What is your stock picking method? Is it successful? These are questions that you need to be 100% sure of if you are going to make excellent returns. People that do well have and method and they stick to it. People generally don’t do well and float from method to method.
A lot of people leave their stock picking to the ‘experts’. When I say ‘experts’ I mean the financial pages of newspapers. People read stock tips in the financial paper and make an investment decision based upon that alone. I am not criticizing this as I used to do that when I started out. Can you really make superior returns that way? I know that I didn’t.
A better way of doing it would be to use a stock trading newsletter. These often give recommendations but go further by giving more detailed research. The first advantage of a newsletter is that you will be to see how experts interpret data and then translate that into a recommendation. The second benefit is that you will be able to view past recommendations and see how well they have performed. Many will have a portfolio printed of the recommendations so you will be able to see how well they have done.
Usually the newsletters and the papers will use fundamental analysis as their preferred method of stock picking. Something that is increasing popular these days is technical analysis. With technical analysis you look for patterns in the price instead of a strong cashflow statement.
Technical analysis, as the name suggests, can be quite tricky. Before you start implementing technical analysis into your trading style you should do a technical analysis course. Your returns will undoubtedly get better if you can madter and use some of the techniques.
There are lots of different stock picking methods that you can use and we have been over a few here. Don’t feel that you should restrict yourself to only one of the methods. Why not experiment in combining a couple and seeing how you get on with that?
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