Stock market analysis - How to research stocks

Last updated: 28.02.2023
Richard Adcock
Richard Adcock
CFD & Trading
> 30 years

Stock market analysis is the foundation of all the truly successful investors and traders around the world. If you are just starting out with online trading, it’s a great idea to familiarize yourself with stock market analysis. 

Stock markets analysis boils down to two main schools of thought, fundamental analysis and technical analysis. In our stock market analysis guide we will take you through all the important analysis types and outline how they can help you to make smarter, more informed stock trading decisions.

Trade now commission-free

nextmarkets investors

  • What is stock market analysis?
  • Technical analysis
  • Fundamental analysis
  • What you should analyse
  • Why stock market analysis is important
  • Conclusion

What is stock market analysis?

Have you found yourself wondering how to research stocks? Well we are here to give you a clearer picture on the matter. Stock market analysis is, as the name suggests, the analysis of a specific trading instrument, sector or the stock market overall. There are many different ways to approach stock market analysis but the ultimate goal is to try and predict what the future activity of an instrument, sector or market will look like. By conducting thorough stock market analysis traders give themselves much better insight into what the best stocks to buy are.

Stock market analysis is the best way for traders to inform their investment decisions. With a solid base of technical and fundamental research behind your decision making you can feel more confident about entering and exiting certain trade positions or investing in specific trading instruments. As we mentioned before there are a number of ways for you to go about stock market analysis. You can use specific providers that can provide you with trading signals. Or, you can go it alone, conduct your own stock market research and use the charting tools and stock screeners on our site to help you make more informed decisions.

At the end of the day, it is up to you how you want to proceed but we will give you the detailed breakdown on the options available to you. For now, the most important thing to do is look at the two main types of analyses that are used for more accurate stock market analysis.

Conducting stock market analysis is done in a host of different ways but they will generally fall under two types of analysis: fundamental and technical analysis. When you master these analysis types you will be able to more easily gauge whether you want to buy Facebook stock or any other stock for that matter. Let’s take a look at how these two types of analyses differ from one another.

Technical analysis

Technical analysis is the other major form of stock analysis. It involves using past and present price action of stocks to try and predict what the future price movements might be. It’s not quite as complex as it sounds but it can be a little difficult to initially understand. In essence, technical analysis is only really concerned with the overall financial market taking things like price volume, supply and demand into account to extrapolate the probability for future price movements of a stock.

One of the main tools of the technical analyst is charting illustrations. These charting tools help to separate the resistance and support levels. In short, the support level indicates on the graph where the price point dropped below the current value of the stock. The resistance levels indicate where the price was higher than the current trading value. Put simply, a dip below the marked support level would indicate a trend towards price decline where a rise above the resistance level would suggest a trend towards a price increase. Where fundamental analysis should be used in conjunction with technical analysis is when external factors influence the data. Technical analysis can only be used effectively when taking supply and demand factors into account.

Fundamental analysis

Fundamental analysis is all about taking in data from several different sources. The sources of data in this regard are things like a company’s financial records, market share, assets and economic reports. If an investor wants to better understand how well a public traded company is performing they will pay close attention to the income statement, cash flow and balance sheet. All of these are strong indicators for the potential future performance of the company’s stock. This information is not just for the elite though as it is released in the form of a 10-k report for the publics’ consumption as well. 

A stock market analyst will run an analysis of a company’s financial statements to review a number of different facets. These facets include things like overall profitability, liquidity, efficiency, the potential for growth and leverage. The stock analyst will use several different ratios to his/her advantage to give them more insight into the overall health of the company. For example, the current ratio analyzes whether or not the company will be over to cover its debts with the current assets that it has, This will naturally give you insight into how well the company is likely to do further down the line in light of their debt to asset ratio.

Essentially, fundamental stock analysis takes into account financial statements of previous years and compares them to the current financial statements. In doing so, you can better understand whether or not a company is in the process of sustained growth or if it is on a downward trajectory. These observations are of course not a final damnation or a concrete approval but they do help the analyst to better understand what could unfold in the coming months and years. An analyst may even compare these financial statement records to that of another company in the same sector to better understand the lay of the land.

All of the above is a way for stock market analysts to try and truly value the worth of a company’s stock at the present moment. Fundamental analysis seeks to understand the difference between a company’ stock value and the actual price that it is currently trading at. This will also enable you to identify what the best stocks to buy are to buy.

Either way, both fundamental and technical analysis are crucial tools at analysts disposal to try and better understand the value of stocks and the potential; for growth or decline in the future. Having this kind of in-depth information on hand can help even your novice trader make smarter investment and trading choices.

What you should analyse

Now you have a better understanding of what the two main types of stock market analysis are we can move on to what you as the trader should be analyzing. We know that seeing the details of fundamental and technical analysis can seem a little scary but in reality you can also use these tools to your advantage to analyze certain markets and stocks. All it takes is a little time and practice on our platform. So let’s take a look at a few things that can help you to become your own personal stock market analyst:

Don’t overthink it

Before you even get onto analyzing individual factors yourself it is best to use the tools at your disposal first. What we mean by this is, use the reports that other professional analysts have already compiled. This way, you cut out tons of research time you would have had to do yourself to get yourself a solid base of data. You don’t need to take all of these analyst reports as law but it will help guide in the right direction where you can start analyzing stock market factors yourself more confidently. 

Industry analysis

One of the avenues for you to analyze pre-existing reports is to take a look at the end of year financial report of companies. These annual reports are public record and will give you some solid insight into how well a company has performed in the fiscal year. From there you can deduce and infer your own conclusions from the data. Of course, stick to our first point about using analysts to your advantage but do this as well to give yourself a well-rounded approach to stock market analysis. 

Financial data

You can stick to gathering your information from previous and present analyst reports on stocks and companies but if you truly want to become a better stock analyst yourself, then you will need to become familiar with the financials of a company. This includes being able to comfortably read through balance sheets, cash flow statements and income statements. Going through these financials is the only real way that you are going to improve your own ability in being able to analyse stocks and how they are valued.

CFD trading - nextmarkets

Why stock market analysis is important

With all of the above that you have just read, you might still be asking yourself, why is stock market analysis important to me personally? It may come off as only being used by major investment firms and the like but in truth stock market analysis should be used by every trader big and small. If you are investing a lot of time into your day to day stock trading, then why not try to improve your results?

Stock market analysis is absolutely the best way for you to take your stock trading to the next level. Doing adequate stock research on a company will give you insight into what the price movements might be for the coming months. That kind of information can help you duck out of the way of bad trades or get you in early on some highly  lucrative ones. It really all depends on the level of effort you put into conducting this analysis. Like we mentioned earlier, you don’t need to carry the load all by yourself. Make use of other stock market analysts who have been doing this for a very long time and use that to help you become more familiar with how to analyse price movements and annual reports yourself. You’ll be able to know exactly whether or not you want to buy Amazon stock or buy Google stock.


At first glance, stock market analysis can seem to be everything from tedious and painstaking to difficult and down right impossible. Luckily, this is just at a glance. When you take the time to understand what stock market analysis is and what it can do for your overall stock trading endeavours. Take into account some of the things we touched on, use other analysts to your advantage and get a feel for the data they have put together. From there try to read through some financial statements of a company that you are interested in investing in to enhance your own analysis abilities. 

Look it is not the most glamorous work in the world, we know that. However, if you are trying to take your trading up a notch then you will need to put a little more effort into improving yourself. By being able to conduct stock market analysis yourself you can give yourself better insight into what stocks you should buy and what stocks you should offload. At nextmarkets, we can show you how to buy Netflix stock, how to buy Apple stock and even how to buy Tesla stock. With your newfound stock market analysis techniques you can decide whether or not these stocks are worth your time in the long run!

Stock market analysis FAQ

❓ What is stock market analysis?

You may have had a stab at some stock trading in the past without really giving it too much thought. You wouldn’t have been the first person to treat it like gambling. However, stock market trading is far more intricate than that. Our guide on stock market analysis will give you some insight into exactly what it entails and why it is done in such detail. 

📊 How do I go about analyzing stocks?

Our guide on stock market analysis won’t just tell you what analyzing stocks means, we’ll also give you a detailed look at how you yourself can go about analyzing stocks to improve your overall trading decisions. Analyzing stock is a great way to give yourself an extra edge when trading stocks which is why we have put this guide together. After reading our guide, you will have a much clearer picture on how you can analyze stocks in your own time.

☝ What tools are available to help me analyze stocks?

Our guide on analyzing stocks won’t just throw you in the deep end. We give you the foundational knowledge you need to know exactly what stock analysis entails, how you can go about doing it yourself but most importantly what tools you can use to help aid you in the process. Doing tons of research on your own and analyzing all the data is never fun which is why it’s always a big help to have a few key tools at your disposal.

📉 Are there certain types of analysis I should be using?

Stock market analysts aren’t just conducting research from their own thumbs but rather on the basis of key analysis types. Our stock market analysis guide will give you clear insight into what these analysis types are and what purpose each of them serves. From there you can make your own decision about which one you prefer and which one suits your ideas about the stock market.

🔏 How difficult is it to analyze stocks?

With our stock market analysis guide we can help put you on the path to being able to analyse stock markets far more easily. Like anything new, it can be a little daunting at first but after spending some time reading our guide we can show you how best to go about conducting stock market analysis yourself.

Smarter Trading
  • Trade with Europe's commission free online broker
  • Receive up to 200 professional analyses per month
  • Trade more then 8000 shares, ETFs and other products
Start trading now