technique is called technical analysis. Technical analysis involves the studying of past trends in order to ascertain patterns. If the market that you are trading in seems like it is following a previous market trend, the trader can act based on this trend. If there is a pattern, technical analysis usually provides a safe prediction of how the market will behave in the future, and the use of this analysis technique can help investors and traders make sound financial investments in the markets.
2) The second analysis technique is called fundamental analysis. Fundamental analysis involves studying the statements and financial dealings of the business in order to determine the amount of assets, liabilities and earnings, as well as the statements and financial dealings of competitors and an in depth analysis of the market’s current status. All this information can give a trader an idea of which businesses may be making a profit in the future, and knowledge regarding future profitability of businesses can allow the trader or investor to make a healthy investment or purchase and earn a profit.
Businessmen who gamble for too long often find that they have run out of luck, and this loss of luck eventually leaves them on the streets after they lose everything. This is because gambling is an extremely high risk activity, and is partly based on luck. The high risk nature of this activity can result in profit if the gambler has good luck. However, the balance of probability states that the gambler’s luck will eventually run out, and when the gambler’s luck runs out, he will find that he has lost everything that he had previously earned.
Hence, the smart businessman does not gamble often, and definitely never gambles with everything that he owns. Businessmen who become rich and remain rich usually take a more analytical approach to their investments, especially when these investments are applied in volatile markets such as the stock or foreign exchange market.
In order to minimize risk, businessmen employ analysis techniques so that they can gather information to assist them in making investments that would be profitable.
There are two main analysis techniques that are implemented by traders:
1) The first analysis technique is called technical analysis. Technical analysis involves the studying of past trends in order to ascertain patterns. If the market that you are trading in seems like it is following a previous market trend, the trader can act based on this trend. If there is a pattern, technical analysis usually provides a safe prediction of how the market will behave in the future, and the use of this analysis technique can help investors and traders make sound financial investments in the markets.
2) The second analysis technique is called fundamental analysis. Fundamental analysis involves studying the statements and financial dealings of the business in order to determine the amount of assets, liabilities and earnings, as well as the statements and financial dealings of competitors and an in depth analysis of the market’s current status. All this information can give a trader an idea of which businesses may be making a profit in the future, and knowledge regarding future profitability of businesses can allow the trader or investor to make a healthy investment or purchase and earn a profit.