Important concepts for beginners

1. Fundamental Analysis

Fundamental analysis is the first stage of analyzing stock data. Fundamental analysis analyzes the fundamentals of a company, including things like its financial statements, market cap, earnings, revenue, etc.

2. Technical Analysis

Technical analysis is what most traders do after they have done fundamental analysis. Technical analysis involves using charts to analyze past prices to predict whether future price movements will follow certain patterns.

3. Market Cap

Market cap is simply the total amount of money a company is worth. A high market cap means that a company's value is high; while a low market cap means that a companies value is low.

4. EPS (Earnings Per Share)

EPS is calculated by dividing net income by the amount of shares outstanding. If the number is greater than 1, then the company is profitable. Companies with higher EPS mean that the company is doing well financially.

5. Net Income

Net income is just the opposite of EPS. It subtracts out any expenses before calculating how much profit a company made. If a company's net income is positive, then it shows that the company made money.

6. P/E Ratio

The P/E ratio is the share price divided by the annual earnings per share. You want a lower P/E ratio -- the lower the better. A low ratio indicates that investors think that the company's earnings are low, though their share price may be high.

7. Dividend Yield

Dividends are payments a company makes to shareholders each quarter. When looking at dividend yields, you should compare them to similar stocks. Companies that pay higher dividends generally offer safer investment opportunities. Thus, a dividend yield between 2% and 5% is a good range to shoot for.