three ways to make money trading stocks

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Three Ways to Make Money Trading Stocks By www.ProfitableTradingTips.com

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Three Ways to Make Money

Trading StocksBywww.ProfitableTradingTips.com

http://profitabletradingtips.com/profitable-trading-tips/three-ways-to-make-money-trading-stocks

Three ways to make money trading stocks are day trading, swing trading and stock options trading.

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Each of these three ways to make money trading stocks has its own logic, strategy and pace.

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First let us look at the very short term approach to making money trading stocks.

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Day Trading

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The first of our three ways to make money trading stocks is day trading.

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There are several profitable day trading strategies.

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These include trend trading, rebate trading, scalping and continual technical analysis in order to spot opportunities.

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The point of technical analysis is that certain market conditions generate certain price patterns for stocks, commodities and currencies.

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Because market conditions repeat themselves so do specific price patterns.

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Thus a technical trader learns to predict the market in the very short term by paying close attention to technical signals.

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If you are going to make money day trading you need to be in place when the market opens and stay at your trade station until it closes.

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However, this does not mean that you will trade all of the time.

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The most effective day traders pick and choose their trades.

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The old saying that if you do not enter a trade you cannot lose money in a trade is appropriate to day trading.

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Wait for the right signals and make a short term profit. Then wait for the next opportunity.

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Swing Trading

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We wrote recently about swing trading Chinese stocks.

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This article provides a good example of how swing traders use fundamental as well as technical analysis to predict stock price movement over weeks and months.

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Swing traders study the fundamentals that drive prices.

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They often take a contrarian stance when a stock or an entire sector is going up faster than fundamentals would dictate.

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These traders look for over priced stocks and short them.

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And they look for underpriced and overlooked stocks and buy.

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The point of this second of three ways to make money trading stocks is to study the stock, make the trade and get out with a reasonable profit.

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As with day trading you can never get hurt by staying out of a trade that you do not understand.

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Stock Options

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There are times when a trader can safely predict that a stock will go up or down and there are times when no one can be sure.

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In a volatile market it is possible to make a lot of money with the correct trade and it is possible to lose your shirt.

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The beauty of buying stock options is that any losses are limited to the price of the options contract.

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Another nice aspect of buying options is the manner in which a trader can leverage his trading capital.

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You simply invest less in the trade with options and your percent return on invested trading capital is often a multiple of what you invested.

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This is often the most safe and secure of our three ways to make money trading stocks.