Stocks To Trade
Apr. 5, 202113 min read

5 Steps To Take To Do Stock Market Research on Your Own

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Written by Tim Bohen

Traders today have a major advantage when it comes to stock market research… 

Thanks to the internet, there’s a ton of useful stock market information available to anyone looking for it. 

In fact, there’s so much out there it can be difficult for new traders to sort through. 

That’s why I wanted to cover five steps to take to do your stock market research. 

Research is key for any trader — it’s like training for an athlete. You need to be able to do stock market research … And you need to know how to do it right.

In this post, I’ll go over the two main types of stock analysis and the best metrics to use in stock market research. I’ll also tell you where to find information to research stocks on your own.

So let’s get started!

Stock Market Research: What Is It?

Stock market research is gathering information on stocks or markets, then analyzing what it means for your trading. 

There are a lot of free online resources you can use to do your stock market research … like the thousands of blog posts on StocksToTrade, or the videos on our YouTube Channel.

Types of Stock Analysis

There are two main ways traders analyze stocks…

Fundamental Analysis

Fundamental analysis looks at a company’s underlying metrics. These include earnings reports, debt, equity, sales, market conditions, and management.

Traders and analysts use fundamental analysis to figure out whether a stock’s price reflects the company’s growth prospects.

Technical Analysis

Technical analysis uses charts to look at things like price and volume data.

Historical price movements and trading volume can reveal patterns and trading behavior. Looking at the past can help you make informed decisions about what stock prices may do next. 

For newbie traders, it can be confusing. How do you know what to look for, and where do you find it?

It’s helpful to have all the information you need in one place. StocksToTrade does that for you. It has great tools and features for zeroing in on potential trades and analyzing stocks. If you’re looking for an all-in-one trading platform, check it out. Get a 7-day trial for just $7

Take a deeper dive into technical analysis here.

What to Analyze in Stock Market Research as a New Trader

If you’re new to trading, begin by focusing on the basics…

Stock market research is much easier when you have a solid foundation. Start by learning the basics before moving onto the more advanced analysis.

Study the charts, learn the patterns, get to know the terms. You should be looking at charts until your eyes bleed!

The steps below can help you build your stock market researching skills, add to your trading knowledge, and make trading easier.

How to Research Stocks on Your Own: 5 Steps 

Determine Your Goals

The first step in doing your stock market research should be determining who you are as a trader … What are your goals?

Are you more of a day trader? Position trader? Long-term holder? Short-seller? (I don’t advise shorting for new traders. It’s risky and a challenging strategy.) 

If you’re a beginning trader, you need to figure this out. Once you figure out your trading style, you can start learning how to do your stock market research.

If you’re not yet sure of your trading style, start with paper trading. You get something close to real-world experience, without risking your capital. It’s how you can see what works and what doesn’t.

StocksToTrade has a great paper trading feature. You can enter your trades into the platform just as you would if you were placing them in the real world, and you get feedback on how they work out. Check out a 14-day trial for just $7 to start today! You’ll get all the features StocksToTrade has to offer, including paper trading.

Have a Plan

Every trader needs a trading plan. Think of it as a blueprint for a house … Nothing gets done without a plan.

When researching potential trade ideas, it’s good to know what kind of setups you’re looking for and which ones could best fit your trading strategy. A trading plan helps you do that.

With a good trading plan, you can see which stocks to avoid and which to add to your watchlist. A good plan will include an entry/exit strategy, and cover all possible outcomes.

A good trading plan will leave no room for surprises. 

Never Take Social Media Too Seriously

Today it’s easy to get caught up in a social media trading frenzy…

On social media sites like Twitter or Reddit, you’ll see certain stocks get ‘pumped’ all the time. 

They can become breeding grounds for pumps. We see them in chat rooms too.

That’s why it’s always a good idea for traders to take any trading information on social media with a grain of salt.

Even though some pumped stocks could turn into good potential trades, you have to know what you’re doing. So it’s important to have a trading plan in place and to do your own research before jumping into a trade.

However, as we saw with the GameStop saga earlier this year, sites like Reddit, Twitter, and Discord can also be great for traders…

Because of social media sites, traders from all around the world can communicate with each other like never before.

Bottom line … When doing stock market research, be aware that people posting on social media probably don’t have your best interests in mind. No one in the markets does.

Go in with your eyes open and learn how you can spot certain trends. Just be prepared to get in and out fast.

That’s why StocksToTrade has a built-in social media scanner that helps traders scan for trending tickers. Stay up to date and monitor trades all in one place!

Check Your Sources

There’s A LOT of information out there on the internet…

It’s easy to start your stock market research with the best intentions, only to find yourself going down a rabbit hole of made-up facts and conspiracies… 

How can you avoid this? Check your sources. Take the time to double- or triple-check anything you read. Do your own fundamental and technical analysis of stocks. Don’t take the word of some random person in a chat room.

Take Advantage of Free Information

When it comes to stock market research, you could end up paying a lot of money for stuff you could have gotten for free, if you had just looked around.

At StocksToTrade we have TONS of free and no-cost information available to all traders…

Like the videos on our YouTube Channel and the episodes of our SteadyTrade podcast featuring many top trading pros as guests…

Take advantage of all of these free resources. They’ll help you improve your market knowledge and trading skills. Do the work and you could be well ahead of the game!

Top Metrics for Stock Market Research

When pro traders evaluate stocks for potential trade ideas, they usually use a few key metrics to help measure how a stock is performing.

These metrics show how a company is doing compared with its stock price.

P/E: Price-to-Earnings Ratio

Traders and analysts use the price-to-earnings (P/E) ratio to value a company based on its earnings performance relative to its stock price.

It’s measured by dividing a company’s current share price by its earnings per share (EPS).

P/B: Price-to-Book Ratio

Book value is what the company is worth on paper — the value of its assets. Price-to-book (P/B) ratio compares a company’s market capitalization with the actual value of its assets. 

You can calculate the P/B ratio by dividing a company’s stock price per share by its book value per share.

PEG: Price to Earnings Growth

Traders and analysts use the PEG ratio to determine a stock’s value with potential earnings growth taken into account. 

This is a much more speculative metric…

To calculate it, divide the P/E ratio by the growth rate of earnings for a specific period.

The PEG ratio can give a bigger-picture view of a stock.

How to Find Information for Good Stock Market Research

There are so many different ways to do stock research … The best way for you depends on your preference and your goals. Some traders like to read blog posts and articles … Others prefer to watch YouTube videos or listen to podcasts… 

Whichever way you prefer is OK! Just as long as you do your due diligence, follow those five steps above, and double-check everything you hear. 

Google a company. Check out its website and its earnings reports. Scroll through Twitter. 

If the company’s fundamentals look good — or if you’re a day trader, even if they don’t —  you could do technical analysis on the stock. Check out the stock’s chart and look for patterns based on historical data.

You can use technical analysis to build the case for trades. But to do it right, you’ll need a trading platform…

Stock Market Research Tools

Today’s traders have so many great research tools available to them…

WAY more than what I had available to me when I got started trading about 15 years ago. If you can figure out how to take advantage of these tools, it can give you a leg up.

StocksToTrade has great tools to help you find potential trade ideas. 

StocksToTrade’s built-in, customizable scanners let you filter for the day’s top gainers, the stocks trading with the most volume — you can sort for just about any criteria you’d like. 

Say you’re looking for stocks trading with high volume that have gained 10% on the day …  You just plug the criteria into the search field and… done! 

Once you find a stock that’s a potential trade, the charting and indicator features allow you to track its chart history and indicators like price and volume.

StocksToTrade was developed by traders, for traders. Check it out with a 14-day trial for just $7 today!

Stock Market Monitor: How Do I Monitor the Stock Market?

New traders might feel the need to sit in front of screens all day to monitor the markets… 

With today’s technology, you don’t have to. You can set up alerts on your phone to let you know when something’s going on with the markets or the stocks you’re watching.

With the StocksToTrade Breaking News Chat, you’ll get real-time alerts for the news that has the potential to move stocks on your watchlist. Two market pros sort through the news as it happens and send subscribers the headlines that matter. It’s been a game-changer for me. Check it out today!

Practical Example of Stock Market Research

There are many different ways of doing stock market research. Here’s an example of one way to go about it…

Say you’re looking for the top percent gainers trading with the most volume. If you’re using a scanner, plug-in your criteria and generate a list.

Narrow the list to five or ten stocks and put the most promising ones on a watchlist. Now you’re ready to look at each company’s fundamentals and do some technical analysis. 

The fundamentals aren’t always as important if you’re doing a day trade — you’re looking to profit from the stock’s movement, so you don’t necessarily care what the company does. You’re looking for patterns in a stock’s chart so you can plan your entry/exit strategy based on those patterns. 

A stock’s chart history can give insight into where a stock might be headed. Patterns tend to repeat themselves over time … So looking at a stock’s chart can give you an idea of whether a trend may be about to reverse. 

If a stock meets all your criteria, you’re ready to place a trade.

Conclusion

There you have it … 5 steps to improve your stock market research.

Remember, everyone’s different. No one strategy works for every trader out there. The best thing to do is find the style or strategy of research that best fits you and stick with it.

Stock market research used to be time-consuming. Now, thanks to technology, it’s MUCH easier.

It may take you a bit of time to filter through all the fluff and get to the information that matters … It may also take a while to figure out your trading style and the setups that fit your trading plan. That’s all part of the learning process. 

As you refine your research techniques, remember to hone your trading plan and always stick to it. Study the charts, learn the patterns, and keep it simple!

And when you’re ready to take your trading to the next level, join us on the SteadyTrade Team. It’s an awesome community of dedicated traders who believe in sharing knowledge. See you there!

How do you research potential trades? Tell me in the comments!