Stock picking is a very complicated process and investors have different approaches.
However, it should follow the general measures to minimize the risk of investments.
This article describes these basic steps for picking high performance stocks.
Step 1.
Decide on the timing and strategy of the investment.
This step is very important because it determines the type of stocks you buy.
Suppose you decide to be a long term investor, you want to find stocks that have sustainable competitive advantages, along with stable growth.
The key to finding these people is by looking at the historical performance of each stock in recent decades and that a simple business SWOT (Strength-weakness-opportunity-threat) analysis of the company.
If you decide to be a short-term investor, you want to join one of the following strategies: a.
Momentum trading.
This strategy is to find that the increase in stock prices and volume in recent years.
Most technical analysis to support this business strategy.
My advice on this strategy is to find stocks that have demonstrated stable and smooth in its price rises.
The idea is that when stocks are not volatile, you can simply ride the trend until the trend breaks.
b.
The opposite strategy.
This strategy is to look for more reactions on the stock market.
Research shows that the bag is not always effective, which means that prices do not always accurately represent the values of stocks.
When a company announces a bad news, people often panic and the price drops below the fair value of the population.
In deciding whether an excess population reacted to a story, you must consider the possibility of recovery from the effects of bad news.
For example, if the stock falls 20% after the company lost a legal case that has no permanent damage to the business of the brand and product you can be sure that the market over-reacted.
My advice on this strategy is to find a list of stocks that have recent price drops, analyze the potential of an investment (through candlestick analysis).
If the investment stocks candlestick patterns show, I will go through the recent news to analyze the causes of the recent price drops for determining the existence of an excess chance of selling.
Step 2.
Conduct research to give a selection of stocks that is consistent with their investment of time and strategy.
There are many projections of stock on the web that can help you find stocks to fit your needs.
Step 3.
Once you have a list of stocks to buy, that the need to diversify in a way that gives the highest reward / risk.
One way is to conduct a Markowitz analysis for your portfolio.
The analysis gives the proportion of money they should allocate to each stock.
This step is crucial because diversification is one of the free lunches in the investment world.
These three steps that began in his quest to make money in the stock market.
Will deepen their knowledge of financial markets, and provide a sense of confidence that helps you make better business decisions.
However, it should follow the general measures to minimize the risk of investments.
This article describes these basic steps for picking high performance stocks.
Step 1.
Decide on the timing and strategy of the investment.
This step is very important because it determines the type of stocks you buy.
Suppose you decide to be a long term investor, you want to find stocks that have sustainable competitive advantages, along with stable growth.
The key to finding these people is by looking at the historical performance of each stock in recent decades and that a simple business SWOT (Strength-weakness-opportunity-threat) analysis of the company.
If you decide to be a short-term investor, you want to join one of the following strategies: a.
Momentum trading.
This strategy is to find that the increase in stock prices and volume in recent years.
Most technical analysis to support this business strategy.
My advice on this strategy is to find stocks that have demonstrated stable and smooth in its price rises.
The idea is that when stocks are not volatile, you can simply ride the trend until the trend breaks.
b.
The opposite strategy.
This strategy is to look for more reactions on the stock market.
Research shows that the bag is not always effective, which means that prices do not always accurately represent the values of stocks.
When a company announces a bad news, people often panic and the price drops below the fair value of the population.
In deciding whether an excess population reacted to a story, you must consider the possibility of recovery from the effects of bad news.
For example, if the stock falls 20% after the company lost a legal case that has no permanent damage to the business of the brand and product you can be sure that the market over-reacted.
My advice on this strategy is to find a list of stocks that have recent price drops, analyze the potential of an investment (through candlestick analysis).
If the investment stocks candlestick patterns show, I will go through the recent news to analyze the causes of the recent price drops for determining the existence of an excess chance of selling.
Step 2.
Conduct research to give a selection of stocks that is consistent with their investment of time and strategy.
There are many projections of stock on the web that can help you find stocks to fit your needs.
Step 3.
Once you have a list of stocks to buy, that the need to diversify in a way that gives the highest reward / risk.
One way is to conduct a Markowitz analysis for your portfolio.
The analysis gives the proportion of money they should allocate to each stock.
This step is crucial because diversification is one of the free lunches in the investment world.
These three steps that began in his quest to make money in the stock market.
Will deepen their knowledge of financial markets, and provide a sense of confidence that helps you make better business decisions.
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