Which stock to choose for investment from a basket of stock available in the stock market? What is the logical reasoning behind this choice? .
I have tried to answer only these two questions in this article. However as an investor you may impliment many other good trading models for successful construction of your investment portfolio.
1: Buy the stocks having low P/E ratio.Day trading mechanism devised into three categories.
2: Buy the value stock or growth stock having low debt / equity ratio and high reserve and surplus.
3: Buy the stock having good track record of giving bonus shares to his investors.
4:Buy stock having low PEG ratio (i.e. price to earning ratio divided by annual EPS growth).
5: Buy Value stock with high beta or growth stock with low beta.
6: Estimate the beta of the stock for 3 month,6 month and 1 year or the expected duration of your holding to know how muct return it will offer with specific % movement in the index.
7: Try to Use the GRACH method to find the expected volatility the stcok may show during the period of your holding
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