How to Sharpen Your Stock Investment Skills

The more you know, the more confident you will be in your stock investment skills.

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The more you know, the more you grow when it comes to stock investing. Whether experienced or not, an investor can never know everything about investing in stocks and managing stock investments. There’s always an opportunity and plenty of ways to sharpen your skills and become a better investor.

Frame of Reference

Expand your frame of reference to better understand how an ever-changing global environment affects your stock investments. Natural disasters, wars and political unrest overseas can affect and create unstable stock prices that reverberate worldwide. Currency exchange rates affect the operating costs of businesses operating in a foreign country, which in turn can also affect stock prices. Take time each day to catch up on world economic and political events and watch TV news shows that cover global markets and economies.

Thought Process

Morningstar recommends that you “think like an analyst” to sharpen both your observational and stock investment skills. Remove emotion from the investment equation by studying financial statements and conducting a thorough analysis of each company whose stock you are considering. Visit the company website to get information on the background of the company. Check the U.S. Securities and Exchange Commission website to review its required filings and find out whether the company's SEC file has any negative information. Read the stock prospectus to find information such as a description of the stock, the stock dividend policy and any other factors that might influence your decision to invest.

Investment Strategy Analysis

Analyze and be ready to refine your trading strategy to place as much emphasis on how to exit as how to enter the stock market. Investment U says that while most investors have a good entrance strategy, far fewer think about how to get out. A good exit strategy gives you a fighting chance of outperforming the markets and protecting your hard-earned money. For example, Investment U outlines an exit strategy that sets a 25 percent rule as its main element, that the time to get out is when a stock falls 25 percent from its high.


Set up an online practice account to both sharpen your stock investment skills and increase confidence in your abilities. Virtual trading websites and most brokerage sites offer options for setting up free practice accounts. After creating an account, you invest in a virtual stock market that operates just like the real thing. Many offer help, advice and educational tools for sharpening your investment skills.