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.
I will refer to this combination as '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.
You can go into a lot more depth when covering fundamental analysis and that is where I advise that you start.
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.
Many investors disagree totally with 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'.
By doing this you should be able to own great stocks but you only hold them when the market is moving in your favour.