Hot Tips to Select the Best Stocks to Buy

Hot Tips to Select the Best Stocks to Buy Learning how to pick the top stocks to buy can be a daunting task even for those who have been trading for some time; however, the process can be simplified. You need to begin by asking yourself “why you are buying a stock� of course for profits, as you would say, but there is more to it! This article looks at the steps needed to select stocks for a long-term buy and hold strategy for investment and greater profits in the future.

You will come across several enticing get rich quick schemes, each claiming to give precise buy and sell signals. Whilst these systems may work sometime, over longer periods they eventually fail, as the markets are essentially driven by factors other than statistical analysis of historic data. The fact that something has occurred in a particular way in the past, is no guarantee that it will behave that same way in the future - it this was the case there would be many rich investors around the world!

The process you may use to identify top stocks to buy is largely a technical approach, but also includes elements of fundamental analysis at the macro level.

Step 1: Evaluating Current Economy Wave Depending on the current economy of a country you are investing, some stocks and sectors perform better in recession than in boom; and vice versa.

For example, utility stocks generally perform well in early recession as people are looking for guaranteed income streams.

Step 2: Discover Sectors that Establish Indices Analyze the sectors that establish indices and find the ones that are performing well, and those that are doing badly – clearly you want to find the best stocks to buy in the sectors that are doing well and have the potential to for an uptrend in the future. Having identified possible sectors and companies, those stocks are listed on a watch list, and monitored for a daily 2% price increase.

How long they remain on the watch list will depend on the chart but, assuming an individual stock looks like a possible buy, there is still some more work to do. It is important to look up dividend and earnings dates as well as director dealings as these may give us clues or warning signals as to whether this is in fact the best time to buy.

Step 3: Stop Loss When placing the buy orders we always have a stop loss in place in case the price trend suddenly reverses.

Overall you are looking to have a balanced portfolio of stocks in a variety of sectors, because you don't want all your eggs in one basket!!

How to Analyze The only software that you may use for the above analysis is a simple end of day data charting package this allows you to run the required filters (either by sector or by price movements) and to do all the analysis of support and resistance and moving averages that your require.

In essence, the process starts with the macro and moves down to the micro in a series of stages, using both technical and fundamental data. For new traders, try practicing either by paper trading or using a free online stock trading game, as it allows new traders to try out strategies, understand the various markets, learn how to place orders, and to become comfortable with all the terminology of stock trading.

To be a successful stock trader you need to know the best stocks to buy - success lies in the effort you put in at the start!