How to Find Stocks to Trade
Simply being interested in the stock market is not enough to be successful as an investor. You have to be able to find good stocks to invest in and then put your money into them. If you randomly choose the stocks, you may not be a winner in the market. Finding the right stocks is often the most difficult part of trading the market. By using tools like stock screeners and financial ratios, you can often find winners for your portfolio.
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Instructions
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Determine the investment criteria that you are looking for as a stock investor. Not every stock will suit you as an investor. You need to decide if you are after regular dividends or if you want the most capital appreciation. You also need to determine what your time frame is and how much risk you are comfortable with. Some companies are very volatile and can appreciate in value rapidly while others grow slowly. Deciding what type of stock you are after can help you in your efforts to identify winners.
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Use a stock screener to help find a stock that fits your investment criteria. A stock screener is a tool that you can access online from one of the many financial evaluation companies like MorningStar. With this type of device, you can specify exactly what you are looking for in a number of different categories. The screener will then narrow down all of the available stocks in the market to find stocks that meet your criteria.
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Evaluate the remaining stocks according to the criteria that you have as an investor. It is now time to do some research into the companies behind these stocks. You can get copies of their financial statements online. You should then perform fundamental analysis on these stocks by using financial ratios. These are popular formulas that give you indicators about a company's potential. For example, the price to earnings ratio is a popular ratio that compares the price of the stock to be annual earnings of the company. Using these ratios can give you an idea of whether the stock is over or under valued.
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Research the companies as well as you can before making a decision. It may be a good idea to look at recent news items surrounding the companies to determine if they would be a good investment. You can look at what stock analysts have to say about a particular company to get an idea of what the experts say as well.
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