Criteria for Buying Stocks


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Criteria for Buying Stocks

Investors and traders all have criteria for buying stock or for selling stock. Criteria for buying stocks are part of an investment strategy or trading strategy. Accuracy in setting up such criteria goes a long way towards success in day trading and success in long term investing. Criteria for buying stocks can be implemented when an individual stock attracts the investor’s attention or can be implemented using computer software in order to screen an entire stock market for stocks that fit a predetermined set of criteria.

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Criteria for Buying Stocks

  1. 1. Criteria for Buying
  2. 2. Investors and traders all have criteria forbuying stock or for selling
  3. 3. Investors and traders all have criteria forbuying stock or for selling
  4. 4. Accuracy in setting up such criteria goesa long way towards success in daytrading and success in long
  5. 5. Criteria for buying stocks can beimplemented when an individual stockattracts the investor’s attention or
  6. 6. be implemented using computersoftware in order to screen an entirestock market for stocks that fit apredetermined set of
  7. 7. The point of using criteria for buyingstocks is to obtain the best return oninvestment,
  8. 8. reduce risk to a reasonable degree, andkeep a diversified portfolio, which byitself is a way of reducing investmentrisk as well as increasing
  9. 9. There are a number of ways to set upstock picking criteria depending uponhow
  10. 10. the investor wishes to be and what hisor her long term investment goals
  11. 11. Criteria for buying stocks also applies today trading in that the best profits
  12. 12. often be made on the volatile stocks sothe day trader will often have a differentset of criteria for buying stocks than thelong term
  13. 13. Analysis of market sectors can helppredict where the market will performwell in the near and long term
  14. 14. At the turn of the last century automakers did well and carriage makerswent the way of the horse and
  15. 15. Main frame computer makers lostbusiness when the desktop computercame to be and chip speed
  16. 16. A strong understanding of marketsectors helps pick stocks with betterchances of making a profit in the
  17. 17. Watching cyclical market sectors thathave bottomed out allows the investorto pick a stock with a low price toearnings ratio before the company andthe market sectors turns
  18. 18. Fundamental analysis leads to strongcriteria for buying
  19. 19. This has to do with evaluating the sales,overhead, past earnings, and marketprospects of a
  20. 20. How well is it managed, how effectivelydoes it bring products on line, is itspricing effective, and so
  21. 21. This method looks at intrinsic value andis the basis of value stock
  22. 22. Finding stocks that are selling far belowtheir intrinsic value is a favorite investingstrategy of many very
  23. 23. Following a company’s earnings pershare divided by its price pershare, another way of saying P/E ratio, isespecially effective in cyclical stockswhen looking for support and resistancezones in stock
  24. 24. Smart stock investing will always includecriteria for buying
  25. 25. The manner in which the trader orinvestor sets up the criteria will dependupon long term investment strategy andshort term trading
  26. 26. Using a stock screener set to the trader’spersonal criteria is an effective way tosee where he or she should be tradingfor the
  27. 27. Using a stock screener will help the longterm investor find value stocks that willlead to long term
  28. 28. A computerized stock screener canselect stocks bases upon dozens
  29. 29. This capability is remindful of the “KISS”method of dealing with
  30. 30. “Keeping it simple, silly,” with no morethan half a dozen criteria is probably abetter way to start for beginninginvesting in the stock
  31. 31. It is probably also good advice for thoseexperienced in stock market investmentsas