What is an Portfolio?

A portfolio is a collections of stocks you bought and sold. On the basis of portfolio strategy you make buy and sell decision. At Investfly, you test whether your portfolio decisions are correct or not. Every portfolio must be backed by a hypothesis that you want to test. Your portfolio is what makes you different from others. You should do your research and come up with at least a dozen trading strategies which you can then experiment at Investfly. You need to create one portfolio for each strategy. Coming up with a new strategy is as much of an art as it is a science. To get your creative juices flowing, here are some portfolios strategy that you may come up with. Please be aware that these strategies are just given as examples and are not guaranteed to work. If you are interested in learning more about stocks, check out books below:

Some Great Books on Stock


Strategy 1:

Hypothesis: Stock prices bounce a little after big fall. When a stock price falls drastically (more than 20%), the next day it bounces back a little bit (maybe 1-2%). Although this may not be true all the time, if it is true majority of the time, it presents a profit making opportunity.

Strategy: Go to Yahoo Finance, click on Investing and then click Market Stats. There you can see Price % Losers. Buy the stocks with more than 20% decline, and sell it the next day.


Strategy 2:

Hypothesis: Stock prices follow a trend. When a stock is in increasing trend, it continues to increase until a significant event occurs that causes it to deflect from its trend.

Strategy: Use Google Finance stock screener to find stocks that have been increasing for the past one month. Buy those stocks, hold it for another month and sell them.

Strategy 1 and Strategy 2 are both based on price action which means they are based on equity's historical prices. However, you can have strategies based on just about anything as shown in examples below.


Strategy 3:

Hypothesis: There are a number of websites that provide stock picks. Before putting actual money on the line, test these picks at Investfly.

Strategy: Use one of the websites that offer your stock picks. Some example are http://www.affordablestock.com/ (Paid) http://www.thehotpennystocks.com/stock-picks/ (Free). Buy top stocks shown on these site. If you want to test multiple picks, you can create different strategies.


Strategy 4:

Hypothesis: Stock prices go up with good earning announcement. If a company announced good earning previous quarter and gave positive outlook for this quarter, the chances are that the earning for this quarter will be good and the stock price will go up.

Strategy: Find all the stocks that had good earning last quarter and gave positive outlook. Filter those stocks based on earnings using Google Stock Screener or Yahoo Finance Screener. Buy shares of those companies with good previous quarter and good outlook about one month before the earning announcement and sell after the earning.


Strategy 5:

Hypothesis: Trust the industry analysts. The analysts from reputed investment firms often give buy/sell ratings for stocks and most of the time their ratings are accurate.

Strategy: Use Yahoo Stock Screener to get a list of stocks with the highest buy ratings and buy them.


Some Important Notes

  • At Investfly, you can create or delete as many portfolio as you want.
  • Keep a high ambition, but be realistic. Do not think that your first strategy is going to work. You may need to refine it multiple times before you actually see it working.