Two main categories of analysis are fundamental analysis and technical analysis.

Fundamental analysis considers the financial and economic data that may influence the viability of a company. There are many flavours of fundamental analysis centred on such concepts as value, growth and turnarounds. Technical analysis is the study of the price chart. It assumes that by looking at the progress of that little squiggly line you can forecast the future trend of a stock. Fundamental analysis is essential to most investors, and technical analysis is essential to most traders and speculators. Derision and scorn is poured down on tech methods by hardcore fundamental investors who regard the whole business as flawed and naïve, whereas technical analysts or "chartists" hold that in today's well informed markets all possible data is already reflected in the share price, and that fundamental analysis is futile, at least for every day people who's analysis skills are somewhat below those of the teams of analysts toiling away around the clock for the major banks and funds, who seem to know everything anyway.

When skillfully applied, technical analysis can provide useful insights into the best time to buy, perhaps because of some innate truth, but probably just because so many people believe in their validity many technical signals are in fact very useful and reliable indicators of at least the very short term future price movements. At any rate the fundamental basis of a good technical analyst's trading method boils down to "run your profits and cut your losses", which usually means hanging on to an uptrending stock and ditching it when it starts to falter. Merely following a trend can be a profitable and honourable profession, and sophisticated trading methods frequently are little more than a few bells and whistles attached to a simple concept of going with the trend. Those who completely ignore technical methods out of hand are often proven right in the end, but aren't likely to have bought at the best possible time.

Likewise, you should not ignore fundamental analysis. While charting is useful, unless you fully understand a company you really are doing nothing more than attempting to divine the future by watching the past, and major underlying changes happen all the time when management is changed, profits are made and lost and new products are introduced. Many of the smaller companies are too thinly traded to show any useful technical signal, and often larger funds won't touch them, your only way of analysing them is through fundamental methods. Ideally you should concentrate on fundamental reasons for buying a stock, this is very important, and try to fine tune your purchase timing with charting, if you want to do that. Chartists are not investors, they are speculators, and frequently are the ones buying stocks right at the top of the trend when fundamental investors have long since decided the stock was too expensive, and sold out.