Stock Market Strategy
By Mark Crisp
A Stock Market Strategy,
We know that professionals take a lot of your profits and even if you want to work with one later on, it’s better to know what’s going on first. So what are the stratergies that those professionals use?
First thing’s first - stock traders quite simply trade stock. Normally they use an intermediate party, such as a brokerage firm or bank, to help them actually trade. Stock Traders invest money (theirs or their clients) in the stock market when they feel that they might make a profit.
So essentially a stock trader will but stocks at a price that they think they can sell for more later down the track.
Stock traders use a few strategies to ensure that they make a profit. Some of these strategies are published and others are kept as ‘trade secrets’.
Although after some time has passed the trade secrets become ‘common knowledge’. The most popular stock trading strategies are day trading, swing trading, value investing and growth trading. Let’s investigate them;
Day trading is exactly what it sounds like it is. The term day trading means that the trader buys and sells stocks all in the same day. Which means by the time the day is done the number of stocks that they own isn’t altered.
Each time a trader buys a stock, they sell one of the same value. When practicing day trading the trader is able to avoid shocks that normally happen over the night.
A day trader makes their profit (or loss) from the difference between their sale and purchasing price. Day traders normally hold on to their stocks for a very short time.
Swing traders tend to buy their stocks when they are at their lowest value point and sell them once the value starts swinging back to their higher point. Hence their name.
Swing traders usually hold on to their stocks for one to two days, which is by and large a medium time length. Swing traders are generally happy to buy and sell stocks of high and low value – but again buy them art their lowest point.
But swing traders only normally trade with stocks that are being currently actively traded.
Like the same suggests value investing is all about value! Like bargin shoppers value investors buy stock that they believe are priced lower than they should be.
Value investors work on the idea that the stocks they buy are under-priced and will eventually grow in price, which leaves them with a profit.
Growth investing works on the idea that companies that who are showing signs of growth will continue to grow.
Growth investors watch the stock news, paying particular interest to companies which have just started showing signs of growth, once this happens they purchase stocks and sell them while they are still on the up climb.
The stocks might not have reached their full potential, but they also wouldn’t have started to fall.
All stock trading is risky no matter what method you choose.
Day trading, swing trading, value investing and growth trading are all proven methods but that doesn’t mean that they are sure fire strategies.
There is no sure fire way.
Stock trading is a high risk game that comes with it’s pitfalls and profits.
In order to make large profits you need to make large risks, and sometimes those risks turn into losses.
Take one step at a time, use your predetermined plans and make profitable choices and accept that you may at some point experience a loss and you will be on your way.
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