3 Common strategies for stock trading


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Stock trading is becoming more and more common among individuals. Whether you want a full-time income or you just want to bolster your cash flow, there are a lot of benefits to well-planned stock trading. Like anything involving money, if you don’t approach trading with a good plan in place or it could all end in failure. Here are some common trading strategies which you may want to use.

First of all, day trading. This is probably the most widely-known method of active trading. You can probably guess something about this kind of trading simply from the name. Day trading involves buying and selling stocks within the same day. Except in special circumstances, the stocks are sold within the same 24-hour period, and no set position is held overnight. If you already know something about the day trading niche, then the whole idea may seem a little daunting. This would be understandable a decade or so ago, when most day trading was done by specialists and professional traders. These days, however, digital trading has made it much more accessible. Investopedia did a great article on novice day trading strategies.

Next, taking advantage of splits. Stock splits are where a share is split into two separate shares, with half the value of the original. The ratio isn’t always 2:1, but most splits are. Splits are often something of a double-edged sword. Depending on the stock in question, valuations can soar. If you’re a relatively small investor, these stocks may be completely out of reach. Even if you can afford these stocks, it might not be practical if you’re trying to maintain a diverse portfolio. Despite these complications, you should pay attention to splits, and know how to react to them. Reverse splits are usually done when a stock’s price gets so low that it’s starting to look worthless. Here’s some info on an apple stock split which should make things a little clearer. Generally speaking, a split is usually a reason to buy and a reverse split is a reason to sell.

Traders crowd the post that handles Morgan Stanley on the floor of the New York Stock Exchange near the close of trading, Wednesday Sept. 17, 2008. The Dow Jones industrial average dropped about 450 points, and investors seeking the safety of hard assets and government debt sent gold, oil and short-term Treasury's soaring. (AP Photo/Richard Drew)
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Finally, there’s swing trading. Swing traders are usually most active when a trend breaks. As a new trend begins to establish itself, prices are liable to fluctuate greatly. As this kind of volatility settles down, swing traders will buy or sell. Swing trades are typically held for more than a day, but a shorter period than most trend trades. When executed properly, swing trading will put you a few steps ahead of your average day trader or trend trader. For a complete beginner, I recommend trying a different trading strategy to begin with. Successful swing traders usually have to form a specific set of rules, based on a lot of in-depth technical analysis. Because of this, it’s a much better idea to gain some experience of stock trading before trying your hand at swing trading.

Whatever strategy you choose, always approach the stock market with caution. Trading can be a massive financial benefit to you, but only if you apply a lot of analysis and care.


Can you make a full time income from investing?

Something a lot of people wonder, is whether they can afford to quit their 9-5 job in order to invest full time. They want to trade stocks and make investments, and they want to get rich from it. However, it takes a lot of work, and even then you might not make a full time income. Although, people have done it before. Let’s take a look at the things that will leave you more likely to make a full time income from investing:

You Need to Do it for the Right Reasons

First of all, if you want to make a full time income from investing then you need to be sure you’re doing it for the right reasons. Doing it for the wrong reasons could end in disaster. People who make the most money from investing absolutely love it and have a passion for it! If you’re simply getting involved in investing because you don’t want a regular 9-5 job, you should probably reconsider. Making investments in still advised, but you probably shouldn’t try to make it your main career focus. It doesn’t always work for people.

Be Prepared to Treat it Like a Business

So, you love investing; you need to treat it like a business in order for it to work. When you’ve been doing it for a long time, you can afford to loosen the reigns a little bit and spend only a small amount of time on it per day. However, to start, you’ll need to treat it like your own little business venture.

Be Prepared to Take Risks

The problem with a lot of investors is that they don’t want to take any risks. They want to play it safe and still make a ton of money while not really doing anything. This probably isn’t going to happen! The richest, most satisfied investors all took a few risks to get to where they wanted to be. You don’t need to take any large risks straight away; you should get yourself used to investing first. Invest in the Morgan Silver Dollar, or something you’re really interested in and see how you feel. When you’re used to investing, you can then take some calculated risks and see if they pay off. What is life without taking a few risks?


Speak to People Who Know What They’re Talking About

It always helps to speak to people who know what they’re talking about. Get as much information as you can from seasoned investors and you’ll be more likely to succeed.

Have a Diverse Portfolio

A diverse portfolio is a must if you want to get anywhere with your investments. Investing in one thing is a big risk in itself, so be sensible and find multiple channels to invest your money.

Play the Long Game

Be prepared to play the long game. You won’t get rich in a few months or even a few years. However, by following the rest of the tips in this guide, you could end up with a substantial return on your investments.

Good luck!

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