Analysis of stocks, or stock analysis, is really a skill which a stock market investor or trader has to fully grasp. The purpose of trading stocks or of investing is to generate income. When the stock market or even an individual security is in an upward move it may well be quite easy to make profits by buying shares in good companies, then holding the stock as the upward movement continues. The stock must of course be sold prior to reaching the top of the uptrend which is usually followed by a rapid downturn.

A trader ought to not to expect to purchase at the bottom and then get out right at the peak in the uptrend. By making use of good stock choices you can  take advantage of part of the upward movement of the stock.

The very frequent pitfall which must be avoided is that of waiting much too long for the uptrend to top out. The market has a nasty habit of turning down incredibly sharply, and in what seems like no time you’ll almost certainly lose all earnings you have on paper. All too frequently investors watch their shares drop in value, they then hang grimly on, expecting this to be a short correction which will be followed by an extension of the uptrend. Generally this does not happen.

Emotions ought to take absolutely no part in buying and selling on the market. Purchasing a security should be the consequence of a choice made as a result of careful analysys of stocks. It is necessary to maintain a steely hard emotionless outlook on the current market. Anyone who is incapable of this would be well advised to stay away from stock trading as subsdtantial losses may be the consequence.

Sound analysis of stocks which is based on observed information and figures is the only basis for buying, selling and investing. Prior to making a purchase the security should be analysed thoroughly to ensure that it has solid fundamentals. Then the industry trend along with the trend of the stock itself have to be validated by use of technical analysis of charts.Technical analysis is an art which requires study of market history as well as the patterns stocks tend to form on charts. There are many good books on the subject which should be required reading before embarking on a stock trading carrer.