How To Choose the Best Stock to Trade?

Of all the stocks available in the market how do you choose the one you trade? Probably, you usually look for expensive and well known stocks or you want those which fit to your financial state. But above all these, you have to understand how to evaluate the value of the securities, thus, a careful research and a bit of effort to learn is highly needed.

Company Profile

The first thing to know is the profile of the company. You have to check if is it is profitable and make a research regarding its earnings. In general, these individual stocks release their quarterly earnings report, so from there you can have an idea which one earns and which one does not. You may take note its net income, per-share earnings and its outlook. If you don’t understand anything about the company or the stock, don’t buy it.

Pre-market Movers

Pre-market period occurs from 8:00 to 9:00 am on a daily basis. During these hours, there is limited volume and liquidity that’s why traders are usually watchful of how the market turns out to be. The movement of a stock during this period says a lot about its performance at the regular hours.

Apple, Google and Intel are some of the pre-market most active stocks. If you want to trade at this time of the day, you must look for stocks with heavy volumes and trades higher than $5 dollars. When it comes to the major indices, it is advisable to assure the broader value of their futures. In addition to this, you may just follow the trend of the broad market.

Trade12 - Trade History

Trade History

If you trade for the long time already, you may just refer to your own experience. Your experience is still one of your best teachers which you can rely upon. If you are already comfortable with the stock you trade and you get the return of investment just the way you expect it, then you might as well stick with it. You can easily predict the movement of the stock you are familiar with.

Choose and Focus

You have all the freedom to choose the stock that you want to trade. After you have chosen carefully, focus on it or them. Basically, you can have at least one or two stocks to focus which could be your favorite or just the famous ones.

Roger’s Communications, First Merit Corporation, Kellogg, Spartan Nash, Merge Healthcare, American Vanguard, Blackstone/GSO Senior Floating Rate Term Fund, Yamana Gold and Coach are just some of the great stocks for 2015 according to Forbes.

However, don’t be blinded by the fact that if the stock is prominent in the market, there is a possibility that demand left a big impact on the stock, thus, it will result in a higher price. You can also consider the predictions of the market analysts regarding the stock you want to trade.

Trade12 - Make a List

Make a List

After you have considered all the things mentioned above, make a list of the possible stocks that you might trade. Then you can start watching the movement of the stocks in the market and see which one is the best one or which one has the potential to bring profit to you. You track the record of the stocks on your list and avoid the ones which would likely perform the worst.

Read more about the importance of recording trade with a trading journal.

It wouldn’t be easy to choose the best stock to trade if you don’t have the willingness to learn. Everything takes practice and you should be keen in every market changes. As you open an account with your broker, subscribe to their education, market analysis and webinars. These will help you gain the necessary knowledge when it comes to trading in general. But, your own effort to familiarize yourself with these stocks is a good start.

Good Luck Trader!


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