Checking its Fundamentals, Breakouts and Supertrend.
How did you decide to pick the best stocks you've ever invested in?🤔
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There are various ways to pick stocks, some people follow fundamental analysis and others just believe in technicals.
I follow two stock selection methods for long-term investing,
Method - 1:
stock selection is not a big deal, it's effortless, shortlisting our favorite companies from our daily using goods/products.
For example, our mobile network, our fav cosmetic products, personal vehicle (car/bike), etc.
Another method I follow is that, observation. Which brand or product, do people like most, understanding the reason, whether it is a temporary buzz or a strong USP?
For example, when foodpanda launched ₹1 Biryani concept, people stopped using others, and it became famous in no time when everyone was talking about it, but its temporary people were attracted to the offer, not to the service. Eventually, it shut down services when they stopped the offer.
So we should understand business and its sustainability.
The next important step is, Entry & Exit.
Once the stock selection is done, we have to do a small research by using tools like https://www.screener.in/9,
if you can not understand the numbers & fundamental data, you can utilize other resources like youtube reviews (of SEBI registered, CAs analysis), reading blog articles about that particular company, rating agencies' comments, etc.
Entry & Exit:
Then identifying the entry point, there are different approaches, we have to adopt something which matches our mindset and psychology.
- Applying dow theory
- 200 MA and 50 MA cross-over (can use EMA also)
- Anchored VWAP (for retracement entries)
- Fibonacci retracement
- Pivot points
- Or any other technical indicators (which you feel better)
The important things I follow:
- Understand the risk before taking the position
- Identifying the stop loss
- Not putting entire capital in one trade
- Following a minimum 1:2 risk reward ratio
- Stick to the rules