You must have a strategy when purchasing stocks for share trading.

Most people in the stock market have no idea regarding the stock picking style or strategy. Most beginners go by the gut feel or by the friend’s recommendation regarding the stock that they should buy.

That said it is imperative to learn the stock picking strategies to make money in the market. In a large number of cases it is very much the most important thing to do as that can impact how much returns you are able to generate on your capital.

 There are generally two basic styles that people follow. These are the long term investing strategy or the short term trading strategy

In the long term trading strategy the main thing to look at is the fundamentals of the company that you are investing in. You may also need to look at the economy of the country to see how best the company will perform in the given economy. You will also need to look at the future prospects of the company in terms of the competitors and also the kind of industry they are in. The main objective in the long term investing is to invest for a longer term and that longer term is usually defined as a period of 10 years or more. In this type of investing style you generally just buy the shares and hold them. You need not worry about the daily fluctuations of the stock.

The other strategy is the short term investing strategy. Short term can be referred to anything from a day to a few months. Now people who are day traders pick up stock based on the stock market news or they pick stock based on the technical analysis of the stock price movements. The day traders are rarely concerned with the future of the stock and they do not even do a fundamental research of the stock. These traders are only concerned about the momentum of the stock and they generally sell at the slightest hint of a downwards movement.

A lot of people use both the strategies however they always make sure that they have two separate portfolios. One portfolio is for long term and the other portfolio is for short term.

Having a strategy will help you reach your ultimate goal and also give you a clear defined path. Most people get confused with the stock picking strategy and I hope that this will clear some doubts about the strategy to be used. For more information on Share Trading go to our shop page