The best stock for daily speculation (stock speculation guide)
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As a speculator in the Saudi stock market looking for opening and closing trading positions on the same day, you are supposed to learn how to choose the stock for speculation according to the basis of daily speculation in stocks and the principles of short-term trading so that you can snatch the best stock for daily speculation 2021 unlike long-term investment (how to choose shares for long-term investment).
Stock speculation is a high-risk stock trading technique, with the expectation of large returns. The motive is to make the most of the fluctuations in the market (the difference between speculation and investment: speculation buys stocks and sells them when they rise on the same day, week, or month.. while investment buys growth and/or dividend stocks and keeps them for a period of 3 to 30 years).
You will learn and discover many secrets of stock speculation in this article (how to choose the best stock for speculation + the best stock for speculation in the Saudi market + an option other than stocks for daily speculation).
How to choose the best stock for speculation in 4 steps
Unlike long-term investing, short-term stock speculation requires a fundamental analysis of a short list of companies that gives you a quick overview of the best short-term stocks without the need for in-depth research on the associated financial aspects.
When the various data and announcements are issued, in that case you have information that you can benefit from when any price movements occur. Here we offer you the best daily trading method consisting of 4 simple steps:
How to choose the best stock for daily speculation: Step (1)
Start with a few companies that you want to analyze and follow the financial and economic news to be aware of any developments related to these companies at the present time, and note and write down some important things, which are reflected in the following:
How was the share price in the past 3 to 6 months?
Is the company currently developing new projects, or has launched a new product?
Note any recommendations from experts to buy or sell the company’s shares.
Important forecasts and upcoming announcements.
Any talk about a possible merger or acquisition.
How to choose the best stock for daily speculation: Step (2)
Start by thinking of different scenarios that you can use as opportunities to speculate. Start with a list of current and potential events that you’ve observed with each company, and try to imagine what might happen to the company’s share price under a range of different outcomes.
The result that supports what you already know at the moment has often been priced, and has become included in the company’s share price. However, if things change or something unexpected happens, this will lead to the emergence of speculation opportunities, for example:
A technology company that has a new product under development, which it says will revolutionize its field, and I read through economic news stations that the product will be unveiled within two weeks, while the publicity surrounding this product has led to an increase in the company’s share price by 25 percent compared to last year. , this is an important example of the market actually pricing in expectations for product launches.
You can also paint a picture of what would happen if a product launch was announced to be delayed, a project canceled altogether, had cost issues, or a product unveiling that wasn’t as impressive as expected. All of these scenarios present a high-probability selling opportunity that means A significant drop in the company’s share price.
How to choose the best stock for daily speculation: Step (3)
After creating a list of all possible scenarios, try to give a relative weight to those possibilities by classifying them according to the probability of their occurrence in this way:
- very likely
- Possible
- Excluded
- very unlikely
Depending on the previous example applied to the technology company that we mentioned, we can say that it is very likely that the market will be priced because the product will turn out to be so great, which is reflected in the share price rising by up to 25 percent.
It is possible that the product will be delayed, which is not priced in the market, and it will be unlikely that the product will be as revolutionary as expected, as this outcome has not been priced in the market either. However, some speculators may take positions based on expectations of the occurrence of this scenario, and it is unlikely It is very important for the product to be completely canceled, as the market definitely does not expect such news, so it was not priced in the market to be reflected in the share price.
How to choose the best stock for daily speculation: step (4)
If any of these scenarios, whether delay, cancellation, or the product is not as revolutionary as expected, appear in reality, then you can look at the price chart to find a buy or sell entry point, stop loss and take profit targets using technical analysis, for example: If The company suddenly announced the cancellation of the product completely, then you can consider several sales opportunities.
The best stock for speculation in the Saudi market
The Saudi stock market index – the largest financial market in the region and one of the ten largest global markets in terms of market value – continued its rush towards achieving new point levels, amid a continuous growth in the average volume of trading and concluded deals, in a scene in which speculation and hot liquidity returned to the Saudi financial market arena since Many years before the global financial crisis.
What is the best stock for speculation in the Saudi market? Unfortunately, you cannot find a specific and fixed answer to this question. The stock market is characterized by volatility and volatility, and economic conditions change quickly, in addition to the basics of speculation (liquidity, trading volume, and volatility) that determine the best stocks for speculation, which are unstable variables.
Therefore, we found it better to point you to the source of these indicators, so that you are informed periodically and push yourself towards learning the basics of speculation and be able to evaluate opportunities and even the recommendations of professionals yourself, thus making your decisions based on foundations and not just gambling:
Economic: to follow up the performance of the Saudi stock market.
Economic numbers: to monitor trading volumes.
For beginners in the Saudi market, do not speculate with all your capital, but the best:
Divide the portfolio into three sections, one third for investment shares, one third for speculation, and one third for cash.
A third of speculation should be in stocks with good volatility, buying at support and selling at resistance.
Look for the stocks that you have entered liquidity to speculate on, and let go of the sleeping stocks.
The basics of choosing the best stocks for speculation
One of the most searched phrases on Google is the best stock for speculation in the Saudi market. In this section we will discuss the process by which to find speculative stocks to trade on. Now please understand that there are many styles and ways in which you can find speculative stocks and we are not saying that the method we are going to go with is the best of all. However, this method works well for traders who are looking to open and close positions on the same day, and will certainly not be suitable for a trader who speculates on the medium term.
While scalping is a risky investment strategy, day trading is very common and can be very profitable – provided you know the basics.
Day trading is a set of trading techniques whereby a trader buys and sells multiple times in the market throughout the day to exploit fluctuations and trends in the price of an asset during the day. The average daily speculator is based on three things:
Liquidity: Liquidity allows you to enter and exit a stock at a good price
Volatility: It is simply a measure of the expected daily price range – the range in which the day trader operates. More volatility means a bigger profit or loss.
Trading Volume: It is a measure of the number of times shares are bought and sold in a given period of time – more commonly known as average daily trading volume.
So how do you know which stocks are best suited for this type of trading? Read on for some essential tips for picking stocks as a day trader:
Start small
To make it easier for you to speculate daily, try to focus on a maximum of one or two stocks during the session.
Researching and tracking stocks and finding opportunities is easier with just a few stocks.
Stick to the plan
To make your daily speculation easier, try to follow your plan and strategy closely instead of trying to go after profits.
It is true that day traders have to move quickly, but they do not have to change their strategy quickly. why? Because they developed a trading strategy in advance, and this strategy is supposed to be adhered to. Don’t let your emotions sway your plans and abandon your strategy. There is a mantra among day traders: “Plan your trade and trade your plan”.
High liquidity and volatility in daily trading
To make your daily speculation easier, try to find highly liquid stocks and avoid cheap stocks.
Liquidity in financial markets refers to the speed at which an asset can be bought or sold in the market. It can also indicate how trading affects the price of a security. Liquid stocks are traded more easily and tend to be more discounted than other stocks, which makes them cheaper. In addition, stocks offered by companies with higher market capitalization are often more liquid than companies with lower market capitalization. This is because it is easier to find buyers and sellers for the stock in question. Stocks that show greater volatility are also suitable for day trading strategies.
Trading volume and trading volume index (TVI)
To make your daily speculation easier, try to find stocks with a decent turnover.
Day traders use the volume indicator to determine whether or not to buy stocks. Trading Volume Index (TVI) indicates the amount that was traded on a particular stock over a specified period of time. It is one of the oldest and most popular indicators, its increase means an increase in the demand for the financial instrument, and its decrease indicates a decline.
A sudden increase in trading volume indicates an increased probability of a price change. Events and news are typical moments of increased trading volume. Strong moves occur with increased trading volume. Thus it can be considered as a measure of strength. The trader expects high buying volume at the support level and high selling volume at the resistance level. There are many ways to use volume in a trading strategy and most traders use it in combination with other analysis techniques.
Warning: If you search on Twitter, you will find among the names of speculative stocks a terrible amount of drumming for inflated and many times higher stocks. Be careful!
Digital currencies are another option for daily speculation
Rapid and strong volatility is one of the things that distinguish digital currencies and open up the appetite of traders, because it creates opportunities to earn money through short-term buying and selling, but of course it comes with higher risks. Speculators aspire to make huge fortunes by dealing in electronic currencies, but they buy and sell them very quickly, which leads to short-term fluctuations.
There are few strong and promising cryptocurrencies besides Bitcoin. But choosing the best digital currencies for speculation and knowing what digital currencies have a future is not an easy task, because the cryptocurrency market includes hundreds of digital currencies. However, the difficulty of identifying successful cryptocurrencies does not mean that you make your trades haphazardly.
The fluctuations in the prices of cryptocurrencies often top the news regarding the virtual asset market, so that fluctuations that sometimes reach 20% up or down during one day are no longer strange, 5 factors that affect the prices of cryptocurrencies.
8 golden tips for speculation in digital currencies:
1. Start speculating according to your financial capabilities. It is best not to take risks or borrow money in order to trade.
2. Draw for yourself the path of a trading plan through specific goals, such as following up certain currencies (news, developments…).
3. Avoid worrying and rushing to make your decision in every deal, as losing deals now may be successful in the future and vice versa.
4. Do not trust false news, which often comes from some investors in conversations from within some platforms or from some people on communication sites whose actual experience in this field is not known.
5. Do not rely on guesswork or luck, the successful investor or trader is always looking for information wherever it is, to benefit from it.
6. Speculation is not considered a way to make quick profits. Learn from your mistakes because you will not be able to improve your trading without learning from every mistake you have faced before.
7. Learn to analyze data, prices and news on your own. Teach yourself and learn from the experiences of others.
8. Do not make speculation all your concern because doing other activities in spare time is an opportunity to review your trading strategy.
summary
Speculation in the Saudi stock market requires you to conduct a basic analysis of a list of companies and review the analyzes of economists and the financial press in order to obtain sufficient background on stock news and prices, as well as new projects and products of companies in the market, speculation about mergers and acquisitions, and others.
In addition to writing down all the notes that you think are expected to happen, and also to study the list and create a set of imaginary scenarios for each one of them. If these results are achieved on the ground, you will be mentally ready to open a buy or sell deal, and technical analysis can be used to find the entry level and stop loss, as well as the exit points for your deal. Finally, your knowledge of these steps is only a beginning, and for professionalism and the ability to determine the best stock for daily speculation 2021, you must continue to enhance the skills of speculation in stocks and the principles of short-term trading.
And the last reminder in this article is that social media is not a reliable tool for finding speculative stocks to invest in. Certainly, you may stumble upon a conversation between people discussing how to speculate in stocks, and they may discuss a specific stock, and there is nothing wrong with researching and looking into that and benefiting from any information or data you come across. Choosing the best stocks to trade in, no matter where you come across them, should be governed by your trading strategy.
Disclaimer: The content of this article is for informational purposes only. The information provided should absolutely not be considered as investment advice or a recommendation. No warranty is made, express or implied, as to the accuracy of the information or data contained herein. Users of this article agree that Money Secrets does not accept responsibility for any of their investment decisions. Not every investment or trading strategy is suitable for anyone. See the risk warning statement.