www.CandleStickForums.com Successful Ratio Investing Successful long term investing as well as short term and day trading depend on basic information about how stocks can be expected to perform in the near and long term. The long term investor is interested in such things as the price to earnings ratio or cash flow ratios as measures of intrinsic stock value. The day trader is interested in these same factors as they can tell him where the stock price might go next, up or down. Successful ratio investing requires that traders as well as investors routinely look a quarterly reports showing how a company is doing. Successful ratio investing depends to a large degree on fundamental analysis. However, ultimate success in picking stocks with the right qualities for long term investing or short term trading requires a combination of fundamental and technical analysis. Understanding the various ratios that describe a stock’s performance is important. Understanding how the market is interpreting these ratios requires technical analysis tools such as Candlestick analysis with Candlestick pattern formations. Successful execution when buying stock or selling stock often comes out the best with the use of Candlestick trading tactics

1. Successful Ratio
Investing
By www.CandleStickForums.com

2. www.CandleStickForums.com
Successful long term investing
as well as short term and day
trading depend on basic
information about how stocks
can be expected to perform in
the near and long term.

3. www.CandleStickForums.com
The long term investor is
interested in such things as
the price to earnings ratio or
cash flow ratios as measures
of intrinsic stock value.

4. www.CandleStickForums.com
The day trader is interested in
these same factors as they
can tell him where the stock
price might go next, up or
down.

5. www.CandleStickForums.com
Successful ratio investing
requires that traders as well
as investors routinely look a
quarterly reports showing how
a company is doing.

6. www.CandleStickForums.com
Successful ratio investing
depends to a large degree on
fundamental analysis.

7. www.CandleStickForums.com
However, ultimate success in
picking stocks with the right
qualities for long term
investing or short term trading
requires a combination of
fundamental and technical
analysis.

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Understanding the various
ratios that describe a stock’s
performance is important.

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Understanding how the market
is interpreting these ratios
requires technical analysis
tools such as Candlestick
analysis with Candlestick
pattern formations.

10. www.CandleStickForums.com
Successful execution when
buying stock or selling stock
often comes out the best with
the use of Candlestick trading
tactics

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Successful ratio investing
takes into account cash flow
ratios, the price to earnings
ratio, the price to sales ratio,
the quick ratio, the debt to
asset ratio and various risk
reward ratios.

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Successful ratio investing
takes into account just what
each ratio is capable of telling
us and when its information
might be misleading.

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For example, a low price to
sales ratio might mean that a
stock is underpriced even
though its products are selling
well.

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However, the company might
have such high expenses that
it is not making a profit.

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In this case a better measure
of how well a company is
doing might be the price to
earnings ratio.

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In this case both
sales/earnings and expenses
are taken into account.

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In either case the point of
successful ratio investing is to
compare a stock with others in
its market sector.

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Successful ratio investing is
picking stocks that are making
money but are still under
priced.

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If the earnings can be
expected to continue then the
intrinsic stock value (a
measure of forward looking
earnings) is high and the stock
may well be a good buy.

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Successful ratio investing also
looks at debt versus company
assets.

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This ratio gives the investor a
clear view of how a company
will be able to weather an
economic downturn or the
time it takes to get a new,
potentially profitable, product
to market.

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A low debt to asset ratio
means good financial health.

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A high debt to asset ratio is a
good reason to avoid a stock
as a long term investment.

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However, it may be a good
reason to consider selling puts
on the stock in case of a big
drop in stock price.

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Whereas a low debt to asset
ratio is part of the margin of
safety of long term investing a
high ratio is a big warning sign
for long term investors.

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Finding a high debt to asset
ratio

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And following the stock price
with Candlestick charting
techniques can put the day
trader in a position to make
substantial profits in short
selling just as the larger
market catches on and starts
to sell the stock.