Want to learn how to invest in stocks like Veeva Systems (VEEV),Nvidia (NVDA), Alphabet (GOOGL), Facebook (FB) or Apple (AAPL) before their big moves? Start with a proven strategy for investing in the stock market for beginning investors.
↑X Find Top Growth Stocks With The IBD Screen Of The Day See All Videos
You'll find that long-term success starts with learning how to keep the odds in your favor and manage risk. This is especially important trying to navigate stock market volatility during times like the coronavirus crash and rebound.
Based on a unique study of every market cycle since the 1880s, Investor's Business Daily's CAN SLIM Investing System gives you the tools to do just that. It identifies the seven common traits of winning stocks. Plus, the CAN SLIM system provides time-tested rules for how to buy stocks like GOOGL, NVDA, FB, AMZN, AAPL, and SQ stock in the early stages of their big moves. You'll also see when to sell to lock in your profits, and how to time the stock market.
Understand that for both beginning investors and seasoned stock market pros, it's impossible to always buy and sell the best stocks at exactly the right time. But also understand that you don't have to be right every time to make money. You just need to learn (and follow) some basic rules for how to identify the best stocks to watch, the ideal time to buy them, and when to sell stocks to lock in your profits or quickly cut any losses.
Scroll down for proven rules on how to make money in the stock market for both beginners and more experienced investors. And if you're interested in newer IPO stocks to watch like CrowdStrike (CRWD), BioNTech (BNTX) and Yeti (YETI), first learn the basics about when to buy newer issues. Before jumping in, be sure to learn some important lessons on how to buy IPO stocks using Facebook stock, Alibaba (BABA) and Snap (SNAP) as examples. Note that it took SNAP stock years to recover from its disappointing IPO in 2017.
Keep those lessons in mind when watching other recent IPO stocks such as Upstart (UPST), TaskUs (TASK), GFL Environmental (GFL), Driven Brands (DRVN) and Doximity (DOCS).
Find The Best Stocks To Buy (And When To Buy Them) With This 3-Step Routine
How To Invest In Stocks: How To Time The Stock Market
Most Wall Street pundits will tell you it's impossible to time the stock market. While it's unrealistic to think you'll get in at the very bottom and out at the very top of a stock market cycle, there are ways to spot major changes in market trends as they emerge. And by spotting those changes, you can position yourself to capture solid profits in a new market uptrend and keep the bulk of those gains when the market enters a downturn.
The sharp decline and impressive rebound during the coronavirus pandemic only reinforced the importance of this approach. The stock market has recently gone through each of the three possible stages: market in confirmed uptrend, uptrend under pressure and market in correction.
To stay protected throughout these changes, follow the No. 1 rule of investing: Always cut your losses short. While you can't control what the stock market does, this basic rule lets you control how you react.
Learn more about market timing:
- Why Is Tracking Stock Market Direction Important?
- VIDEO: Is It Time To Get Into — Or Out Of — The Stock Market?
- What Is A Follow-Through Day?
- Not Every Follow-Through Day Works: 2 Red Flags To Watch For
How To Invest In Stocks: How To Buy Stocks
Finding the best stocks to buy and watch starts with knowing what a big market winner looks like before it takes off.
As noted above, IBD's study of the top-performing stocks in each market cycle since the 1880s has identified the seven telltale traits of market winners. Zoom stock, AMZN, AAPL, NVDA, NOW stock and virtually all the best stocks in every market cycle have displayed these same traits early on in their runs.
For beginning investors and pros alike, the goal is to find stocks that are displaying those same traits right now. Traits like explosive earnings and sales growth, a strong return on equity, a fast-growing and industry-leading product or service and strong demand among mutual fund managers.
Another key indicator is the relative strength line. During a downturn or in a particularly volatile market, look for stocks whose RS line is at or near a new 52-week high. It's a bullish sign of market leadership.
You can instantly see if your stocks get pass, neutral or fail ratings for these telltale characteristics using IBD Stock Checkup. (See how to get pass or fail ratings for your stocks.)
And you can find such stocks in lists like the IBD 50, Sector Leaders, IBD Big Cap 20, IBD Long-Term Leaders, and IPO Leaders. For example, fast-growing semiconductor designer and artificial intelligence (AI) stock Nvidia was featured on the IBD 50 before it surged 750%. And that was before Nvidia stock rebounded from a 2018 downturn to start making new all-time highs once again. Nvidia stock is currently on the IBD 50 and IBD Big Cap 20.
While, of course, not every stock featured on an IBD list will make the type of moves that Nvidia, Apple, SQ stock and Amazon have made, it does show why it pays to regularly update your list of stocks to watch using these stock screens.
Learn more about how to buy stocks:
- Zero In On The Best Stocks To Buy And Watch With The IBD Stock Screener
- Find The Best Stocks To Buy And The Right Time To Buy Them In 3 Basic Steps
- See How To Quickly Find And Evaluate The Best Stocks To Buy And Watch
- Looking For Breakout Stocks? Start With These Lists
- Buying Checklist
How To Invest In Stocks: When To Sell Stocks
Beginning investors often spend more time focusing on which stocks to buy and ignore the equally — if not more— important issue of when to sell. Big mistake! Without a sound set of sell rules, you may end up giving back all of your hard-earned gains or, even worse, taking a larger-than-necessary loss.
There are essentially two types of sell rules: offensive rules for locking in your profits, and defensive rules for cutting short any losses. To make, keep and compound your stock market profits, it's crucial that you learn to use both types of sell rules.
Learn more about when to sell stocks:
- When To Sell Stocks: Take Most Profits At 20%
- When To Sell Stocks: Cut All Losses At No More Than 7%
- Sell Rules For Growth Stocks: Watch For A Big Break Of An Uptrend Line
- Selling Checklist
How To Invest In Stocks: How To Read Stock Charts
When it comes to understanding the stock market for beginners, learning how to read stock charts can be one of the more intimidating challenges. But it doesn't have to be. Once you understand the key concepts of chart reading and why you should use stock charts, you'll find it's not that hard to view charts to time your buys and sells.
Learn more about how to read stock charts:
- Video: Why Use Stock Charts?
- Learn The Basics Of How To Read Stock Charts
- Discover The 3 Most Profitable Stock Chart Patterns
- Video:
Stock Market Tips For Beginning Investors
Like all worthwhile skills, learning how to invest in stocks takes some time and effort. But the payoff can be life-changing. So start with the basics, and gradually improve your investing skills over time.
Now you may be wondering, how much money do you need to start investing in stocks? The answer is, not much. As IBD founder William J. O'Neil has written, "You can begin with as little as $500 to $1,000 and add to it as you earn and save more money."
So if you're looking to start your investing journey — or get it back on track in the aftermath of the coronavirus stock market— stay grounded with the three key foundations of CAN SLIM investing.
Beginning Investors: Get More Tips On How To Invest In Stocks
How To Invest: 10-Day Moving Average Offers Early Exit SignalOne of the problems with sell signals is that they may appear when it's already too late, especially for those learning how to invest. On May 22, for instance, Toll Brothers sold... Read More
Stock Analysis: How To Spot A Potential Change In Stock Momentum Using Volume, PriceIt's one thing to identify a base on a stock chart. Identifying its good and bad parts is another. That's a process in stock analysis that requires studying each week in the... Read More
Stock Chart Analysis: Saucer With Handle Base Less Common, But Packs A PunchIn each bull market, dozens of winning stocks can trace their success to a cup-with-handle base. This bullish chart pattern has a cousin, the saucer with handle, that is less common but... Read More
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