How to Choose the Right Online Investing Strategy
by:
Matt Ehrlin
Picking the right strategy for online trading is one of the points of differentiation between successful traders and people who burn out abruptly. Picking the right online investing strategy for yourself is a matter of knowing yourself. Socrates maxim of "Know Thyself" applies more than you might think to trading.
How much do you want to work? How much do you want to be tied to your computer screen running numbers? How easily distracted are you? These questions, more than anything else, will determine how successful you are at managing any kind of strategy. We're going to cover most of the basic strategies here and highlight the personality traits that are needed to make them thrive.
The first basic strategy is day trading. This is a strategy built around making short term buy and sell orders and often uses leverage to increase the amount of money made. Day traders focus on a specific segment of the market and then look to maximize their daily profits. Individual company performance is less important than volatility and making the best deal for the day.
The personality type that thrives at day trading is an aggressive obsessive. The money that can be made regularly day trading is incredible, and if you're good at it, job offers often follow and can be quite lucrative. The downside is that the workload for day trading is 12 hours a day, five days a week, with next to no breaks. Day traders can burn out quickly, and need to have a short memory for failures. If you can't get over a bad decision rapidly and move on then this is NOT the strategy for you.
The second basic strategy is to make long term positional trades. This is the best strategy to have if you are attempting to preserve overall capital while making measured gains. It has the benefit of lower work loads, but more up front research is required. The classic example of the positional trader is Warren Buffett of Berkshire Hathaway. He advocates a buy and hold strategy and then reinvesting the dividends received into more shares of consistently profitable companies.
This strategy is more focused on what a company does, what they make, and what their long term revenue stream is rather than the share price going up or down. The required temperament for this strategy is patience. You are in it for the long haul.
Stop loss and margin trading are something of a hybrid compared to the other online investing strategy. You care about the volatility of the market, but with each stock you buy, you have a dedicated selling point in mind. You are less concerned about the ride up to the maximum share price so much as you are working the split of getting off the share before it comes down.
In some ways, it embodies traits of both of the other two investing strategies as you have to be patient while occasionally experiencing the adrenaline rush of a day trader. That being said, it is a good middle strategy for someone looking to build assets quickly and then transition to a long term positional portfolio.
About the Author:
Matt blogs at
http://initialpublic.com/finance/ and invites you to find the most profitable
online investing strategy there.
No. of Times this article has been viewed :
202
Most Recently Published Investment Management Articles as of
|
|
Building Wealth Without Being Wealthy
by
Aricka Rediger
It can be hard to put money in investments when you don't have a lot of money to spare. Many investment firms and mutual funds require a fairly high minimum investment.
|
Beginner's Gold Investment - 2 Tips For You
by
BMA Editorial Team 3
The gold investment market has been around for ages. As a beginner, if you are planning on investing in gold, it is imperative to first understand many aspects including factors that affect gold price.
|
Here Are 6 Tips For You To Get The Best Value On Your Purchase Of Gold
by
BMA Editorial Team 3
Diversifying your investment portfolio by purchasing gold safeguards you against unstable market forces and ensures optimum return on investment. Before you choose the type of gold to buy, it is important to make sure that you get the best value for money.
|
The Old Style Stocks Investments
by
Nir Dotan
Stocks investments done in the old style are one of the ways that you can minimize long-term losses and maximize long-term gains in the constantly fluctuating world of the stock market.
|
Advantages And Disadvantages Of Making Stock Investments In the Pink Sheets
by
Nir Dotan
With the recent fall of stock prices in major stock exchanges such as the New York Stock Exchange and NASDAQ, some companies whose stocks have been trading in these exchanges may be moved, or have been moved to the Over the Counter Bulletin Board (OTCBB), and/or the Pink Sheets.
|
How Should I Buy The Stocks For a Good Investment?
by
Nir Dotan
Are you curious about how stocks work? Here are important things you need to know about stocks investment before spending the fruits of your blood and sweat. Buying stocks means co-owning a company
When you buy a share of stock.
|
Introduction To Over The Counter Stocks
by
Nir Dotan
The shares or stocks of a company mean a share in the ownership of the company. Any individual or a company owning shares of a particular company is a co-owner of that organization, and they are also called shareholders.
|
Understanding The Power Of Penny Stocks Investment
by
Nir Dotan
Penny stocks do not have a definite universal definition. Different people have different definitions when it comes to penny stocks. Some people view penny stocks as stocks whose value is less than $1, while others view penny stocks as those priced under $5.
|
Why Buy Gold - Exploring the Reasons
by
BMA Editorial Team 3
There are dozens of investment opportunities today. Some are tactile and some are not. Many investors today enjoy the look and feel of palpable investments like silver and gold. During unstable economic times, the price of silver and gold tend to go up.
|
Learning About All of Your Investment Options
by
BMA Editorial Team 3
There are many people that have a hard time figuring out how they are going to invest their money in a safe way. When you are taking the time to understand how you are going to invest your hard earned money you want to be safe.
|
Determining Where You Will Invest
by
BMA Editorial Team 3
Many first time investors think that they should invest all of their savings. This isn't necessarily true. To determine how much money you should invest, you must first determine how much you actually can afford to invest, and what your financial goals are.
|
Things to Know About Bonds
by
BMA Editorial Team 3
There are specific things you must understand regarding bonds before you start buying them. Not understanding these things may cause you to purchase the drastically wrong bonds, at the drastically wrong maturity date.
|
Investmenting: Gold and Silver Prices
by
BMA Editorial Team 3
Gold and silver are becoming increasingly popular investments in the current economic situation. Gold and silver prices have remained fairly low for many years. But they are on the rise. They are rapidly going up and are expected to continue upward.
|
At Year End, Investors are Pulling Out of Bonds
by
BMA Editorial Team 3
There's been plenty of evidence in the recent weeks that, as year-end approaches, investors are pulling out of bonds like never before. We've seen this in some of the flows data, with the data on bond funds showing week-by-week withdrawals out of both sovereign and corporate paper.
|
A Brief Overview of Futures and Options
by
BMA Editorial Team 3
Futures and options can be classified under the derivatives classification for financial instruments. The derivatives were in operation for many hundreds of years and have become significantly more popular during recent years.
|
|
Search for ebooks on Management & Business