| Picking a good stock is not easy in beginners stock | | | | begin to match the company's perceived value. |
| trading. While many joke that the best picks happen | | | | Growth Investing: As a contrast to value investing, |
| when you throw darts at a newspaper's business | | | | growth investing focuses on a company's future |
| section, we all know the process should be more | | | | potential, regardless of the current price. A growth |
| complicated than that. The problem is two-fold: | | | | stock's intrinsic value may be lower than its stock |
| 1. There are a great many factors to consider in | | | | price, but as the company grows, its stock price can |
| picking stocks. | | | | be expected to grow along with it. Growth |
| 2. There is no ultimate "magic solution" strategy. | | | | companies are commonly found in industries that are |
| Simply stated, there is no single way to choose | | | | expanding quickly, or dealing in new technologies. |
| stocks. That being the case, here are a few of the | | | | CAN SLIM: This powerful stock picking strategy is a |
| most common beginners stock trading strategies that | | | | hybrid of several methods. Each letter suggests a |
| people use to pick stocks. | | | | different element to research, ultimately giving you a |
| Technical Analysis: Technical analysis is, essentially, the | | | | complete list of core factors to weigh. This strategy |
| study of a stock's chart. Pull up a chart, with price | | | | is recommended for beginners stock trading. In order: |
| action, volume, a few indicators, and begin to look | | | | C - Current quarterly earnings per share should be up |
| for various clues as to where near-term price targets | | | | more than 18%. |
| may be. Evaluate the chart for support and | | | | A - Annual earnings per share should show significant |
| resistance lines, current trends, and patterns. Once | | | | growth over the last five years. |
| you understand charts, this method can be the | | | | N - New products, management, industry conditions, |
| quickest and easiest path to finding price information | | | | or price highs are important. |
| for beginners stock trading. It can help you choose | | | | S - Shares outstanding should be reasonable. |
| entry and exit points, but it is not the entire picture. | | | | L - Leaders should be bought over the market |
| Fundamental Analysis: The key to fundamental | | | | laggards. |
| analysis is to get an idea for a company's inherent | | | | I - Institutional sponsorship should be present, with |
| value. It is a simple process, but can take a bit of | | | | good recent performance. |
| time. Finding a company's fundamentals involves | | | | M - Market condition can trump everything, so take |
| researching the company's management, industry, | | | | note of the overall current direction of the market. |
| and financial statements. | | | | These stock picking strategies can get very involved, |
| Value Investing: One of the best known methods for | | | | but they are essential for good stock picks in |
| choosing stocks in beginners stock trading, value | | | | beginners stock trading. There is no sure-fire way to |
| investing seeks out a strong company, fundamentally, | | | | pick a winning stock every time, but these methods |
| with a stock price that is below its expected value. | | | | will help you weed out the vast majority of losers. |
| The premise is that by investing in a value stock | | | | Try choosing a few stocks using each of the |
| early, the price has room to move up, without | | | | categories above, to see which method works best. |
| overvaluing the company. This method takes a bit of | | | | Stick to your favorite method, and your trading will |
| patience, as it may take some time for the price to | | | | improve! |