How do you chose stocks?

Question

How do you know a stock will go up? Is it good news/media? Is it more mathematical/pattern based?

choose*

Answer 1

I do not know if they will go up. Many times they do the opposite--go down.

I first determine if the company has a good earnings record. Actually even before that I determine whether it is reasonably priced or not. If the pe is over 25, I will almost certainly avoid it, but not always. I must admit that I do own a couple with somewhat astronomical pe ratios.

The stock also has to fit into my portfolio. Not too much of a good thing so to speak. A little of this and a little of that. Well not exactly. I like to take a small position in a stock and when the stock goes up a point double up. Up another point add again and so on. That way I am betting on winners, not loosers. The loosers get short shift out of the porfolio.

When I research a stock I also check the technical analysis of the stock. I try to avoid stocks that are technically weak. Not always, I do like bargains now and again but in general those should be avoided.

Answer 2

Most of the time I pick a stock that has formed a base. A base is a price support/resistance range. Six weeks of trading in a range or longer. If the price breaks out of its resistance range on heavy volume. Which is at least 30% above normal volume, and then has another day of heavy volume to the upside that stock qualifies for further examination.

Like do I like the industry its in. What is the PEG ratio. I like it to be around 1.5.

I don't care if it has a high PE ratio as long as it's growth rate supports it.

The most important factors are the general market itself. If money is not coming in the market that stops most stocks from going up regardless of its fundamentals.

After buying a stock you better be prepare to sell that sucker fast it goes down more than 7%. Not having a sell point on each stock will lead to a disaster.

I recommend you pretend to buy stocks and see how you do first.
If you don't have a system you will be eaten alive.

Answer 3

I choose stocks based on where I predict it to go in a certain amount of time. I get that prediction from several different technical indicators and oscillators that help me to figure out where my target for that stock is. Then I use either one or several option strategies based on where I think the stock is going to go (either up, down, or sideways. I can make money no matter where the stock goes, based on the option strategy I choose). Once in a while, I will get into an option right before or during an announcement or news. Most of the time I pick my stocks off the technicals.

Answer 4

I'm a private, technical trader/investor so I use technical indicators as well as some fundamentals to choose stock. Technical indicators are based on mathematical formulae constructed from historical stock patterns in the market. These tech indicators in many cases derive graphs which I then use to determine the predicted direction of a stock. Also, I include fundamentals the could majorly affect the price of a stock before I place a trade.

Answer 5

There is a simple formula with a difficult strategy. Good Investment= Amount of Risk + Estimated Return. The hard part is all factors of this change. When picking a stock think of the company, research it and see how you think it will do in the future economy. Good luck to you!

Answer 6

There is no certain forumula or secret. Look what happened to Enron.

There are lots of factors that can make a stock a good pick. Find companies with low debt, consitancy, and lotsa cash.

News and media are worthless.

There are guides and software to help ppl pick stocks.