After you determine which business cycle the economy is currently in you can start researching for a trade. It is better to have some sort of a routine in place that will be used before every trade. Here is a straightforward five step blueprint to help get you going.
Five Steps to Investing Online:
1. Locate a stock This is the most apparent and most tricky stage in stock trading. With well over 10,000 stocks to trade a good rule of thumb to think about is time of the year. For instance, as I write this, it is the beginning of spring. It would make sense to think about stocks that traditionally make runs, or go down if you are bearish, at this time of year.
2. Fundamental Analysis Numerous short term traders may disagree with the need to do any fundamental analysis, but knowing the chart patterns from the past and the news concerning the stock is pertinent. An example would be earnings season. If you are thinking about playing a stock to the upside that has missed its earnings target the last 2 quarters, caution could be in order.
3. Technical Analysis This is the part where indicators come in. Stochastics, the MACD, volume, moving averages, RSI, CCI, support levels, resistance levels and all the rest. The batch of indicators you choose, whether lagging or leading, may depend on where you get your education.
Keep it simple when initially starting out, using a bunch of indicators in the beginning is a ticket to a losing trade. Become very comfortable using one or two indicators initially. Learn their ins and outs and you’ll be sure to make better trades.
4. Track your picks When you have placed a few stock trades you should be managing them appropriately. If the trade is meant to be a short term trade monitor it closely for your exit signal. If it’s a swing trade, look for the indicators that let you know the trend is changing. If it’s a long term trade keep in mind to set weekly or monthly checkups on the stock.
Use this time to keep up on the news, determine your price targets, set stop losses, and scan other stocks that you might want to have as well.
5. The larger picture As the proverb goes, all ships go up and down with the tide. Being aware of which sectors are heating up piles the odds in your favor. For example, if you are long (expecting price to go up) on an oil stock and most of the oil sector is rising then more likely than not you are on the right side of the trade. Keep an eye on ETFs that track a sector’s performance.
Are you finally sick and tired of having other traders take your money to do something about it?? Read how to trade stocks and for stock picks and swing trading strategies go to how to day trade
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