Jeff Ramson on: Stocks - How to Pick a Winner

Stocks: How to Pick a Winner

Because stock prices are influenced by insurance companies, banks, and mutual funds, you must invest in the same stocks as these organizations. If you want to select winning stocks, there are several steps that you must follow.

Step One The first step involves ensuring that the market indexes are reasonable.

For this task, you must search for $INDU, $SPX, and $COMPQ on a free charts site. Under the charts, you can enter a variety of average overlays. Also, there are moving averages on the site, which are displayed in colored-coded lines.

Step Two The Investors Business Daily is a publication that is released every week. The IBD has a 100 list, which is a listing of the highest performing stocks based on earnings, industry group, and price strength. On the left side of every page, you will find a list of various companies.

Detailed information about the companies is located near the list to the right.

Step Three Read the comments that are found under the charts. Then, determine which stocks are in buying range or have a buy point. In some cases, a black box will be placed around these stocks.

Step Five If you find a stock that has a buy point, follow the stock carefully every day. When the stock moves to a point that is higher than the average volume, you may want to buy it. Stocks that are winners will usually have at least two times more than their daily volume early during a trading day.

Step Six Constantly monitor the stock each day to ensure that it remains higher than its buy point. By checking the Investor Business Daily regularly, you will know exactly when it is time to sell.

Bonus Advice You should use investment management software to make the investing process easier. You will need two unique kinds of software; one software must be for personal money management, and the other software should be used for fundamental and technical analysis and for managing funds and stock prices.

Typically, if you don’t have a proper education, you will not be very successful when you buy and sell stock. According to experts, you must understand common accountancy principles and stock market history.

Learning about the scoring system can be quite helpful as well. If you visit any bookstore, you can find numerous books about trading and investing. You don’t have to read all of them; just read a few of them to enhance your financial knowledge.

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