1 0 Tag Archives: stock research
post icon

Investing in High Risk Stocks

Investing in stock is not an easy activity. You should do intensive research on which stock would perform good and become profitable in the future. There are various factors to consider in choosing the best stock to buy. Often, the stock research would point to the blue chip companies which can give out modest dividends to its investors. However, there a people who invest in high risk stocks with the thought in mind of gaining more profit over a short period of time such as a day or a couple of days. Investing in high risk stock promises huge profit but with the risks associated with it, it can also means losing huge money in short period of time.

Penny stocks are the best example of high risk stocks. These are stocks which are traded for less than $5 per share.

The prices of these stocks change rapidly thus, investors and gain or loss money in just a few hours. Traditional investors tend not to invest in penny stocks because most of the companies that trade in penny stocks are financially unhealthy. However; if you decide to invest in this kind of stock you need to examine the financial statements of the company. Select the companies that have good records and shows consistent growth in sales and revenue. High sales and revenue is an indicator of a healthy and sound financial state of the company. You also need to look at the management team of the company if they are aiming to expand the business in the future.

Investing in companies with sound finances and good management team would ensure that these companies stay in the stock market for a long time thus you have greater chances of gaining from your investment.

In any investing decisions, always weigh the advantages and disadvantages prior to buying stocks. High risk stocks are better option for those who wants to get profit fast, but remember that the risks associated in trading with kind of stocks are also higher.

Go to the article »
15. Oct, 2010
post icon

Bullish vs. Bearish

If you want to learn how to pick stocks, my suggestion is that you follow a set of well-tested rules. You need to do some research to find out when to get into a stock to actually make money from the market. When the market is going up, anyone can make money with the least amount of work. However, the key to long-term success is to make money in the stock market regardless of the direction of the market (going up or down). It is amazing that many people spend almost 20 hours researching a TV, but hardly spend an hour before buying a stock. Good research and hard work goes a long way.

As a student of the markets for more then 10 years now, I have found the following rules to work very well for me. I have learned through experience, both good and bad, that having a sound strategy to pick stocks is vital part of a good trading plan. I hope you can benefit from the disciplined approach the same way I have.

  1. Identify stocks that are stronger than other stocks. If the relative strength of a particular stock is better than the other stocks, my guess is that the company is doing something right.
  2. Once you have identified a group of stocks that are strong, check important fundamental attributes of the company. Is the revenue of the company growing? How about earnings? At what rate are they growing? Most importantly, how do those fundamental values compare to other stocks?
  3. The next decision is how am I going to trade this stock? At what price will I enter the stock? To answer this question, I have found that technical analysis is helpful. A disciplined technical analyst buys a stock when it retraces back to its support point or breaks out of its resistance.
  4. Have a risk management plan. To err is human, but to get out of a bad investment is divine. A good risk management plan keeps your ego in check. Prior to entering a trade, you should know how much of a loss can you afford if the trade goes against you.

The above are some basic rules. Following them will ensure stock market success in bullish and bearish markets. I cannot stress how many times they have saved me from making a bad investment decisions. More importantly, they have helped me make sound investment decisions a countless number of times.

Go to the article »
11. Aug, 2010