Financial Resource

How to stock pick or choose the best share to buy and sell in Malaysian stock market?

By Martin Wong

Honestly speaking, it is difficult to stock pick the best share to buy in the bull market as most good counters/stocks have raisen a great deal. While in the bear market nobody can guarantee that the current low stock price has reached its bottom already.

For the typical investor, says Mr. Joe Average, he who regularly chooses the best stocks based on hearsay, analysts’ stock reports or economic forecast. He watches local & international business channels or listen to well-dressed people talking on TV who thinks they are very knowledgeable. And finally, he believes them – else they would not be on TV, right???

The average investors/traders pick a stock no one has really heard about and hope it would make them really, really rich! However the chosen stock could go in any direction. This is highly risky not knowing whether the company can produce future earnings and profits. How to choose the best stocks usually involves blue chips stock that are household name companies or fairly well known companies in Malaysia or globally. You can choose the best stock over the markets or the best sector they are in.

Subscriber can email me for stock-pick-the-best list.

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For most average investors/traders I have interviewed, learning to stock pick the best share to buy or sell can be difficult because they either have little or no plan at all as to why they are buying at the first place. The first question we need to ask ourselves is “why are we buying or do we have investing stock goals or trading strategies” but unfortunately many traders and investors cannot even provide an answer. If you are a long term investor (I do not support buy, hold & pray), you would have a very different buying system criteria to a short term trader who buy and sell within very short period of time. So it is very important that you need to be very clear of your investing goals and trading objectives. Make sure you can differentiate between your long term investment goals and short term trading strategies.

From my own experience having been in this online stock trading business for years that the simpler the system for stocks picking the better, and the good news is you do not need to rely on stock market experts or stock market gurus to tell you what to buy or sell. All you need is some effort, hard work and lots of practice with a few tools available for a very low cost. The process I use to pick the best stock to buy is largely a technical analysis which includes many elements of fundamental analysis at the macro-economic level. The process is fully explained in my investing & trading course, but the principles are as follows.

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We start to look at the Bursa Malaysia Saham stock market companies as a pool. We begin to make selection on the individual stocks or the best sector and at this stage the very simple and common indicators are used. Using a technical analysis tool, I would identify some possible prospects for the best stock to buy and are placed on a watch list and monitored daily. How long they remain in the watchlist folder depend on the daily stock price chart.

We wait for clues in changes in the technical analysis landscape to trigger our buy signal and buy order. After placing the buy order we always put a stop loss in case the price trend reverses suddenly. The stock market is so uncertain that we have to protect our capital. The only technical analysis tool that I use for the above analysis is a simple end of day charting package called MetaStock software which I have written technical codes (filtering the required best sector or by price movements) to do just the stock picking.  

In short, the process to choose the best stocks to buy starts with the macro level and moves down to combination of using both technical and fundamental data. Although it sound very complicated, it is very easy to use as many of our course graduates have used them for years with great success. For new traders and investors, it is better to start off paper-trading to allow you to overcome the steep learning curve e.g. various trading strategies, unpredictable stock market behaviour and comfortable with placing order online for online trading.
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To be successful, you have to model after successful investors and traders who been through the blood and sweat who know how to pick the best stock to buy. Success lies on yourself and the effort you put in at the start – I hope the above article would help to put you into the right path. For more information, goto www.traderstruthrevealed.com for the Malaysian stock market.

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