Advertise with Us

Bookmark and Share

Trading Online Stocks Wisely

There are several theories about how you pick online stocks wisely. In a nutshell all the theories boil down to one simple fact - risk versus reward. This in turn effects what kind of stocks you pick.

If you are willing to take more risk then you will pick online stocks that are more cyclical in nature and are not part of the defensive industries like consumer durables. The defensive stocks generally do not provide huge amounts of upswing in the market but they are relatively stable and safe as far as your money is concerned.

Day Trading – An online trading option that requires a high risk-bearing capacity

Traders who are willing to take more risk are people who use day trading as their strategy. For day traders the money is made in a single day but then there can be losses in a single day too. Day traders generally do not worry about the kind of online stocks. They are looking for a very short term gains and the next day will move onto the next stock. Day traders generally tend to buy stocks that are in the news because of various reasons and are in the upswing mode. By the end of the day they would made their money and will sell off the stock.

Buy and hold strategy for long term investing

Selecting online stocks really becomes a science when it comes to long term traders who believe in the buy and hold strategy. This kind of strategy needs you to be skilled at stock picking. Traders who use this strategy conduct proper research before buying the stock, thereafter they hold onto the stock for a longer period f time. The aim for buying these kinds of stocks is that once bought this stock will provide enormous amount of appreciation over a significantly longer period of time. This time period can be more than two or three years.

Long term investors definitely need to have patience but if they pick their stock right then they never will never face the risk of losing their money in the stock market. So if you are an investor looking to invest in stock market then make sure that you research properly before you make a decision buy a particular stock.

Rules for investing wisely in online stocks

While online stock trading expertise can be gained by learning from experts or following investing guides, stock trading success is certain if you follow six simple rules or tips:

  • 1. Trade stocks online armed with in depth knowledge. Decide what kind of trading you would prefer, day trading, short-term trading, and week trading or monthly trading.
  • 2. Select a broker with care. Decide whether you are comfortable with high-speed direct access technology or discount brokers. Day trading is more expensive as far as fees and other costs are concerned.
  • 3. Adopt a low-risk high reward trading strategy. Always control risk and be happy with small consistent returns rather than quick returns.
  • 4. Study up-markets and down-markets and learn how to trade using both trends to an advantage. Use an online stock trading method that lends advantage to both market trends.
  • 5. Study stock movements and learn how to recognize winning edges and use the favorable factors to make money. Learn how to exit investments at the ripe moments.
  • 6. Learn the essentials of trading in only the best stocks by reading professional reviews and columns that give valuable stock investment related advice and tips.

Successful trading online requires a fine tuned strategy

According to statistics people are successful at trading stocks online because they have a strategy in place. Astute online investors track their investments carefully. They are masters of the art of money management, have fine tuned stock movement studies, they are ready to take risks and are prepared to ride losses when they occur, they invest only a portion of their money in stocks the rest is invested in trusted investments.

Some ideas experienced investors use for their online investing strategies are:

  • Trading with market movements and recognizing shifts
  • Buying stocks that are strong and selling ones that are weak. The thumb rule is 52 week highs mostly go higher while 52 week lows tend to go lower.
  • Never trading based on rumors. Trading moves are made using logic and reason
  • Studying the stocks and investing in only those that are going to be steady gainers
  • Creating a trading method that is effective
  • Learning how to manage losses and never letting losses multiply
  • Learning how to read the bottom line. Online trading must result in gains not losses. If only losses are made, the fault lies with the trading plan.

If you are serious about online trading and making money then it is best to get valuable online trading training. There are many courses that can educate you and fine tune your trading skills and help you reach an expert level in no time at all.