The stock market always has periods where the bulls are running, or where the bears have taken over most of the food. But it is still by far the place to invest because as new companies and new industries form, there are always gains to be made for investors who are aware. But which strategies are the best for buying stocks or stock options? There are many proven methods for investors based on the amounts they can invest, who’s selling and what their risk tolerance is. But there are a few keys to keep in mind no matter which trading platform your using or who your investment advisor is.

Decide On Day Trading Or Long-Term Stock Investing

The great thing about buying stocks, bonds, mutual funds or ETFs is you can invest and make trades in either one day, or decide to go with long-term investing where you keep your hands off the funds until months or maybe even a year down the road. You can make some quick profits in day trading, but you’ll usually need more capital upfront, and it can be more risky because the stocks you buy could suddenly go way up or down in a heartbeat. It takes a lot more dedication and research to be a good day trader, and the risk can be much higher if you don’t know what you’re doing. Long-term trading is a little less research intensive, but the key here is to calculate whether a fund has hit its apex, or if you need to hold it a little longer expecting an even bigger return. Whether day trading or long-term investing is better really depends on what you want to do with your brokerage account.

Use Both Short And Long Positions In Trades

What is meant by long and short positions in stocks? A long position assumes the market that a company’s stock is running in is on the upswing and that you’re going to stay in that position because it’s likely to perform strong. A short position in a stick, or what’s also known as shorting stocks means you borrow stocks out of a brokerage account, sell them as you anticipate their price declining, buy them again at a much lower price and return them to the shareholder. Utilizing a combination of both positions is what’s known as a market neutral strategy. Shorting is one way to come out on the positive end of a trade, but you could stand to lose a lot of capital if the stock makes a huge gain suddenly.

Take Some Courses In The Art Of Stock And Options Trading

Whether it’s futures or options you’re looking at, one of the best ways to perfect your trading strategies is to learn from the experts who’ve done it before. Companies like Optionsanimal offer crash courses on trading that can simplify the terminology for you, give you tips on how to figure out your risk tolerance, and know what the data on stock charts means. The idea behind programs like this is to help investors develop a multifaceted approach that can adapt as the market direction changes. Even if you already feel you know things about options trading, investing in a little more education on the subject may get you thinking in new ways and considering adding more dimensions to your strategy.

The bottom line is nearly everyone can build a portfolio capable of handling the fluctuations in the market, but you need to go into the market with the right tools in your hand to be very successful. Another thing to consider is whether a broker, wealth management firm or direct buying platform is the way to go. Most investors rely on the advice of either a broker, or a certified financial expert of some kind when making trades, but it is possible to execute them completely on your own. Doing so requires that you’re very thoroughly read up on the company you’re investing in, or if you’re interested in trading in currencies or commodities that you’re very well read up on those field.

by: Dennis Hung