You can test your stock-picking ability by creating a watch list before you buy. Free online services let you create a list and watch price changes in real time. If you know what to look for, you can see which stocks show the greatest potential for giving you profits in the future. Best of all, you won’t lose any money if some of your stocks turn out to be bad choices.
Choose an online stock-tracking service. You can find such services at Yahoo Finance, Google Finance, MSNMoney and Financial Content. These sites provide you with research, news and analyst recommendations, as well as stock screeners that let you search for stocks with specific features. They also let you set up a portfolio of stocks to watch. During the trading day, you can see each stock in your list change prices. Select the stock-tracking site that appeals to you.
Build your portfolio. As you read about stocks in the news or hear a television report on a stock that sounds interesting, enter it into your watch list. Conduct research on the financial site of choice. For example, you may be interested in dividend stocks, growth stocks or equities issued by small companies that have strong potential. As you use the financial reports and charts on these sites, you can select the criteria for stocks that are most important to you. Add stocks you like to your portfolio and begin watching how they behave.
Sort your portfolio. Your stocks will be listed alphabetically. According to Market Smith, you should arrange your stocks by the percentage of volume change. This simply means the stocks that are most actively traded will appear at the top of your list. You can sort this way by clicking the column heading that says “volume percent change,” or something similar. The list will adjust automatically to put the most active stocks at the top. This means your list will look different every day. Watch for which ones consistently appear at the top of the list and which ones appear at the bottom.
Delete and add stocks until your hypothetical portfolio consistently shows gains. This will help you not only pick winners but also examine the process you went through to find them.
- You stand the best chance of making money with stocks that are in high demand, because this drives prices up. However, “stock percent change” can mean downward price movement. When a stock moves to the top of your list, more people than usual are selling it. Increased selling volume can mean a stock is in trouble.
Kevin Johnston writes for Ameriprise Financial, the Rutgers University MBA Program and Evan Carmichael. He has written about business, marketing, finance, sales and investing for publications such as "The New York Daily News," "Business Age" and "Nation's Business." He is an instructional designer with credits for companies such as ADP, Standard and Poor's and Bank of America.