How To Pick Stocks

In a seemingly bottomless pot full of stocks from a variety of markets, how do you pick the winners of tomorrow? We all hear how this company beat earnings, that one merged and this one just got a new contract. Then we stare at a chart which points to the sky and wonder how much farther can it go. Well, my friends, it's already too late. Agreed, you might be able to squeeze another 2 - 5% here and there, but the big move just happened and you were NOT in.

So the question is: How can we pick stocks before they move?

And especially how can YOU pick them, without listening to the so called experts form Wall Street, MSNBC and others?

First of all, who should we take as mentors? Who really make money in buying and selling stocks? The big mouth's on TV? I don't think so. It's the brokers that make the fat commissions we barely hear about and try to avoid from being known to the public. The ones that work for big firms such as Goldman Sachs.

Step One

They take an approach of analyzing financial performance and timing with technical analysis. It sounds quite simple, and it actually is if you have the basic knowledge, the right tools and the devotion to do your due diligence. You see, a company with a great product, who has grown during the past year at a minimum of 50% revenue, earnings up also 50%, is likely to do well in the coming quarters. Then by looking at a chart, to determine when there is a period of correction, consolidation or accumulation, we can find optimal entry and exit points.

It's those tools that we provide you here on ChartScan. Whether you like to trade stocks or options, the basics are the same. Using our stocks scanner, you set the level of performance that any company should meet or exceed. You can choose from an existing performance matrix, or set your own levels of earning and revenue results. For starters, pre set levels are already present when you hit the scan page. If you're not sure how to choose, simply proceed with the settings present and you have a good start.

Choose whether you like more volatile stocks from NASDAQ, calmer ones from NYSE or from all US exchanges. And finally set the minimum price and volume that a stocks has to trade.

With your custom selection or the preset settings, you can now browse thru all stocks that meet these criteria. With one click from chart to chart, you'll find all important, financial data on the right, highlighted in green or red, depending on the performance.

Step Two

The next step is to determine the proper entry point, or with other words when to buy the stock that performs so well. If you're new to chart pattern, check out the page with the most common patterns. There is also a plethora of sites on the Internet that provide detailed information including associated psychological behavior.

Once you found one that looks promising, add it to your watch list. You can set an entry price for when you would buy it if it were to reach that level, and stop loss points if you like. The choice is yours. If you're new to stock trading, you can add stocks to your watch list without actually trading, and you will quickly see how well you'd be doing without putting your money at risk.

This is the technique how professional traders make money. They choose well performing companies and determine buy and sell points by looking at charts. I highly recommend the book "How to make money in stocks", by William O'Neil. I hope you find ChartScan a valuable resource and good luck trading.