Best Stock Investment Strategy

3 Simple Steps to Get Started

By Zainul Anuar

Find Best Stock

There are many new investors getting too excited to invest in stock market themselves. The online trading platform somehow helps to promote stock investing as well since they can start trading stock without having to go through the stock brokers anymore.

However, 90 per cent of stock investors are losing money…

Most of them failed due to lack of investing strategy in the first place. Without firm investing strategy, you can easily get distracted and end up losing all of your initial capital. In this article, you will learn three things you must consider in structuring your best stock investment strategy.

Screen Profitable Stocks Quantitatively

Despite the fact that stock market is known as the most profitable gold mine, the truth is, 70 per cent of the companies listed in the stock exchange don’t deserve to be there. Although they should only consider their listing to expand their businesses operation, some of them aimed to make easy money out of it.

But, how to differentiate good stock with the bad one?

You can use key financial ratios to do that. Good companies normally have consistent trend but great stocks should have increasing pattern. EPS, ROE and ROA are some of the critical financial ratios you can use to filter them out. Make sure the stock you are about to buy have very good track record. Otherwise, don’t even bother looking at its ticker symbols.

Individual Stock Qualitative Analysis

Once you have some picture how good the company is, now is the time to finalise which is the best. Unless you have so much of money to invest, this will help you to prioritize which stock you should invest in first. At this moment, you might want to start with business you are familiar with.

First of all, you have to understand the companies’ source of income. Even though most of them reap profits by selling their own products, there are companies that make money out of advertisement or rentals. Each of those companies must have competitive edge so that their offers stand out than the rest. This is crucial so that the stock able to enjoy huge profit margins in the long run.

Historical Trading Trends

A historical trading trend is useful to understand how the price is moving. As some of the big companies can leave significant foot print in the price trend, you can easily track which factors affect investors’ sentiments. People can be interested in the stock now that they bought it as much as possible, but there will be times where investors pessimistic on the stocks’ future prospect.

This has a lot to do some breaking news in the financial media. However, you can study the price behaviour and predict what it would be in the coming trends. If you master these trading skills, chances are you will be reaping huge profits from time to time.