Trading on the ASX, The age old story of
“how do I choose a stock” to invest in has always been a hot topic. With
the Australian Stock Exchange (ASX) pushing into long-term highs,
reaching towards 5,000 points for the first time since April 2011, a
wave of investors are shifting cash back into the stock market. In this
article, we take a look at a Fundamental approach to trading on the ASX.
Finding a trade is not just a process of selecting the best known company. Markets rise and fall, as do Economies. While one country’s economy may be performing well, another may not. And within that Economy, there will be some sectors that perform better than others.
The path in choosing an individual stock to invest or trade in can be as simple or as complex as you want to make it. Some investors will utilize their Brokers’ knowledge; take tips from subscriptions, newspapers or friends, while others believe they can make their own decisions.
No matter whether you decide to take a recommendation, or whether you are choosing a stock to trade or invest in on your own, you will need a methodology to confirm whether that stock is suitable for what you want to achieve – which clearly is to make a profit.
Over the last 100 years, one of the most proven and respected methods of analysing has been the Top-Down Approach. It is the style of investing that many successful managers have adopted for decades, including Warren Buffet and George Soros. Traditionally it has been used as a means for investors to build long-term portfolios with stock; however, we can adapt this strategy to suit both investing with stock, options, or commodities, or for shorter-term trading.
Finding a trade is not just a process of selecting the best known company. Markets rise and fall, as do Economies. While one country’s economy may be performing well, another may not. And within that Economy, there will be some sectors that perform better than others.
The path in choosing an individual stock to invest or trade in can be as simple or as complex as you want to make it. Some investors will utilize their Brokers’ knowledge; take tips from subscriptions, newspapers or friends, while others believe they can make their own decisions.
No matter whether you decide to take a recommendation, or whether you are choosing a stock to trade or invest in on your own, you will need a methodology to confirm whether that stock is suitable for what you want to achieve – which clearly is to make a profit.
Over the last 100 years, one of the most proven and respected methods of analysing has been the Top-Down Approach. It is the style of investing that many successful managers have adopted for decades, including Warren Buffet and George Soros. Traditionally it has been used as a means for investors to build long-term portfolios with stock; however, we can adapt this strategy to suit both investing with stock, options, or commodities, or for shorter-term trading.
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