Whoa! This is a loaded question in that there is no right answer... it all depends on your investing style, your expectations, time frame and your tolerance for risk... given the variables this question includes, the permutations of answers can be endless! However... Basically the ratio you should be thinking about for any potential stock is: RISK vs. REWARD The word "RISK" implies many things, but initially it implies how much you are paying for the stock... or how "expensive" it is based on valuation... after you have taken action on the stock, it then also implies the risk the company's actions (or lack of) will disappoint Street expectations. The word "REWARD" implies its potential returns (could be in the form of dividends or share appreciation)... this is where most of the "art" in investing comes in... determining what are the company's growth prospects vs. its peers, how can the company keep positively surprising investors during earnings announcements... how you calculate the present value of the company's future cashflows etc... In general you should be looking for stocks with low valuations, high growth potential with little risks of faltering... (which are extreeeeemly rare) ... therefore, the "art" of investing is trying find a reasonable balance between risk/reward... OK, OK... this is a vauge answer... so here are a few concrete criteria that most all investors consider.... Some common criteria: VALUATION: How "expensive" is the stock compared to its peers (this does not mean stock price)... GROWTH POTENTIAL: Can they grow this business, does its industry grow... BUSINESS RISK: Includes market share drops due to competition but also supply costs trends and a host of other factors such as regulatory or gov involvement... VOLATILITY: Can you patiently sit and watch a stock that can swing more than 10% either way each month? ... you get the idea... MACRO/MICRO CYCLICAL FACTORS: In general, when it comes to going up or down, stocks within the same industries/countries/business models move in the same direction... so also think about where the industry/economy/cost trends are going...

Read Peter Lynch's "One Up On Wall Street," a fine book for beginners. Unlike many financial authors, Lynch has actually made a lot of money in stocks as a manger of the Fidelity Magellan fund. Take a 6-month subscription to Investors Business Daily, a newspaper that actually teaches a method of buying stocks.

These are some great answers guys.. Keep in mind, overtime we all develope our own "trading strategy." I am a technical trader, meaning i base mostly if not all of my trades on charts, chart patterns, technical indicators and numbers. I have been basing my most recent trades off two indicators; RSI (relative strenght index) and MACD (moving average convergence divergence). For the RSI indicator, a number of 20-30 is usually a good bullish sign. (meaning the stock market is in an uptrend or increasing state). 55-65 of the RSI scale is usually the upper resistance zone. I tend to stay away from stocks with RSI of anyhting above 50. It simple shows that their strength is beginning to run out. As for MACD goes, look at past history of the stock and look for patterns of the lines. Maybe when the green line intersect the red line, it's a bullish signal. That's for you to determine and realize on your own. Every company is different. I would hate to give you a flase answer on a topic that is so important and detailed. Being of age of 15 years old, I have some time to go and some more tricks and patterns of the market that i have yet to understand. This is what I base the majority of my trades on. I do understand other technical indicators of a bullish/bearish market, but these two combined seemed to make a very nice combination. As i said earier, everyone developed their OWN strategy, keep an open mind and try new things. Hope all goes well. Take care

EVERY ONE wants THE RIGHT answer to your Q - for himself or herself! Believe me, you aren't alone. Every person wants to jump right in and earn a million dollars - right away, today - in fact, everyone wants to do it yesterday or last week! It just doesn't work that way! About THE ONLY THING REAL trading with YOUR REAL hard-earned money does TO you - NOT FOR you - the novice ("newbie") - is to teach you A WHOLE LOT of REAL EXPENSIVE lessons VERY fast! Trading can be or is a very isolated and "hermit-like" way to live or exist. It doesn't have to be that way. My best suggestion: Join an investment group, trading group or an investment club. Learn what other folks are reading, trading AND HOW they do it. It's a small investment, which could save you LOTS of time AND A WHOLE LOT of aggravation and money! BELIEVE ME, an investment group or club can be a wonderful experience. They are terrific "safety nets"! Like everything else, you get out of it what you put into it. For your own benefit and the overall benefit of the group or club, you must be active. In the beginning, you should investigate the different investments you have available to you. Make THE BEST investment you can: Invest THE TIME to educate yourself. Do on-line searches; read books; enroll in investing and finance classes; seek out and use mentors and coaches; ask Qs about those investments which truly interest you: stocks, options, currencies, commodities, bonds, real estate, etc. Once you have that knowledge, no one can ever take it away from you. In the beginning, you READ & LEARN about the market & how it works: Read the very basic books about what the different investments are, how each investment works and learning how to trade that investment. As you read & do research about the investments you are interested in, sometimes you'll come across a financial or investment term you never heard before. Use an on-line investing site or an investment dictionary. You should LEARN HOW: A] the stock market works. B] to invest in many, many various ways. C] to properly trade D] Properly manage the money in your trading account. You should continue saving your hard-earned money AND at the same time, you learn about trading and the proper ways to invest. In the beginning "newbie" traders & investors DO NOT INVEST any money in the market. YET, it probably won't be too long when you'll feel you're ready to invest your hard-earned money. Before taking that step, you really should do research about what you are investing in. "Newbie" investors & traders ALWAYS make mistakes. In fact, throughout a person's trading hobby, avocation or career, he/she makes mistakes. BUT you learn from those mistakes! There are also free sites where you can set up a virtual account & almost trade as though you were trading with real money. Since Google is providing the ads for this site, you can do a Google search for those. There are quite a few of them. You might want to try a few different virtual trading sites, THEN make your selection. You DO NOT put the entire amount in your trading account in one stock. In other words, "DON'T put all your eggs in one basket." You SHOULD stay away from "cheap"/inexpensive stocks. This includes "penny stocks" or "penny shares"; In brief, any stock less than $10. Those stocks are far too risky. It's better to invest the same amount of money in fewer shares of higher-priced stocks, instead of a whole lot of shares in the inexpensive stocks. A SIMPLER WAY TO TRADE: This is what I learned about the stock market and trading: 1] I read a little about the overall market and how it works. I read about different aspects: mutual funds, currency, commodities, stocks and options. 2] I asked Qs of my coaches and mentors; suggestions were made to me. 3] THEN I read and studied about those areas which interested me. 4] I concentrated on those areas which interested me and which fit the amount we had to work with. 5A] For those strategies I felt comfortable with, I developed trading rules. For those strategies I didn't know anything about, I developed some trading rules. 5B] I discovered I only needed trading rules for 4 to 8 trading strategies. 6] Using those rules, I paper traded. 7] When trades went against me - when I lost money - I adjusted or "tweaked" those rules for that strategy. 8] I paper traded - again and some more. 9] I made further adjustments. 10] I’ll admit I didn’t do enough research for the right broker for our trading needs, wants or desires. However, the one we decided to go with is OK – but not the greatest AND definitely not the least expensive. Yet, the actual trading account was opened: As a speculator, with margin, with the approval to trade options. 11] Yes, it was VERY scary AND I was VERY apprehensive: BUT, I MADE THE BIG JUMP: Going "live" - in-the-market - with real money. I lost some money. NO ONE ever succeeds in each and every trade 100% of the time. AND when anyone tells you he/she does, ask to see his/her actual trades as they are in the trading account. A] BUT I didn't use the entire amount of the account's money on one trade. I learned HOW TO properly manage the money in the account. B] I lived to trade another day. AND I continue learning and living to trade other days. C] AND YES, I STILL have a few losing trades. BUT my winning trades are A WHOLE LOT more than the losing trades. Thanks for asking your Q! I enjoyed answering it! VTY, Ron Berue Yes, that is my real last name! Sources: My wonderful family! My wonderful coaches and mentors! TWO [2] of THE ABSOLUTE BEST, MOST wonderful trading groups in the world, which I am most proud to be a member of! Trading stocks and options more than 3 years. "THE University of Hard Knocks"