How to choose the stock to buy?
An investor should be aware of what to invest, how much to invest, and where to invest?
An prior research about the market help an investor to avoid the common mistakes. Trader should plan before investing after analyzing the possible outcomes of the investment. Most importantly managing the stocks after a successful investment increase the chance of making more profit. The following help you to choose the stock to trade.
52 is the number
The BSE and NSE provide a list of top 52 companies which are performing good on share value over a period of time. The broker would suggest the investor to buy shares of the company which has a good record on performance. This list can be referred by the investor to select the companies to invest in the stocks of the companies in the list maintain the positive trend and increases the chance of making profit.
Choose Diverse Stocks
A diversification of the investment is always a better choice of investment. Investing in companies which has diverse group of companies is recommended by the stock broker. The diversified investment reduces the risk factor and will manage the ups and downs of the shares in a equal manner.
Avoid Defensive Stocks
There are stocks which does not make much movements though the market is good or bad, these are termed as defensive stocks or stodgy stocks. It is always better to avoid such stocks.
Say No to Takeover
The shares of companies which are into the talks of takeover or merging targets should be in avoid list as the price of the stocks would be on the maximum buyout rate than its original value.
Analyze the charts
History always helps to decide the nature of the stock. Before choosing to invest the investor should analyze the performance of the stock in previous years with the help of charts to understand the trend. If the chart shows high volatility trend, is it safer not to buy those shares.