Here’s a simple five stage process to help get you going out on the right track :

1. Finding a stock.

This is the most blatant and hardest step in securities dealing. With well over ten thousand stocks to trade in a good axiom is to think about 1st in which sector you need to trade in first. Naturally you’d be taking a look at a sector that’s receiving good media coverage and in which the stocks worried are going in in value. It is clear that you wouldn’t be looking too hard at a sector that was experiencing a dreadful recession. When you’ve decided in which sector you would like to make an investment in you may then commence to start researching for a stock.It is always better to have a system of rules already in place which will be used before buy each stock.

2. Fundamental investigation.

A lot of short term traders might argue with the need to do any Fundamental Analysis at all, however knowing the stocks past history and the latest up to date news regarding the stock can be very crucial.A good example would be the earnings season. If you are planning on buying a stock that has missed its earnings target the last 3 quarters, I dare say caution might be very wise.

3. Technical research.

This is the part where the indicators play a part. Stochastics, the MACD, volume, moving averages, RSI, CCI, support levels, resistance levels and all the rest. Whichever batch of indicators you choose, whether they are lagging or leading, may entirely hinge on where you get your information from. Keep it very simple when you first start out, for using too many indicators in the first place is a guarantee to achieve big losses. Get comfortable using one or two indicators first. Learn their intricacies thouroughly, and you’ll be on the road to making more profitable trades.

4. Follow your decisions.

When you’ve committed to 2 trades you must then begin to manage them correctly. As an example if the stock is designed to be a short term trade you would then obviously be watching it closer for your exit signals. If it is a long term trade you then naturally need to set up different time frames like monthly or weekly checkups on the stock.This effectively frees you up and gives you more time to do other stuff. You may use this time cleverly for keeping recent with the news, determining your price targets, set stop losses, and keeping an eye fixed on other stocks that you may wish to purchase in days to come.

5. Keeping a watch on the larger picture.

This is best done by following the actual sector in which you purchased your stock .For example, if you’re expecting a share price to go up on an oil stock you bought and almost all the other stocks in oil sector are also rising, then this is cofirmation that you could have made the correct decision.

But of course the reverse holds true as well. If the oil sector is starting to show a decline then it might be a good idea to take your profits and run. By knowing in advance and being aware which sectors are hotting up or cooling off stacks the odds in your favour.

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