5 Ways To Research Stock Trade Before You Invest

When you determine the business cycle the economy is currently in, researching for a trade is what you can do next. Having some sort of system in place that will be used is considered the best option before each trade. Here is a simple 5 Step formula to help get you started.

Here are the 5 Steps to Investing Online

Finding a Stock In stock trading, this is the most obvious and the most difficult step. Because there are over 10,000 stocks to trade, the time of the year is a good rule of thumb to consider.

Fundamental Analysis Many short term traders may disagree with the need to do ANY Fundamental Analysis, however knowing the chart patterns from the past and the news regarding the stock is relevant. An example would be earnings season. Caution could be in order if you are planning on playing a stock to the upside that has missed its earnings target the last 3 quarters.

What are the Technical Analysis? This is the part where indicators come in. Whether lagging or leading, the batch of indicators you choose may depend on where you get your education.

Keep it simple when first starting out, using too many indicators in the beginning is a ticket to the land of big losses. Getting very comfortable using one or two indicators first would be a good idea. Learn their intricacies and you’ll be sure to make better trades. Why you should follow your picks When a few stock trades have been placed, your next step is to manage them properly. If the trade is meant to be a short term trade watch it closely for your exit signal. If it’s a swing trade, then the indicators telling you the trend is shifting is what you should watch out for. Setting weekly or monthly checkups on the stock is what you can do if it’s a long term trade.

This time can be used to keep abreast of the news, set stop losses, determine your price targets, and keep an eye on other stocks that you may want to own as well.

Knowing the big picture As the saying goes, all ships rise and fall with the tide. Knowing which sectors are heating up stacks the chips in your favor. For example, if you are long (expecting price to go up) on an oil stock and most of the oil sector is rising then more likely than not you are on the right side of the trade. Several trading platforms will give you access to sector-wide information so that you can get the education you need.

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