Choosing the right stock can often feel like finding a needle in a haystack – whether you’re day trading vs swing trading or even investing early for retirement

The vast landscape of the stock market, filled with thousands of options, can be overwhelming, even to the seasoned investor. Yet, the reward of picking that winning stock, watching its price soar, and reaping the benefits of diligent research is a thrill unparalleled. 

In order to help you consistently pick winning opportunities and execute trades at a high rate of success, we’ve put together this detailed guide on how to pick a stock to invest in regardless of your trading strategy. 

We’ll share the traditional tactics of research and analysis while unveiling a superior approach – one that saves you time, headaches, and stress. With the best stock analysis app on the market, you never have to look for your next opportunity again – it comes to you on a daily basis.

And, the VectorVest system doesn’t just tell you what to buy – it helps you find your stock entry point and determine when to sell stocks for profit with incredible precision. That being said, let’s first talk about how to pick a good stock using traditional tactics.

How to Pick a Stock to Invest in: Tips for Consistently Picking Winners No Matter Your Strategy

Whether you’re implementing swing trading strategies, position trading, scalping, or options tradingpicking the right stock is paramount to your success. Here’s how to pick a stock to buy, starting with determining your trading strategy. 

Determine Your Trading Strategy

Before you begin, understand how much risk you’re willing to take. This will inform the types of stocks you consider, whether high-volatility stocks with high potential returns or stable blue chips for steady growth.

You should also consider what your goals are as an investor. Are you trying to retire on dividends, or earn swing trading profits to supplement your income in the present day? 

Your goals in the stock market will influence not just the types of stocks you seek out but how you manage your positions. Short-term traders might focus on news-driven events, while long-term investors might prioritize company fundamentals and industry growth.

From there, you can start to look into different investment styles like day trading, swing trading, dollar cost averaging, market timing strategies – there are countless choices you can consider. Land on one and then start to assess the market conditions.

Assess the Market Conditions

While you can find a way to make money in any market conditions, you need to at least know what they are so you can determine whether it makes sense to buy stocks on a given day or sit on the sidelines and await better conditions.

Economic indicators like GDP growth, interest rates, and unemployment can provide a sense of the economy’s overall health. For example, rising interest rates might hurt companies with significant debt.

Similarly, you can look at sector-specific conditions if you have a particular industry you’re trying to pick stocks in. Some sectors, like tech or renewables, might be growing at a faster rate due to global trends and shifts in consumer behavior.

Later on, we’ll introduce you to an intuitive market sentiment indicator that helps you gauge conditions on any given day at a glance – without the need to bother with all this complex technical research. 

That being said, let’s talk about the fun part – how to pick a stock to buy using screeners to bring winning opportunities right to your screen on a daily basis. 

Set Up Stock Screeners Based on Your Trading Goals

Stock screeners are going to be your best friend in regards to how to pick a good stock on any given day. You can think of them as your scouts who go out and do the hard work of finding opportunities so you can spend less time sitting in front of your screen.

When setting up stock screeners, it’s important to have a thorough understanding of the criteria you use to pull candidates in. If you’re looking for undervalued stocks, consider metrics like the Price-to-Earnings ratio. For growth, perhaps focus on year-over-year revenue increases.

Remember that the market is dynamic. Regularly update your criteria to reflect current conditions and insights or you’ll find that your screeners don’t work as well over time.

Again, VectorVest can simplify all this for you as we have a database of pre-curated stock screeners you can use. From Daily Boomers that bring in the highest momentum stocks to safe stocks for retirement and even industry-specific stocks, your next opportunity is just a click away!

But, screeners are just the first step in how to pick a stock to invest in. You then need to validate the opportunity by taking a deeper approach to analysis.

Analyze Individual Stocks to Validate the Opportunity: Technical and Fundamental Analysis

We have a complete guide on how to analyze a stock before buying, but we’ll cover the basics here. Again, the specific form of analysis you conduct to confirm opportunities will be dependent on your goals as an investor. That being said, it all boils down to two things: fundamental and technical analysis.

Technical Analysis:

  • Understanding Price Patterns: Stock prices move in trends, and these trends have historical patterns. Recognizing these can help anticipate future price movements. For instance, a “head and shoulders” pattern might indicate a market top or bottom. Learn more about swing trading patterns in our blog.
  • Volume Analysis: Volume acts as a validation tool for price trends. If a stock’s price is rising on increasing volume, it shows strong market support for the price movement. Conversely, if the price drops on high volume, it might signal a downturn.
  • Indicators & Oscillators: Tools like the Moving Average Convergence Divergence (MACD) or the Relative Strength Index (RSI) can offer insights into potential buy or sell signals. We have a breakdown of the best indicators for swing trading in our blog, including the best moving averages specifically. 

Fundamental Analysis:

  • Dissecting Financial Statements: Financial statements offer insights into how a company performs – and how a company performs in business is often indicative of how it will perform in the stock market. Consider EPS, debt-to-equity ratios, revenue growth, and other key indicators. 
  • Management’s Performance: The team steering the ship plays a monumental role. Research past decisions, the success of products or services they’ve launched, and how they’ve managed crises. Their past might provide insights into future performance.
  • Strategic Initiatives: Is the company expanding into new regions? Are they investing in R&D? Companies that are innovative and anticipate market needs tend to stay ahead of the curve.

Once you’ve given the stock a thorough analysis and have justified adding it to your portfolio, it’s time to map out your entry and exit points.

Map Out Your Entry and Exit Points Before Buying

Before jumping into any trade, determine the potential risk and reward. A commonly used method is the 3:1 ratio, meaning for every potential dollar you risk, there should be a three-dollar potential for profit.

All your positions should be supported by trading stops – which consists of stop losses and take profits. This removes you from the process of actually closing out your position, which is important for a number of reasons. 

First and foremost, it removes emotion from the decision-making process. You aren’t going to stay in a losing stock hoping it’ll turn around, watching your portfolio dwindle away. Similarly, you won’t get greedy and miss your window to exit with profits. 

And once again, VectorVest can help with this. We have a dynamic trading stop system to share with you later. That being said, let’s first talk about how to pick a good stock using VectorVest.

How to Pick a Stock to Buy With VectorVest: The Simple, Foolproof Approach to Trading

That’s how to pick a stock to invest in using traditional tactics…but what if you could arrive at the same outcome with a fraction of the work? And, what if we told you that our approach to picking stocks outperformed the old way? 

With our stock analysis software, it’s easier than ever to pick the best stocks and win more trades with less time/effort. Below, we’ll explain how it works and walk you through how to pick a good stock with VectorVest.

How VectorVest Works

The essence of VectorVest lies in its proprietary algorithms. These algorithms analyze both fundamental and technical data, offering a holistic view of a stock’s potential. 

Instead of sifting through countless reports and charts, VectorVest does the heavy lifting for you, boiling down complex data into easily understandable metrics. You’re given all the insights you need at a glance. 

And, the system has outperformed the S&P 500 by 10x over the last two decades and counting, so you can rest assured you’re following a system with a proven track record of success. It’s all based on these three simple ratings:

  • Relative value (RV): Compares a stock’s long-term price appreciation potential (forecasted three years out) to AAA corporate bond rates and risk, offering far superior insights than a simple comparison of price to value alone. Basically, it gives a clear picture of whether you’re buying at a discount or potentially overpaying.
  • Relative safety (RS): An indicator of risk, this rating takes a look at the company’s financial consistency & predictability, debt-to-equity ratio, and business longevity along with other fundamental factors. 
  • Relative timing (RT): Helps you pinpoint when to jump in, when to get out, and when it might be better to wait. It’s based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year.

Each rating sits on an easy-to-interpret scale of 0.00-2.00, with 1.00 being the average. Pick stocks with ratings rising above the average to win more trades – it’s really that easy. But it can actually be even easier, as the system issues a clear buy, sell, or hold recommendation for any given stock, at any given time.

Whether you’re looking for the best stocks to swing trade or you’re trying to learn how to select stocks for option trading, you can leverage the power of VectorVest. Here’s how to pick a stock to buy in our system…

Using the System to Pick a Stock

Once you’ve set up your desktop account or mobile stock advisory app, you’re presented with a dashboard filled with potential stock picks – as we mentioned earlier.

These aren’t randomly selected but are curated based on the VST system, ensuring you’re only seeing stocks that align with VectorVest’s stringent criteria. You can choose screeners that align with your investment goals.

Want to delve deeper? VectorVest allows for customized searches. Say you’re particularly keen on tech stocks with high growth potential but low volatility. Just plug in your criteria, and VectorVest will serve up a list of matches.

From there, it’s just a matter of taking a closer look at the RV, RS, and RT ratings to see the full picture. If you confirm the opportunity is worth investing in, find your entry point based on the RT rating – which is the best market timing indicator for those who want to buy the dip.

To get a better sense of how it all works, we encourage to get a free stock analysis today. But, before we wrap up this guide on how to pick a stock to buy, here is a bit of advice on managing your position to secure profits and minimize the risk of losses. 

Advice on Managing Your Position After Picking a Stock to Buy

Selecting the right stock is just the beginning. Managing your position post-purchase is equally crucial to ensure you maximize profits and mitigate risks. 

Whether you’re a seasoned trader or just starting out, the unpredictability of the stock market can make this a challenging task. Fortunately, tools like ProfitLockerPro are here to be your guiding light.

It’s a premium stop-loss system designed to lock in profits while also allowing room for stocks to grow. Traditional stop-loss tools can sometimes cut your potential earnings short or fail to protect your profits effectively. ProfitLockerPro addresses these issues, ensuring you have a dynamic system that adapts to the market’s twists and turns:

  • Adaptive Trailing Stops: Instead of a static stop, ProfitLockerPro’s stops adjust according to a stock’s performance. This means that as your stock climbs, so does your stop, ensuring you don’t lose out on potential profits. If the stock reverses, you’ll cut losses at a new higher point.
  • Customizable Parameters: ProfitLockerPro understands that every trader has a unique strategy. The tool allows you to set your desired profit target and maximum loss, giving you control over how it operates.
  • Real-Time Monitoring: With ProfitLockerPro, you get real-time insights into how your stocks are performing against your stops, giving you the information you need to make timely decisions.
  • Expertly Designed Presets: Not sure where to start? ProfitLockerPro comes with expertly crafted presets that are based on years of trading experience. Whether you’re a conservative or aggressive trader, there’s a preset tailored for you.

Using our stock picking tool with ProfitLockerPro is a match made in heaven. You can save so much time in front of your screen while eliminating a huge source of stress. The best part? You’re setting yourself up to earn more consistent profits along the way. With that being said, it’s time to wrap up our guide on how to pick a stock to invest in.

Final Thoughts on How to Pick a Good Stock

That concludes our guide on how to pick a stock to buy. Choosing the right stock is a blend of strategy, research, and adaptability. While you can certainly conduct traditional technical and fundamental analysis, these days, there’s an easier way to find winning opportunities on autopilot.

With VectorVest, your next winning trade is a click away. Pull up our intuitive screeners and use the VST system to validate stocks before buying. Then, manage your position with our ProfitLockerPro software and win more trades with less work – it can really be that easy.

If you’re seeking to elevate your trading game, there’s no better time than now. Embrace a more informed, strategic approach to picking your investments today.

 

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