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]]>„You can be deceived if you trust too much, but you won’t survive without trust“
All traded orders with stocks of Tesla and Amazon in IQ Option
You may be able to predict the rise of the stock price through analyzing the situation of a company you know. Then, making a long-term profit for you is very easy.
Above, I only open orders with Apple stocks because I am a tech enthusiast. Passion makes me learn how they develop their brainchildren. The belief that the company value will increase every time a new product is launched has never let me down. Even overnight, it can make you rich if you hold a large number of stocks.
So before deciding to buy a stock of a company, make sure you understand it.
Review and analyze how to trade stocks in IQ Option
1st order: The session started with a gap up, which proved a very strong bullish force. Predicting that the price would increase, I got ready to open a Buy order when the price started the breakout.
2nd order: The price created a strong gap up of almost a few dozen USD. As I considered, the price could not go lower when Amazon’s business results were too favorable. The development of e-commerce took the throne when the Covid-19 pandemic occurred. After finishing the first candle, I opened a Buy order right there.
3rd order: There was a gap down at the beginning of the session. But soon after, a reversal Hammer candlestick appeared. With confidence in Amazon’s price rise in the future, I place a Buy order as soon as the Hammer candlestick was confirmed.
4th order: The price broke out of the previous strong resistance zone and started a bullish momentum. Tesla’s space-development technology showed signs of progressing quite well. I still thought that stock prices would increase in the coming time and placed a Buy order right after the price broke out.
Finally, I withdrew the profit to my Skrill e-wallet after one trading week.
How to evaluate the company before buying stocks
A good company is a company that you firmly believe in a rising stock in the next years. As a result, the stock price will increase. The selling price of stocks will also increase and you will make a profit when selling.
Criterion 1: Revenue and profit have been steadily increasing over the long term
The first sign that a company can continuously increase profits in the future is past performance. If the company has continuously increased revenue and profit for at least 3-5 years, especially during a recession, it is likely that it will continue to increase now and in the future. If in the past the company made steady profits, you can confidently predict the company’s future profits.
In addition to making sure profits grow steadily, you also need to check if revenue is growing. The reason is that some companies may use accounting „magic“ to make the profit numbers attractive, but the revenue cannot be changed. If a company has an increase in profits, but sales slow down or decrease, be careful. That company may not perform well but only „beautify“ the numbers.
Criterion 2: Sustainable competitive advantage
How do you know if the company you want to invest in has a sustainable competitive advantage? These are usually companies that sell products or services exclusively to consumers. This means that the product is often unique. So even when the price goes up, the demand remains strong.
For example, regardless of whether Ferrari, Nike, McDonald’s, Harley Davidson, or Microsoft raise prices, people will still buy. Because these products are considered „incomparable“.
Since there are few direct competitors, these companies will enjoy high rates of return which results in a continuous increase in profits and stock values. Stores have to sell these exclusive products if they don’t want to lose customers.
Criterion 3: Future growth factor
Having a good performance in the past and a sustainable competitive advantage is not necessarily a factor to ensure high revenue and profit in the future. In addition, the company must have a specific growth plan to turn potentials into actual revenue. If the company does not have plans to develop new products or expand into new markets, future revenue and profit will not increase forever. You must ensure that the company you want to invest in has some of the following growth factors:
Develop new product series
Develop new product technology
There are new patents
Expand the capacity
Expand into new markets
There are more branches
There are many unexplored potential markets
Criterion 4: Moderate debt
Borrowing is a good strategy to increase capital for business expansion. But too much debt can easily lead to bankruptcy if there are times of recession or poor cash flow management. It is important to make sure the debt amount of the company is moderate and can be easily repaid within 3 to 4 years.
Criterion 5: Does not require much investment in infrastructure to maintain current operations
Beware of companies that generate high profits but a large portion of the money is reused to replace factories and equipment to keep the company running. Competitive price companies and high capital investment industries often spend a large part of their profits on making the company more efficient.
That leaves companies with no money left to pay investors or invest in new products that drive growth. That is why Warren Buffett shuns companies that require high investment in infrastructure. He only likes to invest in companies that don’t need too much machine change.
Criterion 6: Honest and talented leaders
This is the most important criterion for evaluating a company. However, it is also the most difficult criterion to define. A lot of companies have executives and board of directors working for group interests that ignore shareholder interests. You must understand that the board of directors is actually just employees, not even shareholders.
If this is the case, in the long run, the company will lose market share and the share price will decrease. To ensure that the value of a company’s stock increases over the long term, you must make sure that the management that is running the company is talented.
In conclusion
It takes time to evaluate the performance of a company’s stock. The above criteria are the basics that you must understand before placing an order. Stocks are profitable if you stick around long enough and know it better than anyone else.
There is no need to own the stock of the companies you want to invest in. Just analyze the correct stock value in the future, you will be successful in IQ Option. Wish you have a stable profit with your selected stocks.
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