There are many ways to correctly execute stock research. My bias should be no secret if you’ve visited this site before –my focus is technical trading, not fundamental analysis.
When first trading, my evenings were devoted to crunching numbers and analyzing data in the search for a worthy company to buy. It wasn’t until learning and applying technical analysis techniques that my trading moved to a higher level of profitability.
It seems that stock research is best accomplished when the noise level is very low — after the market’s close and away from the chatter of financial TV channels. It’s thinking time and it’s time to concentrate.
Once a pattern or system develops it shouldn’t take more than 30 minutes an evening to find potential trades.
Here’s my nightly stock research system:
- Scan my Universe for trade set-ups (my Universe is composed of stocks with specific price, volume, and volatility requirements).
- Put “set-ups” in a second watch list
- Take a closer look at the potential trades to see if they meet all my trading method’s requirements (there are several trading methods, but usually just a few fit the market’s current disposition).
- Discovering several candidates means finding the most “textbook” set-up — no “almost” or “nearly there” set-ups
- Deciding the number of trades to place and the amount of trading capital to risk
Actually writing the order the night before helps — fuzzy morning thinking can be a hindrance, but not if the order is clearly written the night before.
Learning to do stock research is a critical component to trading success. It’s all part of having a method of trading and a system to implement those trades. Once those components are in place stock research is quick and easy.
