Why invest in stocks?
With stocks, you own a piece of the future of a company. They are available for a variety of industries - so you can use your knowledge of specific companies or diversify the portfolio. Historically, stocks have produced superior returns relative to other asset classes and have outperformed other asset classes for long periods of time.
While stock performance changes over time, successful stocks can help your money grow -- sometimes even outpacing inflation.
Some stocks pay regular dividends -- income that you can keep or reinvest.
Since stocks are traded in the millions every day, you have a lot of flexibility when buying and selling.
You decide which company to invest in, when it's time to buy, and when it's time to sell.
The basics of stock picking
In order to select specific stocks and ETFs that might be right for you, I suggest following three basic principles. 1. Find stocks that fit your strategy. 2. Start with broad categories, then narrow them down. 3. Use an analysis tool to focus on specific securities.
Find stocks that fit your strategy and not the other way around
Some traders and investors make the mistake of forcing a stock they're watching into their favorite strategy, even if it's not a good fit. So that you can concentrate on suitable investments:
Make your views on the market clear. Consistently timing the market is impractical, but having an opinion on the market's direction can help you decide when to become a buyer (or sometimes even a seller).
Use the advanced screening tools at your disposal. On the websites of onvista, marketscreener or investolio you will find a number of tools with which you can efficiently search through the huge number of securities available.
Start with broad categories and then narrow your search
You can start by choosing a specific sector or industry, e.g. B. Technology, Consumer Staples, Health Care or Energy. Then just add a filter to a screener to find stocks in those or other industries.
Another broad filter is market capitalization. This is the number of shares outstanding multiplied by the price per share and is a common way of estimating the size of a company. Screeners can help you find small-cap, mid-cap, or large-cap stocks.
You can add additional screeners for criteria like the stock's price, recent performance, trading volume, price volatility, and more.
Do you want to start stock market trading?
You can open a free eToro account using the following button.