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Understanding The Main Methods Of Stocking Picking

Playing the stock market can be a very good way to make money, however it can also be a very costly risk if you rush too head first in without know what to do.  Obviously many people are put off from the risks seeming to outweigh the gains and in many situations they are probably right to; especially if they don’t have the time to sit down and do some proper research.  This leads many to use a stock picking service.  The most important thing that anyone getting involved in the stock market should remember that it is not easy to by stocks and make money.

Once you are willing to accept that and are still interested in forging ahead, it is always a good idea to do as much research into investing and trading as you possibly can, as this will be your lifeline a lot of the time.  The thing that helps you to avoid big losses and maximise on big gains.  If you choose to go with a stock picking service though, it is a good idea to understand the two basic ways in which you can pick stock.  We have handily outlined both methods below, Fundamental and Technical.

What Is Fundamental Stock Picking?

Fundamental stock picking is the process that involves looking at the cash flow and income of a particular company you are interested in and using this to calculate whether or not stocks in that company are a good buy or not.  Even if you do take the time to learn the basics of this form of stock picking, it is still very much down to timing whether a stock is worth investing in or not.

For example, you could find and pick a stock that performs well based on your analysis, but even though it has great fundamentals it loses you money because the stock market didn’t agree with your findings.  This is why fundamental stock picking is often most effectively used by pension fund professionals.

What Is Technical Stock Picking?

With technical analysis stocking picking the aim is to pick a particular stock based on what are known as “technical factors” including the likes of chart patterns and moving averages for example.  This is the most relevant of the two methods, especially if you do decide to use a stock picking service as this is the most commonly used method by them.

This is also the method you are most likely to be able to pick up and use if you fancied going it alone, but if you do not have much time to devote to researching the market and how to use this method to the fullest and most effectively; you are best speaking to a professional stock picking service.

Not only will the best stock picking service teach you the best way to fish for those valuable stocks but it will also get you the fish.  It is very important that you do not underestimate the importance of psychology in trading and investing and only an experienced and professional at a stock picking organisation has seen the ups and downs enough to understand how to handle them best.

 

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