How to Pick An Individual Stock on eToro

eToro offers the possibility to invest in individual stock assets. “How do I go about picking my first stock?”, you may ask. There are several steps to picking a stock that works for you. This series of articles will guide you through every step of the way. It starts with comprehending what you want out of the investment.

(NOTE: Before we continue, we have to give a disclaimer that the trading products offered by the companies listed on this website carry a high level of risk and can result in the loss of all your funds. CFDs are complicated instruments that are never guaranteed to provide you supplemental earnings.  In fact, Around 67% of all retail investors experienced a loss while trading CFDs. Make sure to keep this in mind before attempting to use the eToro platform yourself. All the information found on this website is not official trading advice and all practices shown are referenced for the use of the Demo account only.)

What do you want your stock (portfolio) to do for you?

Think about what you want your portfolio achieve – this is quite often coupled to what you want to do with the returns. Do not underestimate this step. Make a realistic plan on how you expect your portfolio to get there. Most importantly, trust your plan and stick with it. An important source of information is daily news updates – they are quite often an indicator for impending market behaviour. This can be very insightful when closely followed. Use this to drive any decisions on strategy and to check if the goals for your portfolio seem reasonable.

The Types Stocks You Can Buy

Dividend stocks typically companies that are established and have low growth. They are solid and pay good dividends regularly. These type of investments are sought after by investors that wish to have a steady income from their investment.

Blue-chip stocks are characterised by stability and robustness against market fluctuations. These types of capitals are purchased by investors who wish to conserve their wealth. For example, Apple.

Growth stocks, as the same suggests, are characterised by higher volatility and greater potential for growth. These stocks come with a higher degree of risk, but a bigger chance of gains. These stocks are picked up by investors who are looking for appreciation of wealth.

Having a selection of stocks from any, or all, of the types mentioned earlier is called diversification. This is often a wise strategy, to spread out the risk over multiple stocks. Picking these individual stocks can be tricky. Stay abreast with the top trends about the stocks that you are interested in. Quite often, common sense can help bring about big deductions and decisions. Be critical about the analysis that you make.

Three broad approaches that you can take

Follow The Gurus

Exchange-Traded Funds (ETFs) are most often very stable and diversified and are managed by industry experts and a great place to start while picking individual stocks. Filter out ETFs in the industries that you wish to invest in and dig into them for companies and stocks.

Develop Your Understanding

Analysing expert views from trusted sources can be cumbersome, but show excellent results. This method also opens you up to smaller stocks. It is important to do your due diligence before jumping into stocks based on these views. Therefore, be sure to do your own analysis of the metrics mentioned in this series and compare the stocks to your own criteria before moving further.

Dig Into Individual Companies

The best way to understand how a company is doing is to read its financial statement. This is, however, not something that all of us can do. Company presentations and investor seminars are great ways to get some detailed information about a company’s financial standing.

It is important to bear in mind that all these efforts might lead you to exclude all the companies that you find. In these moments, remember that the work that you have put in might have prevented you from making a poor investment. Once you have your strategy in place, the next step is to analyze individual stock metrics (see the list below for the entire series of articles on stock picking). Until then, try your hand at investing using the free eToro Demo Practice Account.

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eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Past performance is not an indication of future results.

eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.