Picking stocks can be very intimidating, especially if you are a first time trader with fear on making a loss on your investment. There are, however, certain factors to consider when venturing into the stock market. Below are 6 easy steps on how to pick stocks which will increase your chances on making incredible profit on your investment.
1. Your Reasons for Picking Stocks – It is of utmost importance that you assess your reasons for investing in stocks. Decide on whether you are investing for the short or long term. This will be your starting point.
2. Pick Companies That Are Leaders In Their Field – If a company is a leader in their field they must be doing something right and there is a good chance you will be making a sound investment.
3. Familiarise yourself with the Company – Once you have decided on a company, it is time for you to evaluate the company’s financial position. It is important that you are comfortable with your selection. This can be done by studying their annual/quarterly reports. These reports are available to the public.
4. Diversify Your Portfolio – There is more risk attached to investing in a single stock than by investing in a group of stocks. But there is also a lot more profits that can be made. For this reason, first time traders trying to build their trading account should choose to trade only one market, instead of a group of markets.
5. Be Patient – Follow the stock for a few weeks before deciding to include it in your portfolio.
6. Don’t Believe Everything You Hear – Don’t just take it for granted when someone recommends you to pick a certain stock. The person might be punting the stock because he has a personal interest in its success.
It is safe to say that your decision to invest in stocks would be with the intention of getting the best possible return on your investment. With this in mind it is important to make the right choices to achieve this goal, and starting with the knowledge on how to pick stocks, you are already on your way to make money on markets.