| Stock screening is extremely important if you are | | | | probability game. There are chances of winning and |
| serious about stock trading. The process to screen | | | | therefore there are chances we may lose. However, |
| the stock market is none other than a process to | | | | we must limit our loss when we are losing. Therefore, |
| guide you to select for the best stock market picks | | | | we must determine the stop loss price based on our |
| that can possibly give you the best reward at the | | | | entry price determined earlier. |
| minimal risk. | | | | Step 4: Estimate the Profit Target |
| Here's the 5 simple steps to help you getting started | | | | Similar to stop loss, we must know when we are |
| on stock screening. | | | | going to realize our profit. If you remember the 7 |
| Step 1: Screen the Stock Market | | | | habits of highly effective trader - begin with an end |
| There are hundreds and thousands of strategy to | | | | in mind. We must know our the goal or destination |
| screen the market. Some people use a moving | | | | we are going. In this case of trading plan, we must |
| average method to screen which I use a lots myself, | | | | know where is our target price. |
| some people use indicator like MacD or ADX or RSI | | | | Step 5: Compute the Reward/Risk Ratio |
| to screen the market, or some people use | | | | Reward/risk ratio is an important step to determine |
| candlestick or volume to screen. They are all fine as | | | | our success. Reward is the price difference between |
| long as you pick one method. | | | | your entry price and your profit target, while risk is |
| Step 2: Estimate Your Entry Price | | | | the price difference between your entry price and |
| You must pick an entry price using your screening | | | | stop loss. Finally the ratio between the 2 differences |
| strategy. Majority of us are part timer traders and | | | | become our reward/risk ratio. Pick a stock that gives |
| we do not have the time to sit in front of the | | | | you a reward/risk ratio of more than 2, you can pick |
| computer monitoring the market. Therefore, we can | | | | a higher ratio if you are a conservative trader or pick |
| use the closing price or open price as our entry price | | | | a lower value if you are a risk taker. |
| when we look at the end of day data. | | | | In conclusion, this 5 steps may look and sound simple |
| Step 3: Estimate Your Stop Loss Price | | | | but it is the survivor skill to help to be successful in |
| Trading or investing in the stock market is a | | | | your stock market trading. |