How do you decide which stock to buy?

petermac23 · Jan 20, 2011

Hi everyone,

I'm new here so just wanted to say hi. I am still currently studying the fundamentals of stock and option trading but I wanted to find out what data you guys use to decide which companies you want to buy/sell stocks in.

Thanks

Pete

leonarda · Jan 20, 2011

petermac23 said:
Hi everyone,

I'm new here so just wanted to say hi. I am still currently studying the fundamentals of stock and option trading but I wanted to find out what data you guys use to decide which companies you want to buy/sell stocks in.

Thanks

Pete

hi,
I follow methods similar to those suggested in the NakedTrader book for medium term trading/investing.
My method in a nutshell:
- Buy Strong stock relative to Index/Sector, that is also in a Strong Sector relative to Index.
- Stock in uptrend, pulling back from a 52week high, buy the dip etc..
- I check the Stock's latest report for good revenue/profit/dividend growth, low net-debt, and good outlook, etc...

petermac23 · Jan 20, 2011

leonarda said:
hi,
I follow methods similar to those suggested in the NakedTrader book for medium term trading/investing.
My method in a nutshell:
- Buy Strong stock relative to Index/Sector, that is also in a Strong Sector relative to Index.
- Stock in uptrend, pulling back from a 52week high, buy the dip etc..
- I check the Stock's latest report for good revenue/profit/dividend growth, low net-debt, and good outlook, etc...

Thanks very much Leonarda,

This covers all the aspects I have been thinking about. I want to begin trading soon so thanks a lot for your help.

enni82 · Jan 20, 2011

Before you buy a specific stock I would recommend watching it for a few months, or even paper trading it for a bit. Just to get a feel of how it trades and what kind of range it trades in. I seem to do best when I just observe for a few months and pick my entry point more wisely.

petermac23 · Jan 20, 2011

enni82 said:
Before you buy a specific stock I would recommend watching it for a few months, or even paper trading it for a bit. Just to get a feel of how it trades and what kind of range it trades in. I seem to do best when I just observe for a few months and pick my entry point more wisely.

How long do you usually look at the stock for? Would you say 2 to 3 months?

leonarda · Jan 20, 2011

enni82 said:
Before you buy a specific stock I would recommend watching it for a few months, or even paper trading it for a bit. Just to get a feel of how it trades and what kind of range it trades in. I seem to do best when I just observe for a few months and pick my entry point more wisely.

I sort of agree. However, I would say it depends on your strategy a bit. Range trading this is definitely necessary. I found that with experience over time you start to get to know how certain stocks and sectors behave.

isatrader · Jan 20, 2011

enni82 said:
Before you buy a specific stock I would recommend watching it for a few months, or even paper trading it for a bit. Just to get a feel of how it trades and what kind of range it trades in. I seem to do best when I just observe for a few months and pick my entry point more wisely.

I think this is a good idea for a new trader. I have about 7 fake portfolios set up in ADVFN. I set the fake cash amount and then buy stocks that interest me for the amount I would spend if I was buying them for real. You can then see the prices moving during the day and how you are doing. It really gives you a feel for the stocks as you see how they move on a price basis that means something to you other than just viewing it on a chart.

Attached is a screen shot of one of my watchlist portfolios so you can see what I mean.

petermac23 · Jan 21, 2011

isatrader said:
I think this is a good idea for a new trader. I have about 7 fake portfolios set up in ADVFN. I set the fake cash amount and then buy stocks that interest me for the amount I would spend if I was buying them for real. You can then see the prices moving during the day and how you are doing. It really gives you a feel for the stocks as you see how they move on a price basis that means something to you other than just viewing it on a chart.

Attached is a screen shot of one of my watchlist portfolios so you can see what I mean.

I like this idea isatrader. I have signed up to yahoo finance and I think they have an equivalent program. I had to sign up to it a while ago as part of a module for my course, but do you think it is good enough or shall I give ADVFN a try?

leonarda · Jan 21, 2011

petermac23 said:
I like this idea isatrader. I have signed up to yahoo finance and I think they have an equivalent program. I had to sign up to it a while ago as part of a module for my course, but do you think it is good enough or shall I give ADVFN a try?

I use advfn as well for portfolio management, but what it really is good for is looking at company reports/news/fundamentals etc.., and also lots of good filter capabilities.

isatrader · Jan 21, 2011

petermac23 said:
I like this idea isatrader. I have signed up to yahoo finance and I think they have an equivalent program. I had to sign up to it a while ago as part of a module for my course, but do you think it is good enough or shall I give ADVFN a try?

I use their paid service to get live prices, but I think you can still do the portfolios on the free option, with the prices delayed by 15 minutes.

isatrader · Jan 21, 2011

leonarda said:
I use advfn as well for portfolio management, but what it really is good for is looking at company reports/news/fundamentals etc.., and also lots of good filter capabilities.

The financials bit is good on advfn. I like the coloured balance sheets stacked graph, as gives you a good overview at a glance. The thing I especially look at is the liquidity ratios – Quick Ratio (Acid Test) is the main one for me. If it isn’t above 1 I stear well clear.

Another free site to look at which has portfolio options and full company data is Digital Look. Here’s the link: http://www.digitallook.com/

leonarda · Jan 21, 2011

isatrader said:
Another free site to look at which has portfolio options and full company data is Digital Look. Here’s the link: http://www.digitallook.com/

yep, I use www.digitallook.com too! great site.

isatrader · Jan 21, 2011

leonarda said:
yep, I use www.digitallook.com too! great site.

I like that on Digital Look you can see the forecasts for earnings growth. As I think if you’re buying a company to hold then it needs to be forecast to be growing it’s earnings. For example, see attached for Vedanta which I hold.

petermac23 · Jan 21, 2011

isatrader said:
I like that on Digital Look you can see the forecasts for earnings growth. As I think if you’re buying a company to hold then it needs to be forecast to be growing it’s earnings. For example, see attached for Vedanta which I hold.

Nice one guys, I haven't even heard of these sites before. I like the Digital Look one, it gives you a good amount of company info. Thanks alot for these. I'm gonna go have a try on them now.

Cheers!

isatrader · Jan 21, 2011

petermac23 said:
Nice one guys, I haven't even heard of these sites before. I like the Digital Look one, it gives you a good amount of company info. Thanks alot for these. I'm gonna go have a try on them now.

Cheers!

Good luck

Pazienza · Jan 23, 2011

hayowhatsup said:
Anton Kreil (CEO Institute of Trading and Portfolio Management, BBC2's "Million Dollar Traders") offers you the opportunity to “Trade Your Way To Financial Freedom.”

Hi Hayowhatsup,

Of course we all know that you are WILLYBOY reincarnated.

Check out this thread, helpfully entitled "Hey Willyboy! Stick this up yer Anton Kreil!".

http://www.trade2win.com/boards/general-trading-chat/116186-hey-willyboy-stick-up-yer-anton-kreil.html

You will notice that it is full of ridicule.

Now answer me this, WILLYBOY. If Anton Kreil is such a good trader, why is he flogging trading courses for £500 per day

?

Regards,

C0CKMAN

How do you decide which stock to buy?

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