The stock market can be a powerful way to increase your wealth. There are many different strategies out there which people use to take full advantage of it. Everybody is different, but all traders will fit into one of these trading types.
1. Buying and Holding
Most people preach the buy and hold strategy. That is because it is simple, passive and most people can do it without much effort. How long does it really take to buy a couple mutual funds or ETFs and forget about it after all? Because stocks historically go up over the long term this can be a relatively safe way of investing, if you invest into a stock long enough.
2. Trading The Trend
One other strategy is called trend trading. It involves buying stocks that are going up and selling stocks that are not going up. While it might sound like it was invented by a 5 year old it really can work if you get the hang of it. Sometime the simplest answer is the best.
3. Short Term Swing Trading
Swing traders use technical indicators to buy and sell stocks in the short term in order to make profit when all is said and done. Any trade that takes over 1 day and has a profit target as well as a stop loss can be considered to be a swing trade.
4. Trading Options
Options give buyers the right to buy or sell a stock at a specific price on or before a specific date. Basically it gives traders a way to greatly increase their returns on stock trades. This works best for traders who are already profitable trend trading or swing trading because it can be a fast way to lose money if you have no idea what you are doing.
5. Short Term Day Trading
Day trading is exactly what the name suggests. You buy and sell stock within one day in order to make money on the small moves that occur throughout the day. Day traders are not always profitable, but over the long term it can be a great way to make money.
Every strategy has its ups and downs. But it is up to the individual trader to determine which one fits them the best. Learning the basics of each and experimenting with them can help you determine how you want to approach the market.
For more stock trading strategies visit Shaun’s site about the stock market basics
