The Ultimate Guide to Selecting US Stocks: Seize Potential Stocks and Easily Double Your Wealth!

The US stock market is like a huge department store, filled with a dazzling array of products that can be overwhelming. However, not every item is suitable for you. Stock selection is like finding the “boutique” that best suits your investment goals and style among these numerous options. If you often struggle with stock selection or don’t know where to start, you might as well begin with this article and gradually clarify the logic of stock selection. The process of stock selection is not only a rational analysis but also a journey about belief and patience.

Why Do We Need to Select Stocks? The Background of the Need for Stock Selection

Why do we need to select stocks? Simply put, because the investable targets in the market are limited, and our funds are even more limited. The significance of stock selection lies in using limited resources to capture the greatest opportunities.

Firstly, the purpose of investment is to make profits. If we blindly invest our funds in some seemingly popular stocks, it’s like throwing money into a bottomless pit. Through stock selection, we can find those stocks with high potential that can outperform the market, thus bringing higher returns for ourselves.

Secondly, market fluctuations are the norm. Even during periods when the broader market performs well, there are always stocks that are falling. Similarly, in a bear market, there are also some stocks that can rise against the trend. The essence of stock selection is to find these “the strong get stronger” stocks in the complex market.

Finally, there are leading players in every stage. Whether it’s the rapid rise of technology or the industry changes brought about by the upgrading of consumption, different eras have their star industries and enterprises. Through stock selection, we can participate in the development of these stories and share their growth dividends.

Why Is Stock Selection So Important? The Significance of Stock Selection

The importance of stock selection is like choosing a route for your ship. Only by choosing the right direction can you reach your destination smoothly.

From historical data, stocks that outperform the broader market have something in common. Research has found that the stocks that perform best in each market cycle usually show a trend that is superior to the broader market before a significant rally. High-relative-strength stocks are not only the “favorites” of institutional investors but also the stars of the future market.

Moreover, stock selection can help us manage risks. Investing in stocks is not gambling but scientific risk management. Through stock selection, we can avoid companies with deteriorating fundamentals or unclear industry prospects and concentrate our funds on more promising targets.

On a deeper level, stock selection is a dialogue between investors and the market. Each stock you choose represents your views on the market, the industry, and even the global economy. Stock selection is the result of rational analysis and also an embodiment of investment beliefs.

How to Select Stocks? Find the Method That Suits You Best

The process of stock selection is like a clever “screening” process, involving multi-dimensional analysis and judgment. For the US stock market, there are several common stock selection methods to help investors make appropriate decisions according to the market environment and company characteristics.

Fundamental Stock Selection: Focus on Companies with Long-Term Growth

Fundamental stock selection focuses on the evaluation of a company’s intrinsic value. It mainly determines the investment value of stocks by analyzing the company’s financial health, profitability, and industry prospects. For investors seeking long-term and stable returns, fundamental stock selection is undoubtedly the most reliable strategy.

• Profitability: A company’s profitability directly affects the long-term performance of its stocks. Usually, we will pay attention to financial indicators such as the company’s revenue growth rate, net profit margin, and free cash flow. Companies like Amazon, Microsoft, and Google have gradually established a solid market position through continuous profitability and have become “blue-chip stocks” in the eyes of investors.
• Debt Level: Excessive debt will make a company face huge debt repayment pressure during an economic downturn, which is also a factor that must be noted when selecting stocks. Generally speaking, companies with low debt ratios have more stable financial conditions and can withstand more market fluctuations.
• Industry Position: Choosing industry-leading stocks is a major principle of fundamental stock selection. Leading enterprises usually have stronger competitiveness in the industry, possess more market share and bargaining power, which brings them stable profit growth.

Technical Stock Selection: Identify Short-Term Opportunities

Technical stock selection focuses on judging the future trend of stocks through their price movements and trading volumes. It is a commonly used tool for short-term traders. Technical analysis mainly relies on the combination of charts and technical indicators.

• Relative Strength Index (RSI): The RSI is an indicator used to evaluate whether a stock is overbought or oversold. It helps investors identify possible overbought or oversold conditions in the short term, thereby capturing the opportunity for stock price reversals.
• Moving Averages: Moving averages are a classic tool for judging stock trends. When a stock price breaks through short-term or long-term moving averages, it usually represents a turning point in the trend. Combining the breakthrough signals of prices and changes in trading volumes can help investors confirm the upward or downward trend of stocks.
• Trading Volume: Trading volume is an important indicator in technical analysis, which reflects the attention of market participants to stocks. Usually, when the stock price rises accompanied by an increase in trading volume, it indicates that the market has a strong bullish sentiment towards the stock, and vice versa indicates that the market may lack support.

Relative Strength Stock Selection: Look for Potential Stocks

Relative strength stock selection is an indicator that measures the relative strength of a stock’s performance compared to the broader market. Stocks with high relative strength tend to lead the rise in a bull market, resist declines in a bear market, and have greater upside potential. Through the relative strength indicator, investors can more accurately screen out those stocks that truly have investment value.

• What is Relative Strength (RS)? Relative strength measures the superiority or inferiority of a stock’s performance relative to the broader market. Stocks with high relative strength usually show the characteristic of resisting declines when the broader market falls or show stronger increases when it rises. For example, in the early stage of the COVID-19 pandemic in 2020, stocks like Zoom and DocuSign saw a sharp increase in industry demand and showed extremely high relative strength, becoming the most popular investment targets at that time.
• How to Use Relative Strength for Stock Selection? When using relative strength, investors can view the relative strength of individual stocks through technical analysis platforms (such as TradingView, Finviz). Usually, if a stock’s relative strength line continues to rise and shows resistance to declines during market corrections, then this stock is worthy of special attention.

From Stock Selection to Investment, Which Tools Are Worth Choosing?

After talking about the methods of stock selection, the following will recommend one tool for each of the three aspects: stock selection, stock trading (brokerage), and deposit and withdrawal of funds.

Stock Selection Tool: Accurately Screen Potential Stocks

A stock selection tool is an essential weapon for investors to find potential stocks in the stock market. An efficient stock selection tool can not only help you quickly screen stocks that meet specific conditions but also support you in making scientific investment decisions through data and charts.

TradingView is a leading chart analysis platform in the world, suitable for investors who conduct technical analysis. It provides rich charts, technical indicators, real-time market data, and supports the simultaneous analysis of multiple markets. Investors can use TradingView to observe the trends of the US stock market in real time and capture potential opportunities.

Features:

• It provides real-time charts and data of the global stock market, suitable for short-term and medium-term technical analysis.
• It supports a variety of technical indicators, including the Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD), Moving Averages (MA), etc.
• It has a powerful community function. Investors can share their trading strategies and learn from other investors.
• Users can customize charts and set up combinations of multiple technical indicators for precise stock selection.

Stock Trading Tool: Quickly Execute Transactions and Manage Funds

A stock trading tool is an essential tool for investors when conducting actual trading operations. They can not only help you place orders quickly but also provide functions such as fund management and risk control.

Charles Schwab is one of the leading brokerages in the US stock market, providing a powerful trading platform and comprehensive investment services. Whether it’s stocks, ETFs, options, or bonds, mutual funds, Charles Schwab can provide all-round trading support for investors. In addition, Charles Schwab also provides in-depth market analysis, research reports, and professional investment tools, suitable for investors at different levels.

Features:

• It offers zero-commission stock and ETF trading, suitable for long-term investors and those who conduct daily transactions.
• It has a powerful trading platform and provides dedicated bank accounts without the need to bind additional bank cards.
• It has a rich variety of investment product types, supporting multiple investment choices such as stocks, options, bonds, and mutual funds.
• It provides comprehensive market analysis tools and research reports to help investors make informed decisions.

Deposit and Withdrawal Tool: Fund Management and Cross-Platform Transfers

When investing in US stocks, the smoothness and security of fund deposits and withdrawals are crucial. Deposit and withdrawal tools can not only help you conveniently transfer cross-border funds but also provide efficient fund management services. The following is the recommended deposit and withdrawal tool, which can help investors achieve rapid cross-platform fund transfers:

BiyaPay is a professional multi-asset trading wallet, especially suitable for US stock investors to deposit and withdraw funds. BiyaPay supports the real-time exchange between digital currencies like USDT and the US dollar. Users can deposit USDT and exchange it into US dollars to deposit funds into major brokerages. BiyaPay supports multiple currency exchanges and cross-border transfer services, helping investors achieve global fund circulation.

Features:

• BiyaPay supports a 1:1 exchange between USDT and the US dollar, solving the problem of investors’ fund deposits.
• There is no quota limit, with a minimum handling fee of five thousandths, enabling free asset allocation.
• Funds can be remitted on the same day and arrive on the same day. Real-time transfers are available in most regions around the world, with high efficiency.
• It supports the exchange of fiat currency for digital currency and on-chain withdrawals, facilitating the withdrawal of funds to local banks.

Conclusion: Start from Stock Selection and Find Your Own Investment Story

Stock selection is not only the starting point of investment but also the compass for you to navigate in the stock market. Each stock selection decision is a profound insight and judgment of the market. By understanding your own risk tolerance and using fundamental and technical analysis tools, you will gradually map out your own investment roadmap.

In the US stock market, opportunities and challenges coexist. Investors need to maintain sharp observation and seize those companies with high growth potential. Behind this, it is inseparable from a scientific stock selection method. From the relative strength indicator to the detailed analysis of fundamentals, and then to the technical signals for short-term trading, each link can help you accurately grasp the pulse of the market.