9 Steps To Achieve Success In The Stock Market
Stocks are shares that indicate ownership in a corporation. An individual who buys a share is called a shareholder. Stock market consists of buyers and sellers exchanging stocks by purchasing or selling. For every buyer there is a seller and for every seller there is a buyer. Buyers buy at a low price and help elevate the stock in an upwards direction. Sellers typically sell at a high price, which can significantly decelerate the stock especially when there are many selling at the same time.
Psychology is an important aspect in the movement of the stock market.
Uncontrolled emotions can move the market up or down but this is risky! I would like to introduce to you the 2 critical methods to utilize when making investment decisions: Fundamental analysis and Technical analysis. The Fundamental analysis consists of a financial overview of the company including the revenue, earnings, assets, and return on equity. Technical analysis focuses on trend movement, moving averages, and volume. They are conducted to evaluate the stock’s strength and help determine in which direction the stock will move.
I have multiple sources that I always use to investigate each stock and to confirm that details are consistent. Some websites give more information than others so I am a strong believer of researching all the information you can find on a company to be able to make the best investment decision possible.
The S&P 500 Index list is a good place to start looking for great companies to invest in because it’s the best leading indicator of the health of our economy…so this area MUST be strong. In the initial phase of my research, I like to take a look at the Investing.com website to view the company’s annual growth rate, revenue, price, and volume of shares traded. In addition, it is also important to research the latest company products, management changes, and new price highs for the stock.
Follow This Easy Step-By-Step Guide To Get Started:
Step 1: Go to . Click on Major Indices tab and go to S&P 500 link. Click here for webinar
Step 2: Click on Components link to see all 500 companies. Next, click on the Fundamental tab to view the Revenue. I like to look at revenues that are at least $1 billion. The best companies usually have a very high revenue. (Select column title to filter from high – low to concentrate on a certain range.)
Step 3: In the Performance tab, look at the 3 Year column. Click on the column title to show from highest to lowest percentage growth. A minimum of 60% for the 3-year growth is what I like to see.
Step 4: Next, look over at the 1-year column for at least 20% annual growth for consistency. Write down your favorite companies that meet each criteria.
Step 5: Research latest company press releases(located on company website) and look for exciting updates.
For more helpful tips using fundamental analysis, read my latest post on what to look for in company financial statements: Click Here. The next step is to conduct a technical analysis on the stock.
Step 6: Under S&P 500 Components, click on the Price tab. Choose stocks with volume of at least 1 million shares traded for liquidity. Along with other factors, an actively traded stock displays strength in the trend’s movement. (Press arrow to filter from highest to lowest volume.)
Step 7: A stock’s price should be considered for your own budget means but also price should always be moving up in the chart. Look at its history over the last 5 years to see if it’s climbing to new highs. Keep in mind that the higher the price, the better the stock’s overall health…a nice safety net. I look for a minimum price of $45 per share for safety.
Chart showing price climbing to new highs at $60.58(see below).
Step 8: Click on one of the stock names on the list and you will see more details about the stock. Look for the stock’s current price to be near the 52-week “high” of the range to give you an indication of continuous growth.
Step 9: Select the Technical tab to see if your chosen stock is a “Strong Buy”, “Neutral”, or a “Strong Sell”. Note: It is highly recommended to find a book on Candlestick Patterns to study more on technical analysis and to confirm what any website says is a Buy or a Sell.
As you look over your list of favorite companies that meet each criteria, investigate deeper online for any red flags and eliminate those from your list.
Take a look at this video with Warren Buffet giving his advice to those starting in the market.
Advantages for you in the stock market
- Higher interest rate than a savings account
- Additional income stream for your household
- Work anywhere and spend more time with family
- Early retirement from the corporate world
- Money to pass down to your children
What ways can you increase your chances to achieve financial freedom?
- Read my list of 4 must-have stock investing books
- Invest in online courses to gain substantial knowledge
- Practice trading as frequently as possible to learn chart patterns
- Take the emotions out of each trade
- Most importantly: Always plan ahead for every trade
By Krystle Hall