The stock market – where investors and speculators engage in stock trading – is like a wavering sea with countless opportunities and threats. Some stock traders take out pearls. Some come out with fish. Others come out simply wet.
The golden rule of stock trading is to never risk more than you can afford to lose.
Warren Buffet, CEO of Berkshire Hathaway, proposes, “Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1.”
The stock market is utilized in multiple ways depending on how much risk a trader or investor is willing to take. Traders usually focus on daily, weekly, monthly, and long-term earning.
To maximize financial benefits, you need to decide what kind of stock trader you want to become. The right fit depends on your personality, time availability, financial prudence, and capital investment.
Almost all types of stock trading are potentially profitable.
Tips for Stock Trading
Precisely speaking, you need to be flexible (not volatile) towards different types of stock trading in your market system and your investment approach. This way, you can adjust to the stock market, whether it is bearish, bullish or even range bound. Click here to learn more about these stock market trends.
Although the future remains unknown, investors in the stock market are likely to realize superior returns on their equity investment portfolios if they:
- Come with good research of the stock market and the economy,
- Use independent thinking rather than naively following the crowd,
- Have the mental fortitude to stick to their targets, &
- Sell once target returns have been achieved.
A day trader in the stock market watches the daily behavior of the stock prices and tries to get a margin on account of daily fluctuation. He or she is proactive in stock trading. A day trader is a professional stock market participant who purchases shares of a company with a focus on its technical and fundamental variables.
A prudent day trader keenly watches price fluctuation in the stock market. He or she tries to profit from short-term market volatilities and makes the best out of stock trading activity.