New Zealand Forex Brokers<\/a>.<\/div><\/div>\nStep 3: What Factors Should you Consider When Buying Shares?<\/h2>\n Before you place your first order in the market, you need to know the factors impacting the share price. Here\u2019s what to consider.<\/p>\n
The Company\u2019s Financial Statements<\/h3>\n The three \u2018holy\u2019 financial statements of a company are made up of balance sheet, income statements, and cash flow statements. Now, even if you can\u2019t read financial statements, nor worries. Simply make your own research and read news articles about the financial status of the company. Also, investigate whether the company has posted year-to-year growth in earnings, its free cash flow status, the ROA, and its total debt.<\/p>\n
One quick look at the company\u2019s all-time chart will give you a lot of essential information. First, you can understand the current status of the company \u2013 if it\u2019s trading near historical peaks or lows, and the current trend of the share.<\/p>\n
When you analyze the historical performance of a share price, you should try different timeframes: 1H, Daily, Weekly, and Monthly chart. In each one of the charts, use the following indicators, and write down all the possible entry and exit levels.<\/p>\n
Fibonacci Retracements<\/strong> \u2013 This is a method for determining support and resistance levels<\/p>\nRelative Strength Index (RSI) \u2013 <\/strong>RSI is a momentum technical indicator that measures the speed and change of price movements. In its basic form, you should consider a change in trend when the RSI shows 70 or 30.<\/p>\nSupport and Resistance\/Trend Lines<\/strong> \u2013 Support and Resistance\/Trend Lines are used to determine entry and exit levels. You\u2019ll find trading much easier if you master the skill of finding support and resistance levels.<\/p>\nDividend Payout<\/h3>\n Dividend payouts are an important part of the total return you can achieve from buying shares. In simple terms, dividend payouts are a method to provide shareholders with a yearly return on their investment by distributing profits of the company. For the individual investor, that can be an additional passive income that usually ranges between 2% to 8% per year.<\/p>\n
Share Forecasts by Analysts<\/h3>\n Analysts at large brokerage firms and banks are offering share price forecasts about the future of the company. This be can be categorized to consensus rating (buy, hold and sell) and price target. Even if you do not plan to use this information as an investment strategy, it is crucial to monitor analysts\u2019 share updates as these affect the price movement of shares.<\/p>\n
Economic Calendar and Company Earnings calendar<\/h3>\n An economic calendar and company earnings calendar are two of the most important things to follow when you are trading shares. An economic calendar is used to monitor the status of the economy, domestically and globally. Some economic events and announcements are vital for the share market. Those include GDP, CPI, Non-Farm Payrolls, Unemployment Rate, etc.<\/p>\n
Companies\u2019 earnings calendar, on the other hand, is published both quarterly and annually and allows investors to get an indication of the company\u2019s profits and its financial status.<\/p>\n
Step 4: Open a Share Trade<\/h2>\n By now, you have probably set your mind on a particular online share trading platform, and have a sufficient understanding of how the share market works in New Zealand.<\/p>\n
This means you can start your trading journey. Select a high-quality broker such as FinmaxFX, open an account, and purchase a share for trading.<\/p>\n
Pros and Cons of Buying Shares\u00a0<\/h2>\n\n
Pros:<\/strong><\/p>\n<\/span><\/p>\n
\n<\/i> There\u2019s a wide selection of shares, ETFs, and Index Funds<\/li>\n<\/i> You can generate profits via dividends and capital gains<\/li>\n<\/i> The share market in New Zealand is highly regulated<\/li>\n<\/i> The share market has proven to be one of the best ways to create long-term wealth<\/li>\n<\/i> When buying CFD shares, you can leverage your capital<\/li>\n<\/i> The global share market is highly liquid<\/li>\n<\/i> CFD brokers enable you to easily short-sell shares with a low margin requirement<\/li>\n<\/ul>\n<\/div><\/div><\/div>\n
Cons:<\/strong><\/p>\n\n
\n<\/i> Trading shares requires you to spend time and effort in order to make the right investment decisions<\/li>\n<\/i> There\u2019s a risk of losing your capital<\/li>\n<\/ul>\n<\/div><\/div><\/div><\/div>\nConclusion<\/h2>\n Nowadays, it is possible to easily open a trading account, deposit funds, and start trading shares in a matter of minutes. It\u2019s crucial that you make your own research and form a trading strategy before you risk capital. Remember that you can always start trading on a demonstration account before you jump into a real trading account. Ultimately, if you want to become a successful investor, you\u2019ll have to find the right broker, and tailor an effective trading process.<\/p>\n
FAQs<\/h2>\n <\/time><\/time>