Look No Further For Help Buying Stocks

While the stock markets are largely unpredictable, that does not necessarily mean that they are total mysteries, with no rhyme or reason. In fact, there are guiding principles and trends that you can learn to help you become a more savvy investor.

If you are hoping to make a profit in a very short amount of time (minutes or hours), also known as day trading, than there is a different set of criteria for timing the market than if you are looking to for a long-term investment.

The key is to have patience, and be willing to do the basic research for every potential investment. If you don't feel like you can make this level of commitment that it may be best to explore options such as dollar cost averaging, rather than trying your hand at timing the market.

Buy The Business, Not The Stock

It is important to do some investigating and purchase established companies, in growing fields, with time-tested services and goods. Always try and buy the industry leader, or the #2 company in the sector. You would not by a car without inspecting it, and you should not buy a business without “kicking its tires”.

With only a little thought and planning, you can eliminate a lot of stocks, and hone in on an appropriate business more effectively. If you are unfamiliar with a company or sector you certainly must do your research. Carefully consider purchasing stock in an industry or business that you do not fully understand.

If you are familiar with your company, however, then you are better positioned to take advantage of that company's or industry's growth potential.

Keep Up With Price Movements

Picking stocks requires keeping up with their price ranges. Keep a close eye on your potential investments, or watch list, and familiarize yourself with what is a good price for those securities.

Study the companies multi-year charts, as well as the multi-year charts for the sector as a whole, to get an idea of the moving averages.

Avoid Buying Stocks Close To Their 52 Week High

If you have chosen not to hold your stocks for the long-term, the time to sell is when the security is approaching or passing through their 52 week high.

While the 52 week high is a technical resistance point as well as a psychological level, there is a chance that they stock could move considerably past it. It is a good idea though to take at least some of your gains off of the table at this level, and refrain from increasing your position at this stage.

Watch Out For The 52 Weeks Lows Too

A stocks 52 week low is another technical and psychological support level, as is the 52 week high. It seems obvious that selling at this point is a bad idea, as you are almost sure to lose money.

A stock that falls below its 52 week moving average has the potential to drop even further, making it wise to watch out for a price uptick to increase the odds that a buying rally might have started.

Buying low and selling high is not always easy in practice. Our emotions as well as extenuating circumstances often come into play and can complicate the situation. Develop a plan that suits your needs and objectives, and stick to it.