Fundamental analysis trading jargon demystified

Fsp Invest, 13 Jun. 2013

Tags: spread trading and fundamental analysis, fundamental analysis jargon, what fundamental analysis means, broker recommendations, trading, trading jargon

‘Buy’, ‘strong buy’, ‘recommended list’, ‘European focus list’, ‘weak buy’, ‘strong hold’, ‘1, 2, 3M’, ‘3L’, ‘outperform’. This is a list of just some of the broker recommendations you’ll get when spread trading and using fundamental analysis. If you don’t understand what these broker recommendations mean, they won’t be helpful to you. Read on to discover fundamental analysis jargon means so you can improve your spread trading success.

“Fundamental analysis is the study of the overall economic, financial, political and other factors that represent and quantify the economy in question and can influence a financial instrument,” says These factors help brokers and traders determine future movements in a financial market.
That’s why it’s important that “traders understand how to interpret this information and convert it into an educated and successful trade,” adds
According to the Ultimate Spread Trading Guide, different brokers use different scoring systems and these are categorised into seven distinct categories.
How to decipher fundamental jargon
1.    “Buy” (sometimes referred to as “1” by brokers who use a numeric system) means, on a 12 month view, your broker expects the share to outperform its peer group index by 10% or more.
2.    “Outperform, add, accumulate, 2 and market outperformer”, means your broker expects the share to outperform, but by less than 10%.
3.    Trading buy means your broker’s saying this is a poor quality share, but its shares have fallen so far the bad news is more than discounted. The Ultimate Spread Trading Guide warns, however, that trading these types of shares isn’t a strategy for wealth creation, nor is it one followed by great investors like Warren Buffett.
4.    “Hold, neutral, 3 and market performer”. If your broker uses this recommendation, he means the share’s expected to trade broadly in line with index performance over the following 12 months.
5.    “Strong buy, European focus list, recommended list and member of ‘model portfolio’ ”. “A couple of years ago, when brokers realised they rated most shares as a buy, a few of them decided to introduce various categories of ‘super buys’ – their overall favoured shares,” says the Ultimate Spread Trading Guide.
6.    “Underperform, market underperformer, reduce and 4” means the share’s expected to underperform the market by between 0% and 10% over the next 12 months.
7.    “Sell and 5” means the share’s expected to underperform by 10% or more over the following year.
There you have it. When spread trading and using fundamental analysis it’s important you understand what these sayings mean to improve your trading success. 

Related QA

lenita.fourie777 asked:
I have lost PLENTY in Binary companies. I have lots of dept. I only have R 5 000 available now to try and make up some losses. If everything goes [read more]
Published at 23 Feb. 2018 in: Trading 1 Answer
joe9976 asked:
I have bought the South African Investor Crypto Wealth Package so that I can start investing in Bitcoin. Sam Volkering recommended opening an account [read more]
Published at 23 Feb. 2018 in: Trading E-mail 1 Answer
deongt asked:
Hi Timon. I am currently subscibed to Rhst and have a broker acount with Gt247. I,m thinking of subscribing to Pick pocket trader. Can I use the same [read more]
Published at 21 Feb. 2018 in: Trading 1 Answer
emmamaya020 asked:
Hi Timon, I am directing this question to you out of great concern from within. I recently subscribed to RST tips for making extra profit and on [read more]
Published at 21 Feb. 2018 in: Trading Trading tips 1 Answer
e7469 asked:
I already have an active old trading account with GT247, can I use this account? It was not 1 of the 2 brokers you recommended. Sue Neumann [read more]
Published at 20 Feb. 2018 in: Trading Broker firms 1 Answer

Related articles:




Youtube Twitter Facebook

Connect with us:    

  • Accelerated Investor
  • Accessories
  • Accountancy