Stock research: If you want to be an expert in the stock market trading there are 3 key steps to master in this promising financial sector:

1.Find out stock research materials and gather them

Not all the companies have the same path of trade integration and managerial performance. It is almost impossible to compound the profit ratio all the year round in the same pace. Start by reviewing the company's financials. This is called quantitative research, and it begins with pulling together a few documents that companies are required to file with the U.S. Securities and Exchange Commission (SEC): Form 10-K: An annual report that includes key financial statements that have been independently audited. Here you can review a company’s balance sheet, its sources of income and how it handles its cash, and its revenues and expenses. Form 10-Q: A quarterly update on operations and financial results. In that case the best stock research websites can help alot. The SEC’s Electronic Data Gathering, Analysis and Retrieval (EDGAR) website provides a searchable database of the forms named above. It’s a valuable resource for learning how to research stocks. Short on time? You’ll find highlights from the above filings and important financial ratios on your brokerage firm’s website or on major financial news websites. This information will help you compare a company’s performance against other candidates for your investment dollars. As you can see, there are endless metrics and ratios investors can use to assess a company’s general financial health and calculate the intrinsic value of its stock. But looking solely at a company's revenue or income from a single year or the management team's most recent decisions paints an incomplete picture. Before you buy any stock, you want to build a well-informed narrative about the company and what factors make it worthy of a long-term partnership. And to do that, context is key.For long-term context, pull back the lens of your research to look at historical data. This will give you insight into the company's resilience during tough times, reactions to challenges, and ability to improve its performance and deliver shareholder value over time. Then look at how the company fits into the big picture by comparing the numbers and key ratios above to industry averages and other companies in the same or similar business. Many brokers offer research tools on their websites. The easiest way to make these comparisons is by using your broker's educational tools, such as a stock screener. There are also several free stock screeners available online. Regardless of the industry, company, or particular profession, everyone faces peaks and valleys in their career. If you are a full-time trader, you will inevitably be met with considerable gains and, at other times, significant losses. Sticking with it – staying in the trading game – is an irreplaceable and vital skill that every master trader possesses. Of course, it’s easy to become excited and overly eager to make hasty trades when favorable price movements benefit your bank account. Human nature bids us to continue acting in certain ways when the outcomes are good. But there will also be days when the market all but completely turns against you. Rather than being filled with excitement about trading, at times like those you just want to turn off your computer monitor or close out your trading platform and slink away and lick your financial wounds.

2. Narrow your focus
These financial reports contain a ton of numbers and it's easy to get bogged down. Zero in on the following line items to become familiar with the measurable inner workings of a company: Revenue: This is the amount of money a company brought in during the specified period. It’s the first thing you’ll see on the income statement, which is why it’s often referred to as the “top line.” Sometimes revenue is broken down into “operating revenue” and “nonoperating revenue.” Operating revenue is most telling because it’s generated from the company’s core business. Nonoperating revenue often comes from one-time business activities, such as selling an asset. Net income: This “bottom line” figure — so called because it’s listed at the end of the income statement — is the total amount of money a company has made after operating expenses, taxes and depreciation are subtracted from revenue. Revenue is the equivalent of your gross salary, and net income is comparable to what’s left over after you’ve paid taxes and living expenses. Earnings and earnings per share (EPS). When you divide earnings by the number of shares available to trade, you get earnings per share. This number shows a company’s profitability on a per-share basis, which makes it easier to compare with other companies. When you see earnings per share followed by “(ttm)” that refers to the “trailing twelve months.” Earnings is far from a perfect financial measurement because it doesn’t tell you how — or how efficiently — the company uses its capital. Some companies take those earnings and reinvest them in the business. Others pay them out to shareholders in the form of dividends. Price-earnings ratio (P/E): Dividing a company’s current stock price by its earnings per share — usually over the last 12 months — gives you a company’s trailing P/E ratio. Dividing the stock price by forecasted earnings from Wall Street analysts gives you the forward P/E. This measure of a stock’s value tells you how much investors are willing to pay to receive $1 of the company’s current earnings. Keep in mind that the P/E ratio is derived from the potentially flawed earnings per share calculation, and analyst estimates are notoriously focused on the short term. Therefore it’s not a reliable stand-alone metric.Return on equity (ROE) and return on assets (ROA): Return on equity reveals, in percentage terms, how much profit a company generates with each dollar shareholders have invested. The equity is shareholder equity. Return on assets shows what percentage of its profits the company generates with each dollar of its assets. Each is derived from dividing a company’s annual net income by one of those measures. These percentages also tell you something about how efficient the company is at generating profits. Here again, beware of the gotchas. A company can artificially boost return on equity by buying back shares to reduce the shareholder equity denominator. Similarly, taking on more debt — say, loans to increase inventory or finance property increases the amount in assets used to calculate return on assets.

3. Turn to qualitative stock research
If quantitative stock research reveals the black-and-white financials of a company’s story, qualitative stock research provides the technicolor details that give you a truer picture of its operations and prospects. Warren Buffett famously said: “Buy into a company because you want to own it, not because you want the stock to go up.” That’s because when you buy stocks, you purchase a personal stake in a business. Here are some questions to help you screen your potential business partners: How does the company make money? Sometimes it’s obvious, such as a clothing retailer whose main business is selling clothes. Sometimes it’s not, such as a fast-food company that derives most of its revenue from selling franchises or an electronics firm that relies on providing consumer financing for growth. A good rule of thumb that’s served Buffett well: Invest in common-sense companies that you truly understand. Does this company have a competitive advantage? Look for something about the business that makes it difficult to imitate, equal or eclipse. This could be its brand, business model, ability to innovate, research capabilities, patent ownership, operational excellence or superior distribution capabilities, to name a few. The harder it is for competitors to breach the company’s moat, the stronger the competitive advantage. How good is the management team? A company is only as good as its leaders’ ability to plot a course and steer the enterprise. You can find out a lot about management by reading their words in the transcripts of company conference calls and annual reports. Also research the company’s board of directors, the people representing shareholders in the boardroom. Be wary of boards comprised mainly of company insiders. You want to see a healthy number of independent thinkers who can objectively assess management’s actions. What could go wrong? We’re not talking about developments that might affect the company’s stock price in the short-term, but fundamental changes that affect a business’s ability to grow over many years. Identify potential red flags using “what if” scenarios: An important patent expires; the CEO’s successor starts taking the business in a different direction; a viable competitor emerges; new technology usurps the company’s product or service.
Just about anyone can become a trader, but to be one of the master traders takes more than investment capital and a three-piece suit. Keep in mind: there is a sea of individuals looking to join the ranks of master traders and bring home the kind of money that goes with that title. Very few of them make the grade or even come close to it. Consistent, winning traders are about as rare as multi-million dollar winning lottery tickets. One of the prep courses of becoming a master trader is an adequate education in fundamental economics, financial markets, and technical analysis. But there are plenty of well-educated, well-informed, very intelligent individuals who won’t qualify as master traders. The critical difference between winning traders and losing traders is more dependent on acquiring the six essential skills that master traders share. Master these skills and then you’ll get a genuine shot at being a trading master. The ability to do quality research and solid market analysis is fundamental to trading success. Master traders develop their skills in being able to thoroughly research all information relevant to the securities they trade – and then, more importantly, being able to accurately determine the likely impact of that information on a particular market. Master traders learn and perfect by utilizing market information – both fundamental economic information and market information in the form of trading and price action that occurs – to adapt and approach the market in the most effective ways possible. (By “effective,” we mean with favorable risk/reward ratios, high probabilities of success, and low levels of risk, just in case we get things wrong). Analytical skills are vital because they enable a trader to better understand, identify, and use trends (or the lack thereof) – both as applied to price action on individual charts of various time frames, and in the market as a whole. A master trader understands that neither extreme will last forever, and, that sticking it out – through the good and the bad – is a skill that enables you to learn, grow, and profit. A significant part of being able to stay in the game is practicing good risk management and money management. Always use stop-loss orders and never risk too much on any one trade. Don’t take trades unless they have positive risk/reward ratios, in other words, if what you’ll make if you’re right is significantly more than what you’ll lose if you’re wrong. Why risk a possible $500 loss if the most you’ll likely make even if your market analysis is perfectly correct is only $100? Those numbers are not in your favor. Instead, only take trades when being right stands to make you a lot more than being wrong can cost you. Even when there seems to be a good trade opportunity, such as a major market reversal, if you can’t get a favorable low-risk entry point, just let that opportunity go by, and instead wait for one to materialize where you can get a good, low-risk entry.
As you analyze a market and spot patterns and trends, it’s also necessary to determine what technical trading approaches are called for. We suggest that focusing less on the money to be made, and more on taking the right action at the right time, is a major attitude necessary for developing and perfecting your analytical skills. Focusing on the market, not on the money in your trading account, enables you to make the best, objective trading decisions in each situation – and doing THAT enables you to ultimately make the wisest and most profitable trades. Nearly all of the “Market Wizards” interviewed by Jack Schwager in his famous books on winning trading stated that they focus on the market and on their trades, not on their account balance. They’re solely concerned with trying to get the market right, regardless of whether doing so makes them a dollar or a million dollars.Stock research is as simple as gathering the right materials from the right websites, looking at some key numbers (quantitative stock research), asking some important questions (qualitative stock research) and looking at how a company compares to its industry peers — as well as how it compares to itself in years past.Over time, master traders develop strategies and trading techniques that they use over and over again. Over time, every trader puts together his own personal toolkit of methods, maneuvers, strategies, and trading tactics. That’s a good thing. It’s important that you have your own individual trading style and trading edge, such as specific combinations of technical indicators that signal high probability trades. Having your own tried and true trading tricks is a good thing. A better thing, a master trader sort of thing, is having your most ingrained habit be the habit of continually monitoring the market for signs and indications that the market is changing or forming a new pattern, thereby signaling to you that you need to adapt to those changing conditions by adjusting your trading strategy accordingly.