One of the first things you will hear about investing when you ask successful traders is that you have to do your research. Even the greatest investors ever, like Warren Buffett, will tell you that there is no way around it.
You should never buy even a single share of a company without understanding exactly how it works. After all, Warren Buffett has never purchased a single share without researching the intricacies of the stock. However, doing research is not easy in and of itself, so, we are here to help you with some tips that should improve your research skills.
Check the history of the stock
The market tends to be rather volatile, so you should not focus on daily fluctuations alone. If you want to make serious investments, you should investigate the history of the company in detail. And finding the information you require is not difficult. You can simply visit one of the websites that offer detailed accounts of the history of certain companies. These websites include Google Finance, NASDAQ, The Motley Fool, etc.
Follow the news
In this day and age, most people will do all of their research via google. However, reading news from serious organizations like the New York Times can greatly benefit you. They will commonly offer detailed information on situations some companies are going through. The news outlets will follow any possible job cuts and even rumors that a new success story is coming. Simply being in the loop can help you make a lot of money. And, of course, definitely, follow the sources that specialize in this type of reporting. Forbes, The Wall Street Journal, and similar publications will quickly become your best friends.
Learn about the company
A lot of people will try to acquaint themselves with a certain stock simply by researching the value history. However, that is rarely enough. Try to learn as much about the company as you can. Keep up with their annual report, take note of the products they are selling or services in their offer. Get to know the website like the back of your hand and even investigate the CEO. There is a number of tools online that you can use to get this knowledge. Just bear in mind that this knowledge will help you greatly while going through the next step.
Realize their future
Use your knowledge in conjunction with the estimates given by financial analysts to get a general idea of what the future holds for the company in question. And checking out the estimates of others might make you feel better. Try using different sources and read about the highest and the lowest possible estimates they can give you. Then, figure out if that falls in line with your investment plans.
Stick to what you know about
Instead of going to random stocks stick to what is around you in everyday life. Pretty much any product or service around you has a company whose shares you can purchase. And buying something you know about can make the research a lot easier.
Word of mouth is still an excellent source of information for anyone. So, make sure to contact everyone you know that has some knowledge of the company. No matter who it is, they can offer valuable insight that will help you make your decision. Ask around, odds are, there is someone you know who can help you out. Of course, don’t try to get insider information. That is illegal. So, keep to the information that falls under public domain.
In the end
It will always be up to you to decide what you want to do with your money. However, doing research can greatly diminish the risks that come with trading. And knowing how to focus on the right aspects will definitely make your life a lot easier, and trading more profitable.