With the financial services sector here in Britain adding over £100bn a year to the economy in recent times, it’s clear that more and more people are becoming traders and investors and crafting a portfolio of their own. However, it’s not easy: markets can change on a day-to-day basis, and the amount of data involved can sometimes seem a little overwhelming. It’s wise, then, to think carefully about how you can monitor your investments in a sustainable and simple way. This blog post will share some top tips on how to do just that.
Look to the future
Fundamental analysis is the practice of taking into account all sorts of potentially market-moving wider information before making an investment decision. This could be anything from company events such as profit announcements, economic events such as gross domestic product data releases, and wider news stories such as political upheaval. Many traders choose to use fundamental analysis tools as a way to monitor the markets in which their investments are placed, and with good reason.
However, if you’re not sure where to start when it comes to finding out about future events and getting ahead of the curve, then don’t panic. There are great trading tips available from many online sources, while a glance through the stock sections of some leading newspapers such as the Financial Times is also a good idea. It’s also worth taking a look at an economic calendar as that’s where a lot of the fundamental data on financial events such as interest rate decisions will be found.
An alternative to the fundamental analysis point of view, though, is the technical analysis perspective. This approach involves looking at both historic and recent price data, on the assumption that all relevant information will be contained in the decisions of other traders. Keeping an eye on the investment markets this way is likely to require a decent mathematical skill set, as extracting patterns such as triangles and wedges are done by analysing graphs.
Don’t go overboard
However, it’s important to also sound a note of caution. It’s wise to use some of the established tools and frameworks to keep an eye on the value of your long-term investments, but you shouldn’t fall into the trap of looking at them too much. If you constantly check your investments and read too much into each market shift, then you may find yourself becoming tempted to deviate from your planned strategy. Instead, it’s wise to set in advance a stop loss for the point at which you want to close your position – and then keep a light eye on the markets over time to see whether you should make an informed strategy alteration.
Investing isn’t as simple as setting up an account and leaving it to grow. There are all kinds of assessments that you’ll need to make on a regular basis, including what significant economic events lie ahead and what trends and patterns are becoming obvious through data analysis. By making sure that you don’t go too far in the other direction and over-analyse every market movement, you can give yourself the best possible shot at investment success.