Personal Wealth Creation - How to Pick Stocks

Daily we can find in the business newspapers, magazines and TV interviews recommendations for buying one or other of the stocks. If you closely follow them you will find that some of them turn out to be winning trades and some of them losing ones. When that is the case should we go as per these recommendations or not. There is no doubt about the recommendations themselves. Most of them are based on the research and analysis done by the authors. But it is always prudent to have your own decision before going ahead with investing your money in those stocks. One of the important character of a stock trader is to hold himself responsible for the decisions. We often see many traders blaming the market or someone else for their decisions when a trade goes against them. This continues till they gain experience and learn to own their responsibility for the decision they make. Picking winning stocks

How can we take a decision on these recommendations, whether to invest or not? It is not difficult as you may be thinking. There are two options available to you depending on the type of trader you are. If you are a long term investor or a trader who buys and holds for long period then you should do a fundamental analysis of the company's financials. If you are a day trader or a short term trader then you should do a technical analysis before your invest. You can use these two methods for picking your own stocks. What I do is pick up five or six stocks that are the current fancy of the market. Then do a techical or fundamental analysis depending on the period I wish to hold on to these stocks. Thereafter select one that gives best results from the analysis.

Fundamental analysis is a stock valuation method that uses financial and economic analysis to predict the movement of stock prices. The fundamental information that is analyzed can include a company's financial reports, and non-financial information such as estimates of the growth of demand for products sold by the company, industry comparisons, and economy-wide changes, changes in government policies etc. If you want more information about fundamental analysis Click here

Technical analysis is a security analysis discipline for forecasting the future direction of prices through the study of past market data, primarily price and volume. In its purest form, technical analysis considers only the actual price and volume behavior of the market or instrument. Technical analysts may employ models and trading rules based on price and volume transformations, such as the relative strength index, moving averages, regressions, inter-market and intra-market price correlations, cycles or, classically, through recognition of chart patterns. If you want more information about technicall analysis Click here