Criteria for picking stocks
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white_goodman
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if it loses my money i pick it lol..........
probelm is my knowledge is in LPT's and i can't exactly invest in them atm
probelm is my knowledge is in LPT's and i can't exactly invest in them atm
1. Adhere to your written down plan for buying and selling shares. I.e. The amount you are going to spend.
Have a stop loss in place (This is the amount you can afford to lose if things go the wrong way. 2% of the total value of your portfolio is a good guideline)
The % profit you want to make after allowing for brokerage etc.
The time frame you would like. (Not always possible) for the total transaction. Is it short, medium or long term?
The number of shares you want. (This depends also on your capital constraints)
Diversify don’t invest just in one area. Spread your risk over different types of companies. So if resources go downwards and you have Banks and Retail in your portfolio the chances of all thee going downwards are very slim.
Unless of course there is a general market crash then every thing goes down. Thank God they are not too common.
2 When I pick a stock one criteria I like is the stock to have the last high in the share price has been higher that the one the day before. I do this for a minimum of three days to five days consecutively.
3 Plenty of liquidity meaning a good volume of shares has exchanged hands recently.
4 Buyers outnumber sellers. If the other way round, the share price will drop downwards for sure.
4 Recent news or rumours of news .i.e. Takeovers, profits etc. Only good news of course.
5 Directors buying shares {not selling} in the last 2 to 3 weeks.
6 The “Trend Lines” show a definite trend upwards. If in doubt don’t trade.
7 A visual look {the old “eye ball test”} at the most recent chart, preferably over the last month’s performance.
Again if in any doubt drop the share till next time; just add it to watch list.
I have around 30 to 40 companies currently on my watch list. I whittle them down to around 3 -4 using those basic criteria above.
It is not a hard a fast criteria, make up some of your own preferences. Mine is just to give you a very basic idea to help you get started.
When it all boils down to it, there are no guarantees we are just working on the “Probability” of the share price going upwards.
NB If it is only 50- 50 probability don’t bother this is a share going sideways and you might as well toss a coin because you are now gambling.
If a share is going downwards I use the probability of 70% of it continuing that way, 20 % chance of going sideways, 10% going upwards.
The next is probability I use for an “Upwards” moving share price is 70% to continue upwards and 30% probability of either going sideways or downwards.
Remember these are only guidelines; if things don’t go to plan that is when you implement a “stop loss” (see past article if you want to know more on this.)
This article turned out longer than I expected it to, but if it helps you to make more successful trades then it is all worthwhile. Just remember me when you make your first million.
Have a stop loss in place (This is the amount you can afford to lose if things go the wrong way. 2% of the total value of your portfolio is a good guideline)
The % profit you want to make after allowing for brokerage etc.
The time frame you would like. (Not always possible) for the total transaction. Is it short, medium or long term?
The number of shares you want. (This depends also on your capital constraints)
Diversify don’t invest just in one area. Spread your risk over different types of companies. So if resources go downwards and you have Banks and Retail in your portfolio the chances of all thee going downwards are very slim.
Unless of course there is a general market crash then every thing goes down. Thank God they are not too common.
2 When I pick a stock one criteria I like is the stock to have the last high in the share price has been higher that the one the day before. I do this for a minimum of three days to five days consecutively.
3 Plenty of liquidity meaning a good volume of shares has exchanged hands recently.
4 Buyers outnumber sellers. If the other way round, the share price will drop downwards for sure.
4 Recent news or rumours of news .i.e. Takeovers, profits etc. Only good news of course.
5 Directors buying shares {not selling} in the last 2 to 3 weeks.
6 The “Trend Lines” show a definite trend upwards. If in doubt don’t trade.
7 A visual look {the old “eye ball test”} at the most recent chart, preferably over the last month’s performance.
Again if in any doubt drop the share till next time; just add it to watch list.
I have around 30 to 40 companies currently on my watch list. I whittle them down to around 3 -4 using those basic criteria above.
It is not a hard a fast criteria, make up some of your own preferences. Mine is just to give you a very basic idea to help you get started.
When it all boils down to it, there are no guarantees we are just working on the “Probability” of the share price going upwards.
NB If it is only 50- 50 probability don’t bother this is a share going sideways and you might as well toss a coin because you are now gambling.
If a share is going downwards I use the probability of 70% of it continuing that way, 20 % chance of going sideways, 10% going upwards.
The next is probability I use for an “Upwards” moving share price is 70% to continue upwards and 30% probability of either going sideways or downwards.
Remember these are only guidelines; if things don’t go to plan that is when you implement a “stop loss” (see past article if you want to know more on this.)
This article turned out longer than I expected it to, but if it helps you to make more successful trades then it is all worthwhile. Just remember me when you make your first million.
white_goodman
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1. Adhere to your written down plan for buying and selling shares. I.e. The amount you are going to spend.
Have a stop loss in place (This is the amount you can afford to lose if things go the wrong way. 2% of the total value of your portfolio is a good guideline)
The % profit you want to make after allowing for brokerage etc.
The time frame you would like. (Not always possible) for the total transaction. Is it short, medium or long term?
The number of shares you want. (This depends also on your capital constraints)
Diversify don’t invest just in one area. Spread your risk over different types of companies. So if resources go downwards and you have Banks and Retail in your portfolio the chances of all thee going downwards are very slim.
Unless of course there is a general market crash then every thing goes down. Thank God they are not too common.
2 When I pick a stock one criteria I like is the stock to have the last high in the share price has been higher that the one the day before. I do this for a minimum of three days to five days consecutively.
3 Plenty of liquidity meaning a good volume of shares has exchanged hands recently.
4 Buyers outnumber sellers. If the other way round, the share price will drop downwards for sure.
4 Recent news or rumours of news .i.e. Takeovers, profits etc. Only good news of course.
5 Directors buying shares {not selling} in the last 2 to 3 weeks.
6 The “Trend Lines” show a definite trend upwards. If in doubt don’t trade.
7 A visual look {the old “eye ball test”} at the most recent chart, preferably over the last month’s performance.
Again if in any doubt drop the share till next time; just add it to watch list.
I have around 30 to 40 companies currently on my watch list. I whittle them down to around 3 -4 using those basic criteria above.
It is not a hard a fast criteria, make up some of your own preferences. Mine is just to give you a very basic idea to help you get started.
When it all boils down to it, there are no guarantees we are just working on the “Probability” of the share price going upwards.
NB If it is only 50- 50 probability don’t bother this is a share going sideways and you might as well toss a coin because you are now gambling.
If a share is going downwards I use the probability of 70% of it continuing that way, 20 % chance of going sideways, 10% going upwards.
The next is probability I use for an “Upwards” moving share price is 70% to continue upwards and 30% probability of either going sideways or downwards.
Remember these are only guidelines; if things don’t go to plan that is when you implement a “stop loss” (see past article if you want to know more on this.)
This article turned out longer than I expected it to, but if it helps you to make more successful trades then it is all worthwhile. Just remember me when you make your first million.
very helpful... would you say a stop loss on a more speculative stock would be more relaxed say 3-4% or tighter? cause they may be a little more volatile both good and bad...
I have a 'points system' I use, and will only buy if a company scores 22 or higher out of a possible 26 points. The things I look at are:
* What is the primary interest of the company
* Does the company have any secondary (income generating) interest(s)
* Who are the major competitors (look at peer comparison for market cap)
* What is the company's financial position (I rate it according to equity)
* What is the current social, political and economic climate in relation to what the company does
* Recent and forthcoming announcements
* Current market conditions (both generally and in relation to what drives prices for that particular sector)
* Who are the major shareholders
* What percentage interest does the company have in its projects, and who controls the other portions of the projects
I also usually read what other people are saying and look at the charts.
I have only been doing this for a couple of years but have had some success ticking all of these boxes.
* What is the primary interest of the company
* Does the company have any secondary (income generating) interest(s)
* Who are the major competitors (look at peer comparison for market cap)
* What is the company's financial position (I rate it according to equity)
* What is the current social, political and economic climate in relation to what the company does
* Recent and forthcoming announcements
* Current market conditions (both generally and in relation to what drives prices for that particular sector)
* Who are the major shareholders
* What percentage interest does the company have in its projects, and who controls the other portions of the projects
I also usually read what other people are saying and look at the charts.
I have only been doing this for a couple of years but have had some success ticking all of these boxes.
professor_frink
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tech/a
No Ordinary Duck
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1. Adhere to your written down plan for buying and selling shares. I.e. The amount you are going to spend.
Have a stop loss in place (This is the amount you can afford to lose if things go the wrong way. 2% of the total value of your portfolio is a good guideline)
The % profit you want to make after allowing for brokerage etc.
The time frame you would like. (Not always possible) for the total transaction. Is it short, medium or long term?
The number of shares you want. (This depends also on your capital constraints)
Diversify don’t invest just in one area. Spread your risk over different types of companies. So if resources go downwards and you have Banks and Retail in your portfolio the chances of all thee going downwards are very slim.
Unless of course there is a general market crash then every thing goes down. Thank God they are not too common.
2 When I pick a stock one criteria I like is the stock to have the last high in the share price has been higher that the one the day before. I do this for a minimum of three days to five days consecutively.
3 Plenty of liquidity meaning a good volume of shares has exchanged hands recently.
4 Buyers outnumber sellers. If the other way round, the share price will drop downwards for sure.
4 Recent news or rumours of news .i.e. Takeovers, profits etc. Only good news of course.
5 Directors buying shares {not selling} in the last 2 to 3 weeks.
6 The “Trend Lines” show a definite trend upwards. If in doubt don’t trade.
7 A visual look {the old “eye ball test”} at the most recent chart, preferably over the last month’s performance.
Again if in any doubt drop the share till next time; just add it to watch list.
I have around 30 to 40 companies currently on my watch list. I whittle them down to around 3 -4 using those basic criteria above.
It is not a hard a fast criteria, make up some of your own preferences. Mine is just to give you a very basic idea to help you get started.
When it all boils down to it, there are no guarantees we are just working on the “Probability” of the share price going upwards.
NB If it is only 50- 50 probability don’t bother this is a share going sideways and you might as well toss a coin because you are now gambling.
If a share is going downwards I use the probability of 70% of it continuing that way, 20 % chance of going sideways, 10% going upwards.
The next is probability I use for an “Upwards” moving share price is 70% to continue upwards and 30% probability of either going sideways or downwards.
Remember these are only guidelines; if things don’t go to plan that is when you implement a “stop loss” (see past article if you want to know more on this.)
This article turned out longer than I expected it to, but if it helps you to make more successful trades then it is all worthwhile. Just remember me when you make your first million.
If its going up buy it.
If its going down either short it or sell out.
Why complicate things.
hi strudy some good advice there,
a couple of questions -
1.alot on the forum suggest "buying into" a stock on the upswing/trend, is this a day trader technique?
2.also do you apply this to all stocks whether spec or blue chip, surley you can expect blue chips to move with the market then bounce back up?
3.doesn't anyone here apply the "buy & hold" technique on blue chips at cheap prices?
4. is a stop loss of 2% the average, seems low, and unless you check your stocks daily would be hard to implement.
a couple of questions -
1.alot on the forum suggest "buying into" a stock on the upswing/trend, is this a day trader technique?
2.also do you apply this to all stocks whether spec or blue chip, surley you can expect blue chips to move with the market then bounce back up?
3.doesn't anyone here apply the "buy & hold" technique on blue chips at cheap prices?
4. is a stop loss of 2% the average, seems low, and unless you check your stocks daily would be hard to implement.
wayneL
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Red line crosses blue line ==>> Buy
Blue line crosses red line ==>> Sell
That'll be £3,500 thanks.
Blue line crosses red line ==>> Sell
That'll be £3,500 thanks.
wayneL
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You don't seem to understand what 2% means.
It's 2% of your total capital, not 2% of the position.
Search "fixed fractional position sizing".
I agree. Keep it simple. I love this quote by Nicolas Darvas:
"My only sound reason for buying a stock is that it is rising in price. If that is happening, no other reason is required. If that is not happening, no other reason is worth considering."
michael_selway
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1. Trends happen in all time frames and as such can be traded over all timeframes - it is not only a daytrader technique but a general trading technique.
2. Blue chips can also go down for large periods of time and also go bust/lose money.
3. Depends on your investment goals - eg I hold a portfolio as a long term hold (min 10 years) that is for income (dividends - which is then used to buy more stocks) - I try to save money to add to this portfolio each year during major dips in the market. But the money used is not needed and is part of my retirement plan and is a small part of my total savings. I hardly look at this portfolio, as long as the stocks keep paying a good D/E they stay in the portfolio.
4. I haven't fully read Sturdys post but I think he is refering to 2% of total capital being risked per trade. This for me is too high - I only risk 1%-1.5% of my capital.
eg. Capital = $10,000
Risk of 2% = $200. So total risk per trade is $200
So if you buy XZY for $10.00 and your stop loss is at say $9.00 your risk is $1.00. Max total risk is $200 so you can buy 200 shares ($200/$1.00) - $2000 worth. You also need to take brokerage into account.
wayneL
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And so we are at cross-purposes once again.
What make sense for a fundamental investor doesn't make sense for a technical trader.... and visa-versa.
... and never the 'twain shall meet.
michael_selway
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Hi r34
Forward EPS/PE & Risk (Industry & Company specific)
Weigh the above with the current (& future) risk free Bank Interest e.g Bank West 8.23% (PE of 12.50)
Then use a bit of T/A (trends), but for entry point only
Now thats a powerful combination
thx
MS
Red line crosses blue line ==>> Buy
Blue line crosses red line ==>> Sell
That'll be £3,500 thanks.
lol, where do I sign up?
You forgot the fees for the "live data" and the on going support costs required to keep the program up to date and make me feel better when the system starts to fail.
:
tech/a
No Ordinary Duck
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The Buffet analogy.
When your Buffet and you can buy enough of a company to determine its direction then you can make that analogy and apply it yourself.
And there in lies 90% of the truth of the whole quote!
When your Buffet and you can buy enough of a company to determine its direction then you can make that analogy and apply it yourself.
And there in lies 90% of the truth of the whole quote!
Sean K
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I just buy what LN does.
wayneL
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SHHHHHHHHHH!lol, where do I sign up?
You forgot the fees for the "live data" and the on going support costs required to keep the program up to date and make me feel better when the system starts to fail.
We don't tell them that until they buy the program.
