The Importance of Research and Analysis in Online Share Trading

In this article, we will discuss

The Importance of Research and Analysis in Online Share Trading Are you tired of losing money in online share trading? Do you feel like you're constantly throwing darts at a board blindfolded? Well, fear not. We have the secret to success! And no, it's not a lucky rabbit's foot or a four-leaf clover. It's something much more powerful - research and analysis! Yes, you heard it right. The key to making profitable trades is not luck but the ability to gather and analyze information. So, put down your lucky charm and pick up your thinking cap because we're about to dive into the wonderful world of research and analysis in online share trading. Get ready to say goodbye to blindfolded darts and hello to informed decision-making.

Types of Research and Analysis in Online Share Trading

There are two main types of research and analysis for stock investing and trading:

Fundamental Analysis

This involves analyzing the fundamentals of a company, such as its business model, financial statements, growth prospects, management, competitive position, industry outlook, etc. The goal is to determine the intrinsic value of a stock to find undervalued opportunities. The various tools for fundamental analysis include:
  • Company reports and filings: Analyzing balance sheets, income statements, cash flow statements, management reports, etc., to evaluate the financial health and growth potential of a company.
  • Industry analysis: Analyzing the outlook and trends in the industry to assess their impact on the company. Understanding the key drivers of industry growth and the position of different companies.
  • Competitive analysis: Evaluating a company's competitive position and advantages in its industry relative to its peers. Assessing barriers to entry and competitive threats.
  • Growth analysis: Forecasting future financial statements and key metrics to estimate a company's future growth potential and profitability. Evaluating growth strategies and opportunities.
  • Valuation analysis: Performing DCF analysis, relative valuation, etc., to determine the intrinsic value of a stock and whether it is undervalued.

Watch our video on Fundamental Analysis

Technical Analysis

This involves analyzing historical market data and stock price trends to identify trading opportunities and make buy/sell decisions. Some of the tools for technical analysis include:
  • Price charts: Visual representation of a stock's historical price trends. Used to spot reversal and continuation price patterns and trends. Different types include line graphs, candlesticks, bar charts, etc.
  • Indicators: Mathematical calculations based on stock price and volume trends to determine momentum, volatility, overbought/oversold conditions, etc. For example, moving averages, MACD, RSI, Stochastic, etc.
  • Oscillators: Similar to indicators but normalize the values between 0 to 100% or -100% to +100%. Used to identify potential reversal points. Examples are Relative Strength Index, Stochastic, etc.
  • Other tools: Support/resistance levels, trendlines and channels, Fibonacci retracement levels, etc.
  • Technical analysis theories: Concepts such as Dow Theory, Elliott Wave Theory, etc., provide frameworks for interpreting price charts and trends.

Importance of Research and Analysis in Online Share Trading

Research and analysis in online share trading is the systematic and objective investigation of a security or a market using reliable sources and methods. This also can help you achieve your financial goals and avoid losses by providing valuable information, insights, and guidance. These can also help you to improve your skills, knowledge, and confidence in the market. get the importance as follows:
  1. Helps You Make Informed Decisions
  2. Reduces Risk
  3. Identifies Opportunities
  4. Keeps You Updated on Market Trends
  5. Improves Your Understanding of the Market
  6. Helps You Gauge Your Trading Strategy's Effectiveness
  7. Assists in Setting Realistic Expectations
  8. Fosters Discipline and Patience
  9. Helps You Stay Objective
  10. Enhances Your Confidence
  11. Supports Long-term Investment Success
  12. Encourages Continuous Learning
  13. Promotes Better Communication with Financial Advisors 
  • Helps You Make Informed Decisions

Conducting thorough research and analysis lets you understand the financial health and potential of companies you're considering investing in. By analyzing various financial data, you can make informed decisions on which stocks to buy or sell, ultimately increasing your chances of success during online share trading.
  • Reduces Risk

By understanding the risks associated with a particular investment, you can make better decisions and avoid potential losses. Researching and analyzing companies' financial statements, management teams, and industry trends will give you a clearer picture of the risks involved in your investments
  • Identifies Opportunities

Research and analysis can help you identify new investment opportunities. It uncovers undervalued stocks trading below their intrinsic value, sector trends indicating which industries are growing or declining, or up-and-coming industries with high growth potential. This allows you to diversify your portfolio and maximize potential returns by investing in securities with strong prospects and competitive advantages.
  • Keeps You Updated on Market Trends

Staying informed about market trends and economic indicators is crucial when trading online. It will enable you to make better decisions about when to buy or sell shares. Regularly conducting research and analysis helps you stay on top of these trends and make timely decisions.
  • Improves Your Understanding of the Market

Researching and analyzing stocks helps you make better decisions during online share trading and deepens your understanding of the market. This knowledge can be invaluable in recognizing patterns and predicting future trends, giving you an edge over other investors.
  • Helps You Gauge Your Trading Strategy's Effectiveness

One of the benefits of research and analysis in online share trading is that it helps you gauge your trading strategy’s effectiveness. By monitoring and analyzing your portfolio’s performance, you can see how well your securities are performing, how much risk you are taking, and how much return you are earning. This analysis can help you identify areas where you need to adjust your strategy, such as changing your asset allocation, diversifying your holdings, or exiting unprofitable positions. 
  • Assists in Setting Realistic Expectations

Conducting research and analysis enables you to set realistic expectations about your investments' potential returns. Understanding the risks and potential rewards associated with each investment can help you make more informed decisions about your portfolio.
  • Fosters Discipline and Patience

Researching and analyzing stocks is not a quick or easy process. It requires discipline and patience to gather reliable data, apply appropriate methods, and draw logical conclusions. These traits can also help you in other aspects of your life, such as managing your time, budgeting your money, setting your goals, and overcoming your challenges. Practicing research and analysis can foster discipline and patience to benefit you in various situations.
  • Helps You Stay Objective

The stock market can be an emotional rollercoaster that tempts you to make impulsive decisions driven by fear or greed. These emotions can cloud your judgment and lead to poor outcomes. By basing your decisions on thorough research and analysis, you can avoid falling prey to emotional biases and stick to your investment plan. Research and analysis can help you stay objective and rational in market volatility and uncertainty.
  • Enhances Your Confidence

Knowledge is power; the more you know about the stocks you invest in, the more confident you'll be in your decisions. This confidence can help you stay the course during market fluctuations and avoid panic selling. Research and analysis can help you learn about the fundamentals, technical, and qualitative factors of the stocks you're interested in. This knowledge can enhance your confidence and conviction during share trading.
  • Supports Long-term Investment Success

Research and analysis lay the foundation for successful long-term investing. Regularly reviewing and updating your investments based on new information can optimize your portfolio's performance and mitigate risks. Research and analysis can help you monitor the performance and potential of your investments, identify new opportunities, adjust your asset allocation, rebalance your portfolio, and exit unprofitable positions. These actions can support long-term investment success and help you achieve your financial goals.
  • Encourages Continuous Learning

The stock market constantly evolves, and staying informed requires ongoing research and analysis. This commitment to continuous learning can lead to a deeper understanding of the market and improved online trading performance. Research and analysis can help you learn new concepts, methods, tools, and strategies to enhance your investing skills and knowledge. This continuous learning can also keep you updated with the latest market trends, developments, and opportunities.
  • Promotes Better Communication with Financial Advisors 

If you work with a financial advisor, conducting your research and analysis can help facilitate more meaningful conversations about your share trading strategies. This collaboration can lead to bettertrading decisions and a stronger financial plan.

Tools and Resources Samco Provides for Research and Analysis in Online Share Trading

Samco provides various tools and resources to help investors and traders in their research and analysis for online share trading:
  • Stock Price- It allows you to screen stocks based on parameters like sector, market cap, PE ratio, dividend yield, etc. This helps you find stocks that match your investment criteria.
  • Stock RatingsInvestors can see the rationale and analysis
  • Company Reports - Samco publishes detailed research reports on companies after analyzing their business fundamentals, financials, growth prospects, valuations, risks, etc. These reports provide a holistic view of the company to help investors make informed decisions.
  • News and Analysis - Samco publishes the latest news, analysis, opinion and insights on stocks, sectors and market trends. This helps investors keep track of important developments and their potential impact.
  • Platforms - Samco provides robust trading platforms like websites and mobile apps. These platforms have all the tools and resources for a seamless trading experience.
  • Educational Resources - Samco provides a lot of educational content like blog posts, videos, e-books, tutorials, webinars, etc., on topics such as technical analysis, fundamental analysis, options, futures, etc. This helps investors learn new concepts and improve their knowledge.


In conclusion, research and analysis are the backbones of successful online share trading. With the vast amount of online information, it's easy to get overwhelmed and make impulsive decisions. However, by taking the time to research and analyze the market, you can make informed decisions that will help you achieve your financial goals. If you're looking to invest in the stock market, Samco is an excellent platform. With its user-friendly interface and powerful tools, Samco makes it easy to research and analyze stocks, track your portfolio, and confidently execute trades. So why wait? Sign up for Samco today and start your journey towards financial success!

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