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Stock Trading Analysis for Beginners

8/17/22, 5:11 AM


When it comes to analyzing stocks, there are a variety of tools that can be used. Some investors choose to use technical analysis, while others prefer fundamental analysis. In this article, we'll explore some of the most common ways to analyze a stock's recent trading history.

Traded Volume

The traded volume of a stock is the amount of shares that were bought and sold in a given day. It is calculated by multiplying the number of shares traded by the price per share.

Traded volume can be used to determine one indicator of strength for a stock, which will help you determine when to buy or sell stocks. Low traded volumes mean few people are buying and selling a certain stock while high traded volumes would mean many people are buying and selling that same stock. High traded volumes generally indicate that investors consider this particular company as an attractive investment opportunity; therefore, it's more likely to appreciate over time than if it had low traded volumes because there is more demand for its shares (which increases their value).

Moving Averages

Moving averages are a popular indicator used by traders to help determine the direction and strength of a trend. They're also useful for identifying support and resistance levels as well as potential reversals.

Moving averages do not predict future prices, but instead smooth out price data over time to see the trend direction and isolate significant turning points. The calculation of moving averages is a bit complex, but we can think about them in terms of simple averages. For example, if you were calculating an average age for your friends at a party, you would take their ages and add them up together. Then, you would do this again with each new number until all your numbers were added up together into one final total (the sum). What would happen if every time someone left or arrived at the party? Your total would be different because there was one less person present when adding up all their ages together—and then again when that same person left! In contrast, when calculating a weighted moving average (WMA), each previous price point has more weight than those occurring later in time: WMA = Old price + New Price * weighting factor + Old Price * (1 - weighting factor)


Volume Weighted Average Price (VWAP) is the average price over a given period of time, calculated by multiplying the volume of each transaction by the price of that transaction and then dividing the total by the total volume.

This calculation has some benefits. It helps you determine whether your stock is trading at an average price that represents its true value, or if it's being driven up or down due to unusual activity in one direction.

Trading Journal

Once you've established a trading plan, it's time to start keeping track of your trades.

A trading journal can help you keep track of all the reasons behind your trades and their results. It will also help identify which strategies are working well for you, so that you can focus on continuing those in the future.

The easiest way to do this is by using a spreadsheet or even just pen and paper: write down each trade as it happens along with notes about why you made it and any other details that would be helpful in re-creating the trade (e.g., price action patterns). If possible, also note how much profit or loss each trade generates so that at some point down the line when there are hundreds or thousands of lines on paper, they can still be grouped together under one umbrella category such as “Growth Stocks” rather than being spread out over many different categories like “Large Caps” and “Small Caps” etcetera ad infinitum!

There are many ways to analyze a stock's recent trading history.

There are many ways to analyze a stock's recent trading history. Some of these methods are more useful than others, and some are more complex. Here are some of the most common methods:

  • Traded volume: This is simply the number of shares traded in a given time period (typically per day). It doesn't take into consideration whether those trades were made at a profit or loss; all that matters is how many shares exchanged hands.

  • Moving averages: A moving average calculates an average price over a certain period of time, then uses this figure as the basis for forming future predictions about where the price will go in the future. A 20-day moving average would calculate today's closing price as well as 19 other days' prices going back 20 days from today's date and then use these figures to project what will happen on each day over the next 20 days (or until another calculation is made).

  • VWAP: The acronym stands for volume-weighted average price, which means that traders track how much they paid per share while buying or selling their stocks—not simply how many dollars worth they traded with each purchase or sale. When someone buys 100 shares at an average cost of $10/share, for example, he has not just bought $1k worth of shares; instead he bought 1k x 10 = 10k worth ($100/share x 100) because he paid $100 per share when buying his entire position!


Stock analysis can be a useful tool for beginners. It allows you to take a deeper look at the market, and understand how stocks behave. This knowledge will allow you to make more educated decisions about when to buy or sell stock.