When you first start buying stocks on your own, it can be confusing. My suggestion is to keep it simple. Start with a simple strategy. Don’t get involved in options or currency trading. These are high risk activities and your chance of losing money is probably even higher than if you buy individual stocks. Pick a strategy by a well known investment “guru” and start implementing it.
The next step is to put together a screen that will filter all of the stock market down to handful of stocks that meet certain criteria. You can develop your own screen. If you are new, I wouldn’t do that. I’d just use the parameters that your strategy recommends.
Once you have developed or picked a screen that helps you find stocks to buy that meet your criteria, start keeping a watch list. There are number of places you can do this. You can probably use your brokerage account or even a spreadsheet. Keep it simple but once a stock is on your radar, make sure that you watch the price and volume action of the stock on a daily basis.
What you are looking for are stocks that show strength. You’ll recognize strength by analyzing the price and volume action of a particular stock. I like to look for stocks that increase in price by at least 2% percent while at the same time also show a surge of volume of more than 100% above the stocks 50 day average volume.
When you find stocks that do this, what you are uncovering are stocks that probably have mutual fund managers buying those stocks for their portfolios. When a mutual fund manager starts buying a stock for its fund, it can’t hide it and the increase in demand for the stock pushes the price up.
Your goal is to try and time your buys when these stocks start showing the first signs of mutual fund support. Your odds of successfully finding a winning stock go up tremendously when that happens.