Domzee

How I Pick Stocks

When I’m looking for stocks to trade most of the time I start by looking at various sectors of the market. I want to find out which sectors are performing really good and also the ones that are performing poorly.

After I decide which sectors I’m going to look into I narrow it further by picking out industries and sub industries throughout the sectors I’m looking at. Again I’m looking for the industries that are performing really well and also poorly. Then from there I start picking out individual companies. A lot of times I use a stock screener to do a lot of that work for me but I also like to do a lot of my own homework. Many times when doing your own research you can find quite a few other things as well.

You can also find what I like to call multipliers many times as well. For instance lets say you know of an airline stock that is performing below average and you also know that fuel prices are on the way up. You know that this is going to hurt all of the airlines but it is probably going to have an even worse effect on the airline or airlines that are already struggling. Also say if fuel prices are increasing you should know which companies this is going to effect in a good way. Find the oil producing companies that are already doing pretty well and invest in them. Also since you know that trucking companies also have a hard time dealing with increased fuel costs and that when they increase their prices many companies turn to the railroads to transport their goods so you are likely to be able to find a good railroad company and also take advantage of that.

I also use some technical analysis when choosing stocks. I am not one of those guys that believes you should make every decision base on what a chart says but I do like to make decisions base on trends and also find points of support and resistance. I also like to use them to find price channels and many times I will trade a stock that’s moving sideways based on it’s points of support and resistance and if I notice it gain momentum and break out I will go long if I notice it gain momentum moving down I go short.

It’s not any advanced formulas or technical indicators that influence my decisions they are all based primarily upon what’s currently happening and what I think is going to benefit or what is likely to lose the most from what’s happening throughout the world.

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