We must first build a list of stocks to trade. We are looking for stocks that have a high potential to breakout. With over 15,000 publicly traded companies in the United States, this can be quite a task for the individual who is learning to trade stocks or commodities. So how do you find the best stocks to buy? The key in choosing stocks that provide for robust breakouts that lead to large trends are stocks with growth. Once you have your list together you can apply Breakout Theory’s trading system. This trading strategy will capture the largest stock trends that lead to big profits.
“Growth Stocks” are The Best Stocks To Buy
Growth stocks can be best defined as stock whose earnings are accelerating relative to to the market as a whole. Most growth stocks do not pay dividends because much of the income produced are used to finance further expansion. Learn how to find growth stocks. It should be noted that during a bull market, the big money flows into growth stocks, and you want to ride with wave of the market to increase chances of successful investing. You can find growth stocks by reading this tutorial and do it yourself. It is a time consuming process, and most traders prefer to read stock newsletters for reliable investment research.
Best Stocks to buy are in “Bullish Mode”
The way to tell if a stock is in a bullish mode is to observe a few technical indicators. The 50 day moving average should be above the 200 day. Typically when the chart shows this type of activity, you can expect higher prices. At this point the stock is “trending”You would buy on pullbacks, to a support level, or a shorter term moving average like a 10 day. In most cases the best stocks to buy show this configuration on the charts. You can manually scan charts with your online broker or use stock scanners, to screen your charts. It’s important that you trade with the trend. Buying a stock while in a bear mode will kill your account. You can also get a list of the Top Trending Stocks from INO. It has been back tested and proven that the best stock to buy are in bullish mode.
Best Stocks to Buy Form Chart Patterns
Chart Patterns are an important part of stock trading. Just before a stock is about to move up, it forms some type of pattern on the stock chart. Some patterns are better than others. A few patterns that are popular include wedges, trading ranges, flags, double bottoms etc. Most professional traders know that the best stocks to buy, form some type of pattern just before the breakout. To ride big trends, it’s essential that you know how to recognize patterns. Best resource for learning about chart patterns would be found in our technical analysis library. There may be some software for pattern detection, however most seem to be unreliable. You should manually scan your stock charts. A good online broker should be able to provide you with charts that you can notate and save.
Important: All The Criteria Must Be Met
The above criteria must be met simultaneously. This filters out false breakouts, and prevents you from trading too frequently. The best stocks to buy, are only good when they go up. With all these factors into consideration. You should be able to capture some of the largest trends. Once you have your list together, you can now review your stock chart using technical analysis to spot buy and sell point. Remember to always use proper risk management to prevent large losses.