Research Strategies

“90% of traders fail! Do your research!”

I do research on any stock the same exact way. I use a three step method that determines whether or not the stock is good for me to buy. I find a stock that may be a potential buy so, before making any decisions, I use a 3-step research method that I developed. Enjoy!

1.) Company’s Financials.

  • I take the time to read through all the SEC filings on Yahoo Finance and I look for many different things.
  • I read the 8-Ks, 10-Qs, 10-Ks, and the 4-Ks.
  • I use the 8-Ks to find out what is currently going on in the company.
  • I use the 10-Qs and 10-Ks to determine the assets and income statements and to see how much the companies sales have increased or decreased from the last quarter or year. I also use these two forms to see if the company is in debt or not, and to figure out the burn rate of the company.
  • I use the 4-Ks to see if there is any insider trading. I look to see if it’s sales or buys. If I want a really quick view of the insider trades, I use InsiderCow.
  • I the company has good financials overall, I move onto the next step.

2.) Charts

  • I take the time to look at all different time periods of charts and I look for bullish buy signals. (i.e the 200-day EMA and the 50-day EMA about to cross over each other.)
  • I plot resistance lines and trendlines to see how the stock is doing long-term and short-term. These points are helpful to see where the stock may be going in the future.
  • If the stock is not on a heavy downtrend, I move on to the next step.

3.) Management

  • I take the time to analyze many members of each company’s board of directors to make sure that none of them or corrupt and will be there for a long time.
  • I also try to make sure that the company doesn’t end up like the infamous Enron scandal.

If the stock meets all the criteria I have listed here, I usually buy the stock the next trading session.

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