Strategies That Can Help Novice Traders
If you are looking into buying some stocks and engaging some trades on the stock market, you have to register for a brokerage account first in having the stock broker account.
The things that you will do after that will determine your success in the field. Here are some stock market strategies that can help novice and professional traders alike.
1. Invest Money Only If You Won’t Be Needing It for 5 Years
You can start investing using both a traditional and Roth IRAs. However, there are certain penalties and even tax ramifications if you withdraw from the fund if you’re earlier than 60 years of age.
Therefore, you have to use your own money, but only invest the cash that you know you won’t be needing for at least 5 years.
The reason behind this is that you want your stocks to stay in the market for quite some time until it is ripe for the picking. You can earn your money back (and even more) just by being more patient.
Five years, most analysts agree, is the perfect time to assess if your stocks are going to make you richer or poorer, so be sure to marinate it for the time being.
2. Do Passive Investing
Passive Investing is a stock market strategy where you put your entire plan of trading to a minimum. In other words, only strike when the iron is hot.
To do this, set up a good stock portfolio first. To help you get started, you can try your hand in getting as many exchange-traded funds, mutual funds, and even index funds as you can from different industries. This is to help diversify your stocks so that in the event that company X has crashed and burned, you still have plenty of reserves and you’re never going to really lose a lot of cash.
Being passive about investing means that you’re maximizing your profits over time and you do not run into the risk and problems that usually occur with overzealous traders.
3. If You’re Actively Trading, Trade Only 10%
It is not wise to pool all of your resources at once and bank them on a certain company because it is always going to end up in disaster.
A company might suffer huge losses that might result in a turnover or outright sale of the institution and you’re left with almost nothing in the process.
If you are looking to be active in trading, only invest 10% of your stocks on the market. This is so that in the event that the shares you’re going to buy or sell depreciates in value, you will not suffer huge losses.
4. Create an Investment Plan Regularly
Whether you’re going to take the active or passive approach to trade, it is best that you create your own investment plan, and regularly at that.
The main premise of trading is that you want to buy stocks at the lowest possible price whilst also selling them for a much higher value. But, that can only be done with careful planning and analysis.
Sometimes, the best approach you can take is “slow and steady” but again, your results may vary.