|Steps to analyzing an opportunity|
Steps to analyzing an opportunity
Irregardless of where you found the stock you are about to analyze, the steps should always be the same.
1) Is the company fundamentally sound? (don't forget to compare your company with it's primary competitors)
Apply fundamental checklist. The fundamental checklist will represent whether the company is solid or not.
If yes, proceed to step 2
2) Is this a good time to buy/sell this company?
Apply technical checklist. The technical checklist will represent whether it is a good time to buy/sell the company or not.
If yes, proceed to action.
Notices or assumptions:
Sample Technical Analysis Checklist
The intention of this checklist is to provide a sample checklist for your trading system. Each investor should modify their checklist to meet their needs and risk requirements. It is also important to test your system and it is advised to paper trade a system rather than back-test your system. The reasoning behind paper trading versus back-testing is that back-testing removes the human factor which is extremely important.
Your checklist should also have a "reason to buy" score as well as a "reason to sell" score. It is the technical analysis part of an investing system where the trader can maximize their investment potential and beat the market average. The ability to buy or sell a stock when the trend has changed is a powerful tool and it is when you sell that you make or lose your profits.