Stockpicking Part 2 - Bottom Up

Stock Market - Bottom Up Analysis

When it comes to stockpicking – choosing which stocks to invest in and trade – there are many different techniques which have proved successful in the stock market. The most important thing is to consider as many as possible, and find the ones which work best for you. Last week’s post about top down analysis described a top down approach; finding a broad area of the economy you think will perform well and then finding the best stock in that sector. This is useful for those with big picture views that are often unsure how to create a trading strategy or trading model based on them, but it doesn’t work for everyone.

Stockpicking Part 1 - Top Down

Starting Stockpicking

Choosing your first stocks to trade or invest in can be a daunting task. Why should your stock be the best one? What about the thousands of people out there who will inevitably disagree with you? Generally speaking, 50% of investors will make money, and 50% will lose money. There is always a small portion of the market that invests on a whim, without reliable information and without an exit plan, and usually fall within that losing 50%. Your aim is to not fall into their habits and claw your way into the successful 50%, and the surest way to do that is through hard work and thorough analysis.

Free Broker Research

Broker Research

Free broker research can be immensely useful for both trading beginners and those who are more experienced in the markets but are looking for different strategies in order to improve their returns. The stock research can often be obtained through brokers who own the research, for example Comsec in Australia, and since it costs nothing, there are only rewards to be reaped for you. The stock research often contains details the company, what the future catalysts for price movements are, what their target price is and whether they recommend buying or selling the company in the short, medium or long term. Whilst this is great, there are a few significant drawbacks that you should be wary of.

Trading Online Simplified - Part 3

Trading at its Simplest

This is the last of the three part series seeking to clarify and simplify some language used in trading and investing that can leave beginners confused. All good trading blogs should seek to enhance the reader’s learning, and hopefully this one is no different. If you have any questions about the topics, or any topics for that matter, do leave a comment and I’ll get back to you when I can.