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Stock
Strategies For Successful Trading
As with any difficult activity, the best way
to be successful is to have several strategies in place
to ensure that failure is not an option. Because stock trading
is such a delicate issue that deals with your money, it is
extremely important to have some active strategies in order
to know when to trade your purchased stocks. Your ultimate
goal is to make money in order to carry out your financial
future in a way that you can feel satisfied. By strategically
working the following strategies for stock trading, you are
able to ensure complete satisfaction with your money.
As an investor, do not feel as if you have to become deeply
analytical researching into wee hours of the night about stocks
of certain companies as you spend you time drenched in a monsoon
of financial statements, spreadsheets, etc. For some people,
this complicated, analytical strategy works best, however,
it is not the only strategy in place to successful investing
with stocks. An easier strategy is the “Pyramid Scheme” which
includes three points that actively work together in order
to make all individuals successful in trading stocks.
The Pyramid Scheme
Step
One: Keep your number of targets small and make sure
you don't set your expectations too high. For example, you
feel that a safe and profitable stock investment would be in
snack foods. So, you decided to pick the market leader in snack
foods NOT the snack food company with the highest prices to
trade stocks. This ensures success for the long-term and not
just a “get rich” fast strategy.
Step
Two: Invest in growth industries, one in which
will continue to grow for years to ensure that you receive
a
high return on your investment. For example, let's say that
you own 1,000 stocks in a pet food company. It is logical to
say that pet food itself is a growth market; however, the particular
company in which you bought shares may go out of business tomorrow.
So, you decide to trade your shares for a more stable type
of business, such as computers. Because computers are the way
of our future, it is logical to sell your 1,000 shares in pet
food and purchase 1,000 shares in a computer company, such
as Dell to ensure growth on your initial investment.
Step
Three: Invest in market leaders, companies that seem
to have a monopoly in their industry, even if their stocks
seem over priced. For example, Microsoft has dominance in the
software industry to the point that they are in no danger of
losing their market dominance, which simply means more money
for you if you choose to invest in a company such as this.
With the “Pyramid Scheme” you can rest assured knowing that
all three of these simple steps work together to form a reliable
strategy in which to work with in order to trade stocks.
Another equally as effective strategy for trading stocks is
known as the “Basic Strategy” in which you vow to invest in
an even number of shares in an even dollar amount. The reason
you must invest in an equal number of shares is because no
one can accurately predict which stocks will increase in value,
therefore, you are investing on emotion. For example, Stock
X is priced at $100 per share so you decide to purchase 10
shares for $1,000. However, Stock Y is only $40 per share,
so you decided to purchase 100 shares for a total of $4,000.
In the meantime, Stock X goes up $10 so you have just earned
$100, but Stock Y goes down $2.00 so you loose $200 which means
you are in the red $100. Therefore, you must trade in Stock
Y for more of Stock X in order to make a return on your investment.
There are thousands upon thousands of stock trading strategies
currently in use, some are free and some you must purchase
from certain companies claiming to have the way to make a 1,000%
return on investment. It is totally your choice as to what
strategy, if any you choose to incorporate into your stock
trading. The healthiest advice toward stock trading strategies
is to always use your common sense when dealing with your money.
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# # # # # by SolveYourProblem.com : 2007
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