By Allen Brown
The stock market is experiencing a steady rise despite all the possible drawbacks the world is going through. It is no wonder that an increasing number of people are hopping on the investment train and putting their money and investing skills to the test, to see if they can actually make a profit on the financial market. This, of course, leads to having a lot of beginners in the game and they should be guided one way or another.
The worst-case scenario is ending up short and penniless while trading, so instead of going through that lecture, it is better to listen to some advice about how to take your trading to the next level while also earning some cash. As this is a very complex and attention-seeking profession, take note that whatever strategies you can use to your advantage is a plus, as you can advance in knowledge of the market without having to experiment on your own to find out if something works or not.
Value Investing
Many people will get the idea of value investing even though they may not know what it’s called. The gist of it is to find a stock that is undervalued, invest in it as soon as possible, and cash out when it reaches its true value. Knowing how to be a good value investor is not as easy as it sounds; you have to recognize certain patterns on the market as well as keep up with the news on what is going to be the next big thing.
Value investing is one of the basic strategies you can use to strengthen your portfolio. Considering that such stocks are rather cheap to come by, it doesn’t have to be a large investment, but it can yield great results if your judgment was right.
Short-Selling
This tactic became very well known during the GameStop drama at the beginning of 2021, though it has been used for decades earlier. In short – it is betting that a certain stock will go down in value. Although this can be manipulated if you are a large enough player, it is considered immoral by some, and should be done by one’s own assessments and good judgment alone.
Many can use this tactic, from the big hedge fund companies, as well as smaller brokers that deal in penny stocks. For instance, Timothy Sykes subscription stock-picking service gives examples of how you can trade in this way with penny stocks and how to recognize fantastic opportunities. In short selling, a sale is opened by borrowing shares of a stock that the investor believes will lower in value by a fixed future date. The investor then sells these same borrowed shares to buyers that are ready to pay the market price. Before the borrowed shares should be returned, the trader is betting that the price will continue to decline and they can purchase them for less money, thus making a profit.
Dollar-Cost Averaging
This tactic is nowhere near as engaging as those mentioned above, but it still has its merits. Dollar-Cost averaging (DCA) is the method of making regular, relatively small, investments in the market over time. This process can easily be automated so that the money goes to preferred stocks, like those that have just started to rise after a dip, or a similar situation.
As investments happen at regular intervals it means that the average price of an investment will go down as you capture all prices, from high to low. This means that you will have a more stable portfolio, even though it is not theoretically the most profitable.
Keeping a Cool Head
Not a tactic per se, but it is still worth mentioning. Trading stocks is deeply rooted in how the human mind works and many oscillations in the market were caused by mass panic or by illogical thinking due to the fear of losing money. This is, of course, very primitive and should be avoided.
When faced with a dip in any stock value you are given a choice – either to sell, hold or buy. The common logic is to sell before a dip, that is – before your assets lose their value. But by keeping a cool head during that first moment, you can probably judge the situation better and see if the dip will be very shallow, and maybe see that buying is better, as you will end up with more stocks for the next big plunge.
Having a formal financial education is rare, to the point of it being a luxury in some places. But even without one, you can still receive an informal education and find out directly what strategies can be used on the stock market to brush up your trading for a profit. So don’t be shy – take your investments to the next level.
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March 09, 2021 at 10:42AM
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Practical Tactics That Will Take Your Investments and Trades To The Next Level - The Apopka Voice
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