Stock Market Technique that Works

It is difficult to know what to look for when choosing stocks. Each company is different, and at different stages of their growth. You can get information to help you make a decision from many different sources. There is Google and Yahoo Finance, The National Post, and sites geared to helping you make those decisions, like stockhouse.com.





Everyone has there own techniques in choosing stocks. Over the last several months I have devised a technique that seems to be working for me.

Look for stocks with allot of volatility. You want to stay away from anything under about 12 cents a share, and concentrate your efforts on everything above 30 cents.

You want to check the current price, the opening price, the news, and performance. The current price must be above the current price by about 3 to 6 cents on the dollar.

Check the volatility. How volatile has the company been over the last 3 months. Small companies with several million in revenue, will typically fluctuate about 3 cents or more. Generally you can count on about 3 to 4 cents on the dollar.

If you look at larger companies, such as billion dollar corporations such as Proctor and Gamble (PG - NYSE [63.18]). You will notice a trend of several dollars a month. To ensure fast turn over, you need to count on about 15 cents to the dollar.





Aside from market fluctuation, you want to look at the news. News is very important, and will tell allot about the company you are looking to buy into. Check out what news posting the companies have released. The financial papers of newspapers may help to give you an idea, of what is going on.

Don't dismiss income statements. You never buy a company without looking at the financial statements; however, when choosing stocks it is not as important. The
majority of people are looking at past stock performance and news releases.

Always trade during the day. Strike while the iron is hot. If the company has reached your target price, sell. Don't delay. There is some risk, but it is minimal.

The risk is that the price will go up, or down just as the order is placed. Companies like Google for example will be extreamly risky. The stock moves up and down daily, and millions of dollars are being traded each minute. You might reach your target price at $514.00, only to discover that when your order was completed, the stock price had droped to $512.00. Therefore, you need to be very careful when trading these popular companies, raise your target price to avoid being shafted.




Using this technique I have some success. I'm able to post companies to a virtual portfolio, and tag them as sold over 24 to 72 hours. The trick is to look for companies above 30 cents on the dollar, and buy lots of 3000 to 5000 shares at a time. 5000 shares is equavalent to $50 a cent. $30.00 a cent for 3000. Try it for yourself, and see what I mean.

This technique is not a guarentee that you will make money, there is always a chance you will have to wait for profitablity. In theory, this technique should make you between $200 to $600 a month.