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Lesson 3 Finding “the right” stock

/Lesson 3 Finding “the right” stock

The Big Problem: The big issue for all investors is “How do I find the right stock?” Let’s look at the how and when.

How? You will need software that scans all stocks on a particular exchange looking for certain characteristics. You might find a chart of interest due to a sudden increase in volume, a sudden price increase, a stock trading at a new high price or perhaps a huge increase in on-balance-volume.

How do you know what to look for? If you have never traded before and never looked at charts of stock prices it can be a bit overwhelming. This is probably why most new entrants into the market act on a tip from a college. (And usually the tip is no good). This is why Step Two is so important. Understanding the right “Set-up” will lead to far greater profits than acting on hot tips and newsletters.

When? You might the right set-up weeks or months before it breaks above a resistance line. Timing is imperative when trading stocks so you will find you need to check prices each day. As prices approach the breakout level and on-balance-volume begins to rise you then need to check market depth and have orders ready to place.

Where? Where do you get good advice? Where do you get good information?