Are you a new investor in the stock market and thinking about which stocks to invest in?

Well, picking up stocks depends on many factors such as how much capital you have to invest, what is your level of experience in trading, are you a short term or a long-term investor and so on.

Are you a new investor in the stock market and thinking about which stocks to invest in?

Well, picking up stocks depends on many factors such as how much capital you have to invest, what is your level of experience in trading, are you a short term or a long-term investor and so on.

It also depends upon your trading plan, whether it is dynamic or not.
But most importantly, you should keep learning about this field to improve your trading strategies.

In this video, we will discuss some steps for selecting the best stocks for trading in the stock market:

Understand your risk appetite:

One of the biggest mistakes that novice traders make is jumping to trade in the stock market without doing much homework.
Before you start trading in the stock market, it is important to understand how much risk-taking capacity you have.
As you are new to this field, it is advisable to choose those kinds of stocks which are less volatile.
As your skills and experience will develop, you can increase the risk associated with the stock and trade more volatile shares.

Start Reading Newspapers:

When trading in the stock market, it is extremely important that you stay informed about all the news about the stocks which you have picked to trade in.
You should also be knowing about the company in which you are planning to invest such as in which sector it lies, what are the products it produces, is there any scope of expansion, its peer companies and so on.
The current news about that particular stock plays a huge role in the price movement of that stock.
For example, if there is news about the company launching a new product or product line, then the prices of the stock will shoot up as the company is planning to expand its business.
Therefore develop a habit of reading financial newspapers on a daily basis.

Start analyzing companies and management:

Before picking up stocks to trade, analyze it on your own.
You can analyze the stocks based on certain fundamental parameters which will allow you to understand whether the company will perform well or not in the coming few years.

Some of the fundamental parameters are:

P/E ratio: This fundamental parameter determines whether the stock is expensive or cheap.

Dividend yields: The Company in which you are investing must give consistent dividends for the last few years.

Revenue: When looking at the financial statements, you must analyze whether the revenue from the business is growing every year. If it is growing, then it is safe to invest in that company.

Profit: The company should have steady and rising profit.

Debt: The debt level of the company should be low.

Return on Equity: The return on equity of the company should be high.

The above are the basic and important fundamental parameters that you must analyze before investing in the company.

Evaluate the Management of the Company:

Before investing in the stock, evaluate the management of the company.
Remember that if the business is doing well then the stock of that company will also do well.
You can evaluate the management of the company by checking the background of the promoters of the company, how much salary they are receiving, their stake in the company and if the company is paying dividends to their investors or not.

Learn and analyze technical charts:

You also need to learn how to analyze the price movements of the stocks in which you will be trading, using the technical charts.
By learning about the price movements, you will get an edge in predicting future price movements of the stocks.
So first, invest your time in learning how to analyze technical charts and then start trading.

Develop your trading plan:

After learning about the fundamental and technical analysis, develop your own trading plan.
Your trading plan must be based on whether you want to be an intraday or swing trader or a long-term investor and develop your trading strategies accordingly.
After executing your trading plan, try to stick with it.
You can become an expert in the field of trading by studying and analyzing the fundamental parameters as well as the technical charts. It requires experience, patience, discipline and dedication to become an expert in trading.

Thank you for watching the video.