How do you pick the best stocks to trade? | Motilal Oswal

How to select the best stocks for trading

Trading can get you great returns in the market but it comes with increased risk. Having a successful trading career is contingent on your research and experience as a trader, your timelines and a little bit of luck. If you are interested in learning about how you can trade stocks on there are a few basics you need to familiarize yourself with starting with how to select the right stocks for your trading strategy. Read on to know more about how to select the best stocks for trading and the factors you need to consider.

How Does Stock Trading Work?

A publicly listed company is one whose shares are listed on a reputable stock exchange. These shares give investors ownership over the company and are traded freely between those looking to buy the stock and those looking to sell the stock.  The purpose of this trading is to simply sell the stock at a higher price than what you bought it at, netting you a return. However, “trading” differs from “investing” in that it is typically done for short-term gain, whereas “investors” look to hold stocks for a longer period in the hopes of the price rising substantially.

How to Choose the Right Stocks?

While trading, choosing the right or wrong stock can alter the entire trajectory of your trading plans. Here are a few tips to keep in mind when you are selecting stocks to trade:

 

  1. Look for liquidity: Liquid stocks get more buyers and sellers as compared to illiquid stocks, and provide more opportunities to trade.
  2. Avoid volatility: Trading highly volatile stocks can lead to huge losses, as their movements are hard to predict.
  3. Find good correlation options: Stocks that have a good correlation with major indices or sectors are a relatively safe bet as they tend to follow the upward movement of an index or sector.
  4. Go with the market trends: Market trends are generally reliable indicators of which direction your stock is likely to move in. Keep an eye out for stocks that may arise.
  5. Research is key: Research is one fundamental requirement that is an absolute must and cannot be compromised on. Even if the market moves in unpredictable ways or is not in your favour, you can fall back on in-depth technical analysis to recover or save you from potential losses. 

How to Start Stock Trading Online:

Here is what you need to get started with online stock trading:

  • A trustworthy broker 
  • A PAN card
  • A trading account
  • A Demat account
  • Extensive and ongoing research of the market
  • A wish list of stocks 

In Conclusion

With a suitable trading strategy, patience, experience and the assistance of some vital resources such as online reports and real-time market updates, you can take your stock trading career to the next level. Getting a good broker with a reasonable brokerage rate is also very important. Thanks to online trading platforms and trading-adjacent online services, you can easily open a demat account and start trading today!

Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account | 10 Points to Remember When Operating your Demat Account | Types Of Demat Account & Trading Account

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