Stock Picks - 15 Tops Reasons Traders Consider Them Important

It is easy to enter the trading world, but not so easy to stay there! The trader/investor has to select the best possible deals, if he/she wants to be associated with the trading community for a long time. The selection of deals is termed as "stock picks".

Here, we list out all the reasons why stock picks are considered to be so crucial to day trading in stocks--

(1) If one thinks of day trading, it has many advantages--

(a) Since it is not necessary to place a particular stock position behind the current day of trading, stocks can be held even overnight. Thus, even if there are probable losses, they are not very high.

(b) Whatever be the current market condition, there is assurance of profits as well as additional leverage.

(2) Day trading is not without its disadvantages--

(a) The time period set for day trading is limited to 24 hours; so the investor/trader could easily win or lose, within just a short period.

(b) Loss of money in turn can lead to higher volatility, changing prices, unlinked markets and lower liquidity.

(3) After seeing the advantages and disadvantages concerned with day trading, it seems even more imperative to go in for stock picks. Yes, the investor or trader has to enter day trading with some knowledge about securities as well as strategies to be implemented. Even lists of stock picks necessitate that they be analysed thoroughly, before going in for actual selection of a particular stock. Adequate experience is an added bonus!

(4) The exact definition of stock picks--"stocks that are picked as per certain criteria, with the aim of reaping rich returns". As a matter of fact, this is one among four significant strategies concerned with investments in the stock market.

(5) This is the best deal since it ensures maximum market returns for the trader or investor. If the day trader uses the intra-day volatility of the stock prices which are most active in nature, to his maximum advantage, there is no way that he/she is going to miss out on regular gains! The profits can be seen within a few hours, or days or weeks or even months.

(6) The other three strategies employed along with picking of stocks include--sector timing analysis, market timing analysis and holding and buying.

(7) The set of strategies and methodologies significant to day trading are--chart formation, technical analysis, algorithms, trend analysis, relative strength ranking, volumes and fractals. Picking of stocks is dependent on the above.

(8) A great methodology is evaluating the financial scenario of that particular company. The stock financial evaluation gives the entire history of the company's finances. The analytical steps involved with this are--PE/Price to Earnings, PB/Price to Book Ratio, and ROE/Return on Equity.

PE = A ratio evaluation that reveals a comparison of the company's current stock and per-share earnings.

PB = The stock market value and book value are compared.

ROE = Gives a picture of the company's financial proficiency.

(9) Short-term selections correspond to securities that aim for a well trading immediate future. They are meant to last only for one or two days. If the price of these stocks should rise to 10% or even more in just one day, then they can be considered the best deals!

(10) Factors like EPS growth, outstanding patterns of stock charts, stock basis periods and GSA rank determine the selecting of stocks. These are companies that are associated with strongly-established industry conglomerates.

(11) Apart from the above, other factors that can have an impact are--management quality, market sizes and industry regulations.

(12) It is advisable to take the help of trustworthy stock analysts when selecting stocks. Even with an unpredictable market, the investor/trader knows where to put his money and reap profits.

(13) Other sources of information include newsletters that give advice from experts regarding active indices and stocks. Even the latest updates can be had from them.

(14) There are plenty of reliable web sites that give tips on stock picks. In fact, chat rooms can be used to interact with fellow traders or investors; this is first-hand information with the latest updates.

(15) Finally, education about stock picks in day trading can be found in good books, though the latest information may be missing.