Stock Investment Research before Investing

Stock Investment Research before Investing

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Stock Investment Research before Investing

Once you decide which business cycle the economy is currently in you can start Stock Investment Research before Investing. It is better to have some sort of set up a system in place that will be used before each trade. Here is a simple 5 Step formula for Stock Investment Research before Investing.

5 steps for Stock Investment Research before Investing

1. Finding a Stock:
Finding a Stock is the most obvious and this is most complicated step in online stock trading. With more than 10,000 stocks to trade, a good thumb rule is to consider the time of the year. For example, it would be wise to consider stocks that conventionally make runs, or go down if you are bearish, during this time of year.

2. Fundamental Analysis:
Many traders, who are interested in trading for a short term, may disagree with the requirement to do any fundamental analysis, however knowing the chart patterns from the past performance and the news & reports regarding the stock are relevant. An example would be the earnings season. If you are planning to play a stock on the rise that has missed its revenue target of 3 quarters, caution might be in order.

3. Technical Analysis:
This is the step where the indicators are in to the picture. Stochastics, the MACD, volume, moving averages, RSI, CCI, support levels, resistance levels and everything else. The batch of indicators you choose, whether lagging or leading may depend on where you get your education.

Keep it very simple when you start, using too many indicators in the start is a ticket to the land of large losses. Get very comfortable in using one or two indicators first. Learn their ins and outs and you'll be sure to make better trades.

4. Follow your picks
Once you have placed a few stock trades, you will need to manage them properly. If trade is supposed to be a short term, watch it closely for your exit signal. If it is a swing trade, to monitor the indicators that tell you the trend is changing. If it is a long term trade, remember to set the weekly or monthly checkups on the stock.

Use this time to keep abreast of current news and events, decide your target prices, set stop losses, and keep an eye on other stocks that you may want to own as well.

5. The big picture
As the saying goes, all ships rise and fall with the tide. Know which sectors are heating the pile of chips in your favor.

For example, if you are long (expecting prices to rise) on an oil stock and most of the oil sector is rising then more likely than not you are on the right side of the trade. Several trading platforms will give you access to information across the sector so that you can get the education you need.