January 7, 2016 at 12:30 pm #387Anonymous
How To Use The Plethora of Market Tools To Find Good Stock Investment Opportunities.
So you’ve decided you want to invest in the stock market but where do you begin? After setting up your online trading account you take one look at the thousands and thousands of possible financial instruments and if you are like most people, shut down the computer and turn on the Television. The sheer volume of choices can be intimidating and even after you finish that 6 week course on “Online Trading In The New Age” you feel nearly as lost as when you began. Except of course, at least after the course you do understand the differences between a bond, fund and security. The problem is that there are still thousands and thousands of stocks to choose from. What do you do to find those perfect stocks to invest in?
The plethora of choices may seem like an insurmountable mountain of choices and you may feel the need to pick up the phone to call your broker or that friend that talks stocks all the time. In fact narrowing your choices is probably easier today than it has ever been. There are virtually an unlimited number of free financial tools on the web to assist in refining the choices to find investments you are comfortable with. Once you become familiar with using these tools you will no doubt be able to select your potential investments with confidence.
To begin with you first need to decide what type of investment approach you plan on using. Some common classifications are High Risk versus Low Risk, Long Term versus Short Term or Fundamental versus Technical, etc. However, these are guidelines not rules and ultimately you make the decisions so use the criterion that suits you best. Regardless of which style or combination of styles you choose there are tools that can narrow your search for the right stocks.
For the purpose of simplicity in this article we will focus on traditional stock purchases rather than short selling, options or other investment vehicles. Our starting point should be one of the oldest adages in the market. You have no doubt heard this phrase more times than you care to consider: “Buy Low and Sell High!” The funny thing is that the vast majority of people who invest in the market do exactly the opposite, why? The most likely reason is because most people make their purchase based on advice in television programs or on the net or from friends well after the stock is already oversold or very near its peak.
If you want to buy low then look for stocks trading below their normal price levels. There are a number of tools to help you find stocks in this category. An obvious one is the most actives category. A number of sites offer free stock screening services that will filter the stocks that lost the most value usually by dollar or by percentage for the day. These stocks may have lost price value because of internal reasons or because of external factors. In either case you have a starting point, a list of stocks that are now low. From this list you have to determine which ones will continue to drop and which ones will turn back up and regain value.
Another sorting function is the new 52 highs and lows. A number of systems provide regularly updated lists of the new stocks on any particular exchange which have reached their highest high or lowest low over the past 52 weeks. In other words the new 52 low stocks are at their lowest point in the past year. That should sound like a bargain to you because it often is. Like any other declining stock you need to research news and other factors to ascertain why the stock is down. In many cases however you will find that market pressures are the biggest single factor and the stock will often rebound for a rally. The list of new 52 highs and lows changes constantly during each trading day so check the 52 lists often for new buying opportunities.
News often reveals the future direction of a stock as most investor realize however many investors do not assess the ramifications of general market news on a particular stock. Rather than seek out new press releases on companies to evaluate for a buy try monitoring the news of general economic factors which have a bearing on particular industries or sectors. A number of websites offer free news feeds as well as searchable news. It is easier to today to obtain specialized news data than it has ever been.
You must be logged in to reply to this topic.