Investors want to purchase stocks at a low price and sell them at a high price. This is what we have all heard from the first time we were exposed to the financial markets. The biggest issue facing investors is: ‘What is low and what is high?’

There are many schools of thought that attempt to tackle this issue. This can be very confusing for the average investor. We need to simplify the process of stock selection and identifying the proper entries and exit points to increase our probabilities for success. 

The proper entry and exit points can be found by utilizing Online Trading Academy’s patented Core Strategy. This leaves us with the issue of finding out what stocks to trade. Again, there are many avenues we can go down here but one of the best is likely to be one of the oldest.

Most traders and investors are familiar with the name Warren Buffett. However, they may not know who Mr. Buffett’s mentor was. That gentleman was Benjamin Graham, and he is the father of value investing.

What is Value Investing?

Value investing is a relatively simple strategy for purchasing stocks when they are under their value by a significant margin. There are several key things to being successful in this type of investing, the first is being able to buy when markets and/or stocks are depressed.

Most people are reluctant to let go of their stocks when markets are crashing and are therefore stuck holding and hoping prices return to the previous glory. We need to be realistic in the markets. They go up and down. Taking a small loss is not a problem, it allows you to preserve your capital for when the markets bottom out and is much better than a large loss.

This is important to remember with the major bull markets we have been in as of late because the markets will crash again sometime. When they do, this will present an excellent opportunity for the value investor to grab up deals.

How to Estimate the Value of a Stock

The next key to being able to identify the right stocks to buy is being able to correctly estimate the value of the stock. This value is called intrinsic value and it is not the same as the market price you see online.

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