There exists several different trading strategies. {Choosing which strategy to use|Your choice of an overriding method will depend on your personality and your wealth building (goals|outcomes|aspirations).
Following are four different types:
1. Fundamental Trading: Stocks are picked based on analysis, which examines certain things like earnings history or projected earnings, stock splits, company reorganization or acquisitions.
2. Technical Trading: Based on closely watching charts, graphs, lines on stock or index graphs for signs of convergence of divergence that might indicate to buy or sell. There are a wide range or technical indicators that can be evaluated to assist in making a final stock pick.
3. Momentum Trading: Based on identifying stocks that are undergoing high volume trading and sticking with them to ride the momentum and gain substantial profits. The big profits are in the big moves. 4. Scalping: Making dozens or even hundreds of trades a day in order to scalp a small profit.
Picking stocks can also depend on your overall methodology; whether you plan to engage in day trading, holding stocks for the medium term or whether you will employ a buy and hold srategy. Technical analysis combines well with day trading and medium term trading for identifying and picking stocks. Momentum trading can be highly effective for medium and long term trading. Fundamental analysis is essential to pick stocks for a buy and hold strategy where stocks may be held in a company for years.
Mark Crisp is the creator of the Stress Free Momentum Stock Trading System. An especially effective trading method that focuses on big moves for big profits. Mark also provides a complimentary copy of "The 7 Habits of a Highly Successful Trader" at http://www.momentumtradingsystem.com