Strategies for Stock Market Success

Strategies for Beginners

If you are a new player looking to invest in the stock market, there are 2 things you need to keep in mind to begin with:

1. Timing is extremely important.

2. ‘Buy low and sell high’.

The concept behind these strategies is simple; to buy (or sell) at the right time in order to increase the profit margin, which is the difference between buying and reselling stocks. A shrewd investor will follow the stock market strategies mentioned above as a rule of thumb, in pursuit of increasing his profit margin and maximize his profits respectively.

In contrast, the most common mistake made by investors who have recently begun is that they are prone to react on impulse and rely heavily on the so-called investment tips. In reality, there is no such thing as an investment tip. All investment tips are derived from another persons opinion and can either be accurate and/or inaccurate and may prove to be a gamble at best.

Focusing on the low-risk stock market strategies that follow the concept mentioned above and steering clear of ‘get rich fast’ kind of investment tips is the ideal start for any investor wanting to build long-term wealth. In addition, investors should combine and use a mix of; research, experience, intuition and composure, to make the best use of the money they are investing.

Strategies for Intermediates

Investors who have been in the share market for a longer period of time have a relatively better understanding of the market as opposed to those who have recently started. An advanced stock market strategy suggestion for these experienced investors is to efficiently manage trade and portfolio risk. There is no reward if there is no risk and since risk cannot be eliminated, it must be managed. Risks are managed by protecting investments; either by hedging or applying other financial tools of the sort. Efficient management of risk will help retain profits and minimize losses.

Investors who are capable of managing risks will typically invest in dividend stocks, or low-risk stock option strategies as a part of their profit maximizing strategy.

A dividend is a fixed amount of profit paid to the shareholder by the stock issuing company, depending on the amount of shares the investor owns. However, sometimes the stock issuing company may not turn a profit in a given year, in which case the shareholders are left holding the stock, but are empty-handed in terms of a dividend.

Alternatively, experienced investors can choose income generating Stock Option Strategies such as Covered Calls and Credit Spreads. These type of strategies are a good investment since they are a low-risk stock market strategy and usually provide a steady means of income, and depending on the investors risk tolerance, can that can also be hedged, providing peace of mind and a foundation from long-term wealth creation.