Land Shark: Core Foundations of Trading
By Jon Harris
How to Find Stocks to Trade Stocks
It can sometimes be very difficult for new stock traders to find the right stocks to trade. What stocks you trade, and how often you trade will depend on your level of experience. The amount of capital you are sitting on, the market categories you are investing in, and what style of trading you are doing will determine how you pick your stocks. Your stock trading knowledge will develop as you continue to learn about the risks associated with each stock, and about your weaknesses in the stock market. How you are finding stocks to trade should also depend on your goals and your personality. If you are just trying to make a little extra money then you should be trading with stocks with a lower volatility of price dips. You don’t want to have smaller goals, but aggressively invest large sums of money into different stocks. If you are interested in being aggressive in the stock market with your investments then you would be willing to invest in riskier stocks. It’s important to access what degree of risk can you live with and actually afford.
Develop a Strategy
All new stock traders should carefully determine a strategy that can plan for the future, control the amount of risk they are facing, and help preserve capital. Many new traders often just jump into the stock market without knowing exactly what they are doing. New stock traders should be trying to learn how to analyze and predict each stock. All stocks have patterns and different characteristics that you can learn over time. In order to find the best stocks to trade you need to learn the habits of each stock so you can make all the right moves. During different time frames, you will start to notice that the behavior for each stock may have different patterns. The most successful traders on the stock market have a strong understanding of all of the stocks they are trading.
Every day there are thousands of stocks that can be traded. Should you look into the most popular stocks such as Google, and Microsoft? It’s best to do your research on each stock and to get an early start on the trading day by preparing to trade at around 8 am. By getting up earlier you can access each stock and determine what stocks you would like to monitor. You should develop your own stock watch list in different market sectors. It’s best for new stock traders to focus on one or two different stock market sectors to monitor. You should regularly watch the different price movements and changes for a couple months. Also, limit the number of stocks you follow in each sector, so you never feel overwhelmed. You will have an edge over other traders as you develop an understanding of how each market sector moves so you can make the best trades at the right time. Figure out what stock you enjoy following and trading the most. If you become more comfortable with a stock, then you are bound to learn its movements and develop profitable trades.
Monitor Earnings Calendar
Monitoring the earnings calendar can definitely help bring about increased volatility. Keeping track of the earnings calendar will allow you to monitor how the stock is trading going into the earnings announcement. It’s not very wise to attempt to place any trades before the earnings report is released. This would be very risky and is never recommended if you want to be a successful stock trader. It's best to develop a watch list so you know what stocks to watch for on the earnings calendar.