Posts Tagged ‘stock trading strategy’
5 Stock Trading Strategies
November 10th, 2010
Watch this weird 30 minutes Stock Trading video just now. Turn your $200 into $100K in just 1 month with this FREE Penny Stock Trading Report that shows how to find killer penny stocks. Get this 52 page ETF Trading Guide FREE. Stock trading is a proven and time tested method to grow your wealth over time. Over many decades, investors have used the buy and hold stock investing strategy successfully to make good returns on their investments over time. Does Buy and Hold work anymore? Many analysts are of the opinion that the days of buy and hold may be over. Suppose you have a $100,000 retirement account. The best way to increase your nest egg safely and efficiently is to follow the following five stock investing strategies:
Stock Trading Strategy #1: Always Look For Those Companies That Others Are Ignoring
Always look for those companies that are being ignored by most of the analyst. Most of the stocks that are hyped by the analyst on CNBC, Bloomberg, Wall Street Journal and other financial media always get overpriced pretty soon when most of the investors rush to invest in them. There is no use in investing in these over hyped stocks that are always overpriced and may soon crash. There are companies that go out of favor with the market for multiple reasons. But the underlying fundamentals driving the business of those companies are still strong. If you do your research, you can easily dig out such companies. The trick lies in investing in stocks that are undervalued.
Stock Trading Strategy #2: Use Charts To Time Your Entry And Exit
Good Stock Picking is only the first step in your ultimate goal of building a market beating stock portfolio. Once, you have identified, your favorite stocks that you think are worth investing, don’t simply rush to invest in them. Observe the behavior of the stock on the charts for a few days. Use the charts to time your entry into the market. If you want to go long on a stock, enter the market close to the area of support. Similarly, if you want to go short on a stock, enter the market near an area of resistance.
Stock Trading Strategy #3: Always use limit order to enter and exit the market
When you decide to enter the market or exit it, don’t simply rely on buy and sell orders. Using Market Orders means buying and selling at the current market price! It may not be the price that you would have wanted. Instead use Limit Orders so that you know at what price your stock will be bought or sold. Proper use of Limit Orders can make a lot of difference to the performance of your stock portfolio.
Stock Trading Strategy #4: Always keep an eye on other markets especially the currency market
Suppose, you had included foreign stocks in your stock portfolio or you had invested in a market sector that is correlated in a positive or negative way with the currency market. In case of foreign stock, if the currency of that country appreciates, this helps increase your return on that stock. Similarly, if you had invested in oil company, weakening dollar means higher prices for oil and more return on your oil stock.
Stock Trading Strategy #5: Always keep an open mind
Maybe you can get a better return in the currency market or the commodity market. It is always good to keep an open mind. Always go where you can get the best return on your investment. Commodities over the last decade have made higher returns as compared to stocks. In the same way, in the currency market, you can make a consistent return of 5-10% that can easily translate into an annual return of 60-120%. Compare this rate of return with that possible in the stock market.