Stock Trading Technique – Actions to Pick Ideal Stock Market Picks

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Stock screening is extremely important if you are serious about stock trading.

Step 1: Screen the Stock Market

Some people use a moving average method to screen which I use a lots myself, some people use indicator like MacD or ADX or RSI to screen the market, or some people use candlestick or volume to screen.

Step 2: Estimate Your Entry Price

You must pick an entry price using your screening strategy.

Step 3: Estimate Your Stop Loss Price

Trading or investing in the stock market is a probability game.

Step 5: Compute the Reward/Risk Ratio

Reward is the price difference between your entry price and your profit target, while risk is the price difference between your entry price and stop loss. Finally the ratio between the 2 differences become our reward/risk ratio. Pick a stock that gives you a reward/risk ratio of more than 2, you can pick a higher ratio if you are a conservative trader or pick a lower value if you are a risk taker.