When I do research FTSE 100 Stocks, I always start by trying to understand the nature of the business. For example, when I wrote about passive income stocks yesterday, I covered Aviva, Tesco, And On the national grid. It is easy to understand why insurance, energy, and food are all in constant demand. But, for example, prefers a cryptocurrency mine Argo blockchain Significantly more complex. And my basic rule is never to invest in a stock that I don’t understand.
Then I analyze the basics. Basically, I try to determine the internal value of a company by evaluating its revenue, balance sheet, cash flow and price-to-earnings (P / E) ratio. If its stock price is trading below what my internal value seems to be, then this is a good sign for me to take a position. And if volatile share prices change, as in its case Scottish mortgage, Then I will look at the five-year average to ensure it is smoothed by long-term growth.
Of course, the fundamental analysis may be that a company with significant debt and high P / E ratio is not a good buy. But the reverse is often true for growth stocks. For example, borrowing money for an expansion fund makes a stock risky, but can also bring higher rewards.
FTSE 100 Volume Leader
But to judge the perfect time to take a position, I always check the volume of the shares. It refers to the number of shares exchanged in a given period of time. The higher the volume, the more investors are buying and selling them. If a stock has a high trading volume and the price is rising, it is usually because it has given good news that is creating demand for investors. This creates a positive feedback loop, as rising prices attract more buyers.
If the volume of the stock is increasing but the price is decreasing, it is usually due to bad news. Investors are selling their shares quickly, which creates a negative feedback loop. This is because the initial price reduction can result in more investors selling. And since there are often not enough buyers for fast-falling stocks, prices fall even faster.
So when to buy?
If a high volume FTSE 100 stock that is growing rapidly starts to decrease in volume, then interest starts to decrease. At that point I find that there is usually a small contrast, which is the best time to buy for me. And if the stock I want is declining rapidly, I use the same strategy. I wait for the volume to decrease, and then I take a position. Usually the stock will then rebound slightly. So by carefully checking the volume of an in-demand FTSE 100 stock, I can get more shares for my money.
For example, Lloyds Last week was the most traded stock so far. About 90 million shares were traded on Friday. This is double the trading volume of the last four days. And its share price fell 3%. So if I decide to invest, I will wait for the volume to fall to the previous level, which I hope will return the price of a share. But of course, nothing is certain.
Is this little known company the next ‘Monster’ IPO?
At the moment, this ‘Bought by shouting’ The stock is trading at a steep discount from its IPO price, but looks set to skyrocket in the coming years.
Because this North American company is the clear leader in his case which is assumed Valued at 1 261 billion by 2025.
The Motley Flower UK team of analysts has just released a comprehensive report that shows you why we believe it has so much potential.
But I warn you, You need to act fast, Given how fast this ‘Monster IPO’ is going.
Charles Archer owns Aviva shares. Motley Full UK has recommended Lloyds Banking Group, National Grid and Tesco. Opinions expressed in the companies mentioned in this article may differ from those of the author and therefore our official recommendations in our subscription services such as Share Advisors, Hidden Winners and Pro. Here at The Motley Flower we believe that considering a variety of insights makes us a better investor.
The content of this article is for informational purposes only. This is not the purpose of any kind of investment advice, no. Bitcoin and other cryptocurrencies are highly speculative and volatile assets, which carry a variety of risks, including the total loss of money invested. Readers are responsible for doing their own due diligence and seeking professional advice before making any investment decisions.