3 Different Approaches to Stock Trading/Investing!
Ah, the wonderful world of stocks. The New York Stock Exchange opens at 9:30 EST and closes 4:00 EST during the weekdays (excluding some holidays) and it is a time to make some money! This article is going to be targeted for more beginners and I’m going to talk about the 3 different styles of trading/investing for stocks.
- Long-term Investing:
This is the way most people will invest their hard earned cash, a simple and effective way to generate income while you sleep. This is when you hold a stock for months or even years. This is great for those with a busy work day, and have some extra cash to spare on the side. Let’s say you make $5,000 a month and you take 10% of that $5,000 each month and invest it into stocks. That $500 invested will do you loads in the long run. When you invest long term, you want to find safe and stable stocks or indexs such as blue chip companies. What is a blue chip company? An example of this is Apple, Nike, Visa, Microsoft, etc. These are well established companies that trend higher each year and is a safe bet to keep your money in without you having to worry about losing all of it. Long-term investing is the easiest to learn and is the safest. Now why wouldn’t everybody do this? Well you’re essentially leaving your money in that stock and you can’t touch that, so this is a great idea for those with higher capitol or those who are okay without that money. When investing long term, you will want to learn about fundamental analysis to help you determine whether a stock is worthy enough to invest in.
2. Swing Trading:
Swing trading is when you hold a stock for a few days, to weeks, to months. This is not the easiest concept to grasp but will definitely not hurt to learn. When swing trading, you want to be looking for a more volatile stock, but still a relatively safe stock so no penny stocks. This is a highly effective way to make a little extra money (or even a lot of you put in more money) on the side without too much of a learning curve. You will want to learn about a technical analysis and fundamental analysis to benefit you the best and that way you can be successful. You don’t have to hold the stock for a long time which is why it’s so effective, and the return you can get out of the stock can be quite high.
3. Day Trading
Day trading is when you “trade” a stock within on trading day. Many of you have probably heard a lot about the dangers of day trading and to stay away from it. I’m not here to tell you what you should or shouldn’t do, but I will give my opinion on it. Day trading is a high risk high rewards type of deal. There is ways to lower your risk and that is to learn about day trading and practicing with paper money (simulation). There is nothing wrong with starting out to paper trading with any of these 3, and I actually highly recommend it. There are different types of day traders, but one thing you will need to learn is technical analysis. This will help you learn about the stock and if it should be trending upwards or downwards. This is a really important skill that I highly recommend you to learn because not only will it help you day trade, but if you want to get into forex it will benefit you A LOT.
I hope this was informative and gave you guys some sort of an idea about stocks. Please please please I cannot emphasize this enough. You have to learn, you can learn on Investopedia, YouTube, and many other websites. If you don’t learn you WILL lose money. You can even purchase a course if that’s what you want to do. I didn’t buy a course when I first started as YouTube was really informative and helped me a lot. I would only buy a course for day trading but be wary of scams.