I am a biginer in share trading. What is the deciding factor when we buy a company shares?

Dear Friends,
I am a biginer in share trading. What is the deciding factor when we buy a company shares? also want to know what is book value and earning per share.Please replay

In the beginning “newbie” traders and investors DO NOT INVEST THE FIRST cent or dollar. No amount of money.

In the beginning you LEARN HOW:
A] the stock market works.

B] to invest in many, many various ways.

C] to properly trade

D] many other concepts and aspects.

Beginning or novice ['newbies"] investors and traders ALWAYS make mistakes. In fact, throughout a person's avocation or hobby to do trading, he/she will make mistakes.

In the very beginning, you READ AND LEARN about the market and how it works:
Read "Investing for Dummies"
As you are reading and doing research about the investments you are interested in, sometimes you'll come across a financial or investment term you never heard before.

You can usually find excellent, easy-to-understand definitions of many financial and investment terms by going to Investopedia’s dictionary.

http://investopedia.com is a free site. It’s recognized by Y! A as a "Featured Knowledge Partner".

It probably won’t be long when you’ll feel you’re ready to invest your hard-earned money. Before taking that step, you really should do research about what you are investing in. It also has a free, paper trading platform. You can set up a virtual account and almost trade as though you were trading with real money.

http://finance.yahoo.com is also recognized by Y! A as a "Featured Knowledge Partner"
END E-MAIL #1
The thought processes are:
1] to have more successful trades than failing trades.
2] to minimize the losses of those losing trades.
3] "To live to trade another day." Having enough money in the trading account to return to the market.

ALL this is accomplished by a few true expressions used on Wall Street:
Some trading expressions come to mind:
A] "On Wall Street there aren't any gifts."
No one gives anyone else anything - not even stock tips.

B] BUlls [BUyers] earn money.
BEars [SEllers] earn money.
Pigs get fat.
Hogs [Greedy Traders] get slaughtered. They lose the money in their trading accounts.

C] "Trees don't grow to Heaven. Neither do stocks or any other investments."
In other words: What goes up, MUST come down!

D] "Plan your trade. THEN trade your plan!"
Have a trading plan with rules for that plan for each strategy.

$____ may not be enough for you to get started. I want everyone to know I DO NOT own any portion of this man’s estate, nor am I associated with him or any one else connected with him in any way. I am not part of the publishing company or an agent or anything else. This man does not know me from Adam AND I don’t know him. I know of him and the wonderful book he wrote. THIS IS NOT SPAM.
You should buy a copy of this book:
“The Richest Man in Babylon” by George S. Classon. You can get the book on http://amazon.com
Its very easy to read. Its very easy to follow. You can write in it. You can make notes in it. All you have to do is to read five [5] pages - Let’s count
1 - 2 - 3 - 4 - 5 pages of this book - or any book - each and every day.
OR You can leave it sit on the shelf, on a table or on the floor and let it collect dust.

Thanks for asking your Q! I enjoyed answering it!

VTY,
Ron Berue
Yes, that is my real last name!

That you believe that, for some reason/s the share price will go up.

mkt trend and chart signal

more on my blog

well it depends on what kind of investor you are growth investor, dividend investor, speculative investor i recommend you look into what kind you want to be id need more info on you in order to make any suggestions...a book value is the amount the company would be worth if it were to sell all its assets and pay off all liabilities and debts ....an earning per share is how much money is how much earning each share gets when ever they make money

There CANNOT be one factor, you have to look at them all. While one company may look more attractive based on EPS, another may have a better P/E ratio, while a third may have the best long term growth prospect. It will depend on your goals and how much risk you are willing to take.

Before picking the right stock you need to do some analysis.

There are two major types of analysis:
1. Fundamental Analysis
2. Technical Analysis

Fundamental analysis is the analysis of a stock on the basis of core financial and economic analysis to predict the movement of stocks price.

On the other hand, technical analysis is the study of prices and volume, for forecasting of future stock price or financial price movements.

Simply put, fundamental analysis looks at the actual company and tries to figure out what the company price is going to be like in the future. On the other hand technical analysis look at the stocks chart, peoples buying behavior etc. to try and figure out what the stock price is going to be like in the future.

Earnings per share (EPS) ratio

EPS = Net Earnings / Outstanding Shares

There are three types of EPS numbers:
Trailing EPS – last year’s numbers and the only actual EPS
Current EPS – this year’s numbers, which are still projections
Forward EPS – future numbers, which are obviously projections .

Price to earning (P/E) ratio
The P/E looks at the relationship between the stock price and the company’s earnings. The P/E is the most popular stock analysis ratio, although it is not the only one you should consider.

You calculate the P/E by taking the share price and dividing it by the company’s EPS (Earnings Per Share that we saw above)

P/E = Stock Price / EPS

For example: A company with a share price of Rs.40 and an EPS of 8 would have a P/E of: (40 / 8) = 5

What does P/E tell you?
Some investors read a high P/E as an “overpriced stock”.

However, it can also indicate the market has high hopes for this stock’s future and has bid up the price.

Conversely, a low P/E may indicate a “vote of no confidence” by the market or it could mean that the market has just overlooked the stock. Many investors made their fortunes spotting these overlooked but fundamentally strong stocks before the rest of the market discovered their true worth.

In conclusion, the P/E tells you what the market thinks of a stock. It tells you whether the market likes or dislikes the stock.

PEG (Price to future growth ratio!)
The market is usually more concerned about the future than the present, it is always looking for some way to figure out what is going to happen in the companies future.

A ratio that will help you look at future earnings growth is called the PEG ratio.

You calculate the PEG by taking the P/E and dividing it by the projected growth in earnings.

PEG = (P/E) / (projected growth in earnings)

For example, a stock with a P/E of 30 and projected earning growth next year of 15% would have a PEG of 30 / 15 = 2.

What does the “2” mean?
Technically speaking: The lower the PEG number, the less you pay for each unit of future earnings growth. So even a stock with a high P/E, but high projected earning growth may be a good value.

So, to put it very simply, we are interested in stocks with a low PEG value.

While I applaud your desire to invest, please limit yourself to investing in professionally managed portfolios, i.e., mutual funds, until you can gain an understanding of macroeconomics, fundamental analysis and industry-specific trends sufficient enough to enable you to speak compellingly and with clarity for at least 15 minutes on the reasons a given firm warrants an investment of your presumably hard-earned dollars. If you lack the time, commitment or desire to do the due diligence necessary to make prudent investment decisions, please engage the services of a competent and experienced investment advisor who can provide you with the framework for a sound, goal-oriented investment plan that is correlated to your specific risk tolerances, reward expectations and time horizons.

There are two ways to look at investment deciding factors.

One is fundamental ( look at promoters, their track record, company's financials etc. ). Calculate various ratios and get a feeling about the whole thing. Then decide. Lots of information is available on this way as well as the companies.

Other way is technicals ( look at past price movements , draw charts etc). This is bit tricky and may lead to lots of mis-judgments on one's part. You need to have lots of experience. Secondly it doesn't take into account the fundamental strengths and weaknesses into account hence proves erroneous at some times and some cases.

If you need some basic information about investing in shares please visit www.askniting.com. Feel free to interact.

Best luck.

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The ultimate factor is the prospects of the company in the future. This is derived from various figures like the EPS, current P/e, forward p/e. etc.

Expected Earnings Per Share indicates the expected earnings for a single share in the next financial year.

Learn great strategy when it comes to trading, try to check out these websites.

http://www.universalmarkettrader.com
http://www.netpicks.com

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