It doesn’t matter how you complex your stock picking system is, it will boil down to one of three things. It will be either fundamental analysis, technical analysis or the two of these combined. For the purpose of this article I will call it ‘techno-fundamental’.

When you start stock picking you are likely to use fundamental analysis. This makes sense as this type of analysis is what you read about in the newspapers and hear from your mates down the pub. It is all about putting a value on the company and then comparing that to the price.

So how can you work out the health or the value of different companies? There are many different ways but they won’t give you a definitive value, they will give you an idea and you can make your stock picking choice from this information. You need to look at some financial numbers. It isn’t difficult to do but will take a bit of practice as there is a lot of jargon that is used.

We have only scratched the surface when it comes to fundamental analysis. If you are a beginner I would advise you to find out more. I will talk about technical analysis here though. This form of analysis is very different to fundamental analysis in that it doesn’t really matter what the health of the company is, what matters is what the market participants do.

I find technical analysis a more interesting way of stock picking. Not everyone if fond of technical analysis. They don’t believe that you can make a decision that is based solely on the price moves of a stock. In reality it is more complicated than that.

I believe to get the best out of your stock picking you should be using both of the analysis techniques… ‘techno-fundamental’. Using this method will enable you to own quality stocks at the right time. By right time I mean when they are moving in the way that you want.