Just how do professional investors do it? They seem to spot all the best stocks before other people, but they’re not allowed to use inside information. How do they start with the same data and get such positive results? The simple fact is that there’s a lot of data out there, and not always in the obvious places. The investors who consistently pick winners are simply those who know where to look. That’s something you can learn.
Although you may not consciously know where to start looking, the chances are that you’re actually doing it already. Do you sometimes encounter new products that you absolutely love and that your friends are excited by when you introduce them to them? Do you have friends or family members who do this? Sometimes that’s the very best way to find a company with big growth potential – to trust your instincts as a consumer. When you encounter such products, look into the companies behind them and consider whether they might make a good investment. Explore their other products to determine whether they’re one hit wonders or whether they’re consistently coming up with ideas that could make them a success.
Another thing that you can do in day to day life is to keep an eye on trends developing around you. This could be anything from looking at the colours and styles of clothing people are wearing to paying attention to conversations about the latest computer games they’re playing. If you feel that individuals are moving in a particular direction in their choice of products, look out for the products that are emerging to meet those new preferences and research the companies producing them. To have growth potential, a company needs to do more than fit in today – it needs to have a sense of what’s coming tomorrow. When you understand that too, you can get in ahead of the competition.
Identify winning stock lists
If you’re already an investor, the chances are that you’ve been approached quite a few times by people who insist that they know all about which companies are about to undergo rapid growth. It goes without saying that the vast majority of these people are scammers or, at best, individuals’ with an inflated idea of their own business skills. Although you should be wary of such tips, however, there are stock lists out there that consistently turn up winners. When you see a company achieving success, look back to see where it has been listed and take notes. When you identify consistently impressive lists, watch them for tempting future prospects.
Follow the experts
As well as people with dubious tips they’re keen to share, there are also people out there with genuinely good information they like to keep to themselves – at least until they’ve made their own investments. Keeping it a secret afterwards is not so easy, so when you identify investors who are consistent in their ability to spot growth stocks, you can watch them and buy what they’re buying. This still requires a little tailoring because you may have slightly different investment priorities or you may be unwilling to take on the same level of risk, but it can nevertheless be an effective strategy – you just need to get in there before everybody else does and the price of the promising stock shoots up.
Reducing the risks
If you’ve invested in stocks with high growth potential but you’re concerned that they may be subject to short-term volatility, you can reduce some of the risk involved by using CFDs to hedge against loss of value. This technique means that, for a set period, you will neither gain nor lose from changes in the stock value, but if you plan to hold onto what you’ve bought for the longer term, you can start gaining after this period when, with a bit of luck, you’ll see the growth you waited for. It’s surprisingly easy to learn how to do this and with a few basic CFD trading tips you’ll soon be on your way.
Key to making a success of all this is your ability to get out there and network, and to maintain the kind of social life that helps you stay informed. You’ll also need good research skills so that you can find out about the companies that make an impression on you, though you can now do a lot of that online. Perhaps most importantly, no matter how good a business looks, you’ll need to profile it as you would any other in order to be sure that it’s the real deal and has the staying power to make your investment worthwhile. If you can get all this together then when the next big thing happens, you could be on board.