Best Stocks To Buy And How to Pick Them
best stock to buy
Learning how to pick the best stocks to buy could be a frightening process even for those who have been trading for a period of time, but this need not be the case, and the first query we want to ask ourselves is ‘why are we buying?’ a stockholder looking to buy and hold for 5-10 years, would have totally different buying criteria to a short term day trader or an equity option writer, so before rushing in to buy our stocks, we want to have a very clear idea of our goals and objectives for the stocks we are proposing to buy.
There are of course, many firms offering ‘black box’ solutions, get rich quick schemes, and software that may give you exact buy and sell signals. Whilst a few of these systems may work some of the time, over longer periods they eventually fail, as the markets are largely driven by factors aside from statistical analysis of significant data. The fact that something has occurred in a specific way in the past, is no guarantee that it’ll behave that way in the future – it this were the case there would be many rich backers round the world! jilbab online
As a full time technical trader myself, I have found over time that the simpler the system the better, and just about all the info I use is freely available on the internet. All that is required is some effort, difficult work and tons of practice. The method I use to identify best stocks to buy is largely a technical approach, but also incudes components of fundamental analysis at the macro level the method if fully explained on my site, but the guidelines are as follows.
Step 1 is to think about the economy of the country where you are investing, as some stocks and sectors perform better in recession, than in expansion, and vica versa. As an example, utility stocks often perform well in early recession as the pro money is looking for safe stocks with guaranteed income streams. Having done this the next stage is to have a look at the main indices of the country and to establish a long term view from the charts. In the US this would be the S & P five hundred or the DJX thirty, and in the UK the FTSE one hundred, 250 or 350. We then start to drill down into the sectors, taking a look at those that are performing well, and those that are doing badly – clearly we would like to look for stocks in sectors that are doing well and in a long-term uptrend.
Now we start to have a look at the charts of stocks in these sectors to spot those performing well and in long-term up trends. The only indicators I use as this stage are volume, and simple moving averages. We are searching for any odd volume patterns, analysing candle formations, looking for support and resistance levels, and any symptoms of a breakout.
Having identified some possible prospects, we then filter these on a daily basis looking for a 2% increase in price on the day for stocks within our watch list. This highlights target stocks that are active. Before purchasing we’d then look at possible revenues dates, dividend dates, directors dealings, and any other details that can give us clues or caution signals which we deserve to be aware of before putting the buy order. Finally when placing our order we always have a stop loss in place in case the price trend reverses suddenly. Overall we are looking to have a balanced portfolio of stocks in a selection of sectors – we don’t want all our eggs in one basket!!
The only software that I use for the above research is an easy end of day information charting package – this allows me to run the necessary filters ( either by sector or by price movements ) and to do all of the research of support and resistance and moving averages that I need.
Basically the method starts with the macro and moves down to the micro in a series of stages, using both technical and basic information. It is simple and free and one that i have used for many years with great success. For new traders I’d also suggest practising employing a free web-based stock trading game, as it permits new traders to practice secrets, understand the assorted markets, learn the way to place orders, and to become comfortable with all of the terminology of stock trading.
To be a successful investor you need to know the best stocks to buy – success is in the labor you put in at the start – I’m hoping the above helps a little!