One certainly can make a living buying and selling stocks, and even become wealthy in the process. Monetary rewards can come quickly with high risk or slowly with less risk, depending on which method of trading you choose: day trading, swing trading or position trading. It is important to remember that risk will always be a part of your life if you decide to make a living buying and selling stocks. On the other hand, there are ways to sway the odds in your favor.
Define your monetary goals. If you want to make money quickly, day trade. While this method can reap the greatest monetary rewards, it is also the most risky. Position trading is much less risky than day trading, but your cash will be tied up for longer periods of time. Swing trading is another type of trading that many investors choose because it blends the best of day trading and position trading.
Decide how much cash want to invest. Don’t invest money you can’t afford to lose. Once you begin buying stocks, always keep some cash as part of your portfolio. This will allow you to buy stocks when opportunities become available. The buying and selling of stocks is usually done online or over the phone.
Learn stock terms. This will not only help you place trades, but will also help you learn how the stock market works and give you an edge over other traders.
Find a good broker. Some things to consider are good service, low commissions, low account minimums and benefits such as online information including current stock prices. Discount brokers can save you money.
Research the stocks you want to trade or hire a trustworthy stock pick service with an excellent reputation to choose possible buys for you. A trustworthy stock pick service is one that doesn’t take bribes from stock companies or allow employees to trade the same stocks they recommend as a buy. A reputable stock pick service might be the best investment you make.
Trade on paper first before trading with your own cash. This will give you a chance to learn as you trade without losing real money. When you feel confident about your skills, begin trading with your own cash. Whether paper trading or trading with cash, always keep detailed records of your transactions. This will help you learn from your successes and failures.
Don’t put all your cash into any single stock.
Avoid greed; take profits at realistic points. Decide beforehand when you will sell and check prices daily to keep on top of your investments.
Avoid panic selling if your stock begins to fall. Stocks can be volatile, but most of the time a stock’s price will return to previous levels after a dip in price.
Stay away from stocks that are mentioned online for free or hot tips from friends or coworkers. They’re generally very unreliable.
Don’t let your emotions rule your trading activities. You can make a living buying stocks, but it’s up to you to do the homework and eliminate as much risk as possible. Research equal returns.