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3 Killer Stock Market Strategies

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  • 3 Killer Stock Market Strategies

    Stock investing for the simple minded. That hurt, didn't it? Relax, it is just a title. It is also a call to wear tough armor if you want to make it in the stock investing game. It is truly a dog eat dog proposition out here on Wall Street. The good news is that you can make it. If you got your armor on then it is time to do battle but first you need a few weapons. I have included three killer strategies that will help any level stock investor on their way. You will not read about most of these anywhere else so enjoy and always remember to online paper trade first, you will read that again because it is so important. Good luck playing the stock investing game: It is very profitable if you learn from the pros. Here we go:

    Taking home winners

    Stocks that go out at or near their highs for the day are good candidates to take home and ride out for one or two days. At the very least they are generally profitable in the opening of the market the next day. The market makers are usually caught having to cover their short positions in the opening fifteen to thirty minutes. What usually winds up happening is there is a gap up created and that pop often provides a nice quick gain. The danger in this strategy is the potential for negative news (IE: downgrade, etc.. ) to work the opposite effect. Of course, this is the danger that you always deal with as a swing trader and that is one of the more appealing aspects of day trading - no overnight positions. All said and done, this is a great move. In my early days I did this trade quite a bit and did very well.
    Remember to online paper trade first.

    Buying ETFs

    This has become increasingly popular. Nowadays, there are just about one or more ETFs for every sector. No, "Stock Investing For a Dummy" article would be complete without talk of ETFs. Yahoo Finance provides a nice list that will tell you every ETF known to man. The nice thing about trading the ETF is that you avoid the aforementioned risk that an individual stock holds. Buying an ETF or shorting an ETF (here you have the added benefit of not having the up tick rule) in a hot sector gives you a nice risk/reward ratio. Remember to online paper trade first.

    Shorting strategies

    Shorting is not for everyone and that is probably a good thing. I lost a big chunk of money early on by making the mistake that so many repeat. I shorted stocks in a strong bull market. This goes against everything that I now stand behind. I make money because I work with the market, not against it. It is very difficult to consistently make money shorting stocks when the overall trend is running the other way. For some reason traders often want to fight this but they rarely win on a consistent basis. With that said, you should be familiar with how to short and when to do so. After all, the bear market comes and goes and if you are trying to long stocks in that environment you would run into the same problems those traders do that short in an up trending environment.

    When shorting I look to catch the momentum of a likely falling stock. Stocks fall harder and faster than they do climbing. Big money can be made if you short properly.

    It would be wise to consider the following factors that can work in your favor if you are going to be shorting: seasonality (as previously mentioned), sector weakness, etc...

    There is a warning that I hope you heed. Whatever you do, please save yourself money and heartache - DO NOT short a stock because "you have a hunch." DO NOT short a stock because "it seems like it's got to go down." Have a strategic purpose backed up with good research before considering shorting. Unless you find yourself in an obviously bearish market I would not even get involved in shorting until you have a few years of trading experience. Remember to online paper trade first.

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    "Step into the arena and hold on to your hat. Don't get discouraged if you don't make 8 trillion dollars in your first month. Trading is not a get rich quick scheme. Realize that trading is a skill and just like any other skill it takes time to learn. Have convictions in your decisions in life and trading. Ignore the comments and "advice" of those that have never traded a day in their life."

    Good KARMA and positive energy abound.

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