How I Pick My Stocks | My 4 Step Process!

How I Pick My Stocks in 4 Steps!

I've been through so many stock market downturns and I've watched my account just get decimated periodically.

I believed my stockbroker had my best interest at heart. So I was taking every one of his recommendations for over 30 years.

It was during the .com fiasco that I finally said, stop this insanity, and I made the decision to do trading on my own.

I thought I could do at least as well as the stockbroker did with my money and time has proven to be right.

Sometime in 2011, I called him and I asked why he didn't handle my account, like I was currently trading. At the time I was making well over 100% returns each and every year. And I'll always remember his words.

"I don't have enough hours in the day to pay that much attention to everybody's account. If I did that, I wouldn't have the energy or time to cultivate new clients."

Guys it was at that moment I realized the man I called a friend for over 30 years and counted on to safeguard my money was nothing more than a great salesman.

Now, I'm grateful I came to my senses. And I know many of you are in the same spot as I was.

What do you do? Who do you listen to? What advice do you take and implement?

So let's return to some of the first conferences I attended after firing my broker.

I was watching the instructor fly through stock tickers and start stock charts showing us how to find the positions to trade. Listening to him, I thought, "I wish he just gave us his watch list. I could use somebody to tell me what to trade."

Sounds like I was yearning for my stockbroker again.

I expressed that wish to the instructor by asking if he could share his watch list with us and I'll never forget what he said.

"If I just told you what to trade, I would be doing you a disservice. I'm teaching you how to find the right trades for yourself."

That same lesson was reinforced two years later in a speech where the instructor said, "Listen to everyone but in the end listen to nobody but yourself. 

I am so grateful to all the folks that guided me along my journey to become a great thinking trader.

Now I feel privileged to pass on some of the wisdom and insights that I've garnered over the years.

How To Pick A Great Stock To Trade

Here's just one of the many ways I figured out a good ticker to trade. It's worked well for me time and time again.

To start, every week I measure the money flowing in and out of the sectors ETFs. There are 11 of them out there. Finding this flow of money is fairly simple and a technique you learned in Investing Buddies.

I use Investor's Business dailies website. It is a site you have to pay for guys, but it's not that expensive. And frankly, it's worth every penny because of all the data you can glean every day.

Here's the Excel sheet. I prepare on Saturdays just to see what sector is getting stronger and what sector is getting weaker.

If you see a sector starting to take off, that's where you should focus on your search for new tickers to trade.

There are many sites you can search for by tickers and by sectors. The criteria is important though.

Criteria For Finding A Good Stock Ticker To Trade

Here's the criteria I use for my search.

1) The stock price has to be a minimum of $20 a share.

Why?

Because institutions, that means pension funds banks mutual funds, typically don't trade cheap stocks. They look for prices over $15 a share to trade.

2) The minimum volume traded has to be over 2 million shares a day for me to even consider it.

I want to see a lot of activity for two reasons. One, high liquidity makes it easier to get in and out of positions. It's especially important because it's spread between the bid and ask price is really critical to your trades.

3) The ticker must have weekly options available.

4) I only look at companies in the US and Canada

Now this is kind of subjective. I used to trade stocks for many countries. These days. I tend to only look at companies in the USA and Canada. I've been I've been burned pretty bad by a few Chinese companies in the past couple of years.

Once I come up with a good list of possible stocks by sector, I further sorted them to see if there's an industry that's looking especially good. Having a stock stock in a strong industry and a strong sector can make all the difference between a wildly successful trade or a losing trade.

In a way, all trading is kind of like gambling so why not stack all the odds in your favor?

Of course in our training courses, we go into a lot more detail on our search criteria, but this information will get you started.

There's a free trial subscription for Investing Buddies you can get just by clicking below.

We are also opening up our Double Account Trading Adventure. Data is a class where we aim to double our account in just 10 weeks. Right now, you can get into the rest of the DATA class instead of waiting till the next one begins and get daily coaching on all of these market insights!

I hope this helped you choose how to pick a good stock to trade!