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Trading Floor

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Submitted By viviwei
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Executive Summary
There has been a lot said in the media about the Australian share market volatility. Market volatility has wiped 15% from the value of the Australian share market since March 2010 (Cain 2010). In volatile markets, it is common to feel uneasy about investing due to the risk involved. But, market volatility is completely normal and the current market conditions may actually be advantageous for some investors. For example, volatility is needed to some degree because if prices do not move sufficiently, it will be difficult to make money from trading them. Thus, the recent fluctuations in the share market have highlighted the fact that there are risks involved with investing money and that finding the right investment strategy is a crucial step in investing.
Investors today have more investment options than were available to the average investor just a few decades ago. While having multiple options is usually a good thing, too many options can cause confusion and system overload and lead many people to avoid making decisions about their investment strategies. Most strategies used to invest in the share market fall into three general categories including technical analysis, fundamental analysis, or a buy-and-hold strategy. The fundamental analysis approach is primarily concerned with value; it examines factors that determine a company's expected future earnings and dividends as well as the continued dependability of those earnings and dividends (McDonald 2007, 100). The investor who uses technical analysis attempts to predict the future price of a stock or the future direction of the market based on past price and trading volume changes (Subramaniam 2010, 46). The buy-and-hold approach is the benchmark against which any other approaches to market investing should be measured. This strategy provides the

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