Online Stock Trading Tips

This is a tutorial on how to use MS Excel to back test your trading strategy and see if it is feasible to use or not. This tutorial assumes you are going to use the trading system on a daily basis. So if you are going to use it on a monthly basis, then you will need to do minor modification on the spreadsheet.

Backtesting is important to assess the expectancy of your trading system. You can read more about trading system expectancy on the principles of money management in stock trading.

If your trading expectancy is above $0 dollar including commissions then you can be sure that it will profitable when you are going to trade it using real money.

The following are the steps you are going to do:

Step1: Go to Yahoo finance: http://finance.yahoo.com/ and then under “Get Quotes” type the code name of the stock you need to analyze. For example, let’s use the Google stocks: GOOG (more…)

Selecting the correct stocks are important. It is because no matter how big your capital or how clever you are in managing risk and money management, a poor stocks is poor. You cannot do anything to increase its value, it is because it’s beyond your control (its the control of the company owners by the way, except if you are a giant shareholder and you can do something to revive but this is rare for most stock investors)

Therefore as an investor, you need to know a few sets of important things in choosing how to buy good stocks. If you are planning to have a well diversified portfolio(recommended), you can have different mixtures of “good” stocks in different sectors.

Assuming you still have to buy a single stock and you are planning to create portfolio, the following are the detailed steps:

Step1. Write down the sectors for which are very important in your day to day living (like you cannot continue to live without them) and you know them very carefully because you are a long term customer/user of that sector. (more…)