The amount of stocks to pick is overwhelming, but so is choosing the right stock picking system to help you find the best picks of the thousands of available stocks.

The problem is that most stocking picking systems are not helpful, just like most stocks are not good investments.

You need to know what the problem is of most stock picking systems. You also need to learn what works. You can accomplish both by learning to avoid the three fundamental mistakes.

They are:

1) Choosing a system that is too narrow.

2) Adopting a system that is too broad.

3) Picking a system that is too inflexible.

Mistake #1: Picking a System that is too narrow

Some stock picking systems will be based on multi-day candlestick patterns, or some form of divergence. Their entire strategy is just technical indicators, The problem is that all of these systems are only using two factors: price and volume.

Imagine if you were about to invest in a horse that competed in racing. Would you be satisfied with only the weight and speed of the horse? No matter how you graphed those two variables, they are only two criteria. You should also be interested in the breed of the animal, the competition it was racing against, the jockey’s qualifications, and the horse’s age, to name just a few important details.

Most stock systems do not factor in anything but price movement and volume. These systems do not screen for overall market conditions, industry type, company specifics such as profitability, and much more. You need to take in the factors that matters as we investing is more than finding a magical pattern that you hope will be like Midas’s touch. Finding the right stock and timing your buy and sells takes expertise and common sense.

Mistake #2: Picking a System that is too broad

Choosing a stock system that is too broad would be the second mistake. To avoid giving the wrong advice, there are many stock professionals who will give tips and advice that is so vague, it is next to useless.

By focusing on the precise signals to buy and sell a stock, you can avoid the mistake of being too broad in your focus. You will lose money and make mistakes, but that’s okay. Everybody makes these mistakes. The goal is to be consistent in your stock trading. Don’t chase amazing dreams, but be realistic and invest wisely and prudently.

At the end of the day you want an expert opinion that is clear and precise. That is what you get if you find a system that is neither too narrow nor too broad.

Mistake #3: Picking System that is too inflexible

You will find people selling you software that will do all of thinking and stock trading for you. The problem is that the unpredictability of the stock market makes it almost impossible to know what the future of the stock market will be.

Your system should be ready to conform to your ideologies and values and not the other way around.

You need a system that adapts to you. Are you into high reward with higher risk? If so, you need a system that allows the flexibility of making a double-bagger each month while raising your risk levels. Do you prefer to buy and hold winning stocks for a longer period of time and squeeze every last cent from it and only trading a few times per year? Do you prefer to trade the best of the gold stocks, or high tech, or some other industry?

The best system takes the best of the stock market and fits it to your goals, comfort levels, and style.

The Solution is to Ask the Right Questions

When it comes to picking stocks you need a system, and you need a system that avoids the three mistakes. The best option is to find a stock picking system that provides to you the control and precision that you need to win the investment game.

Do some search engine research with the terms “stock picking system” and you will find lots of possibilities. You need to evaluate them by asking the right questions. Make sure you ask if the systems you are looking at provide precision and adaptability. When you find the system that answers those questions, you have found your solution.