There are plenty of Stock market investing strategies that can be extremely profitable, but it requires making decisions based on reason and not emotion. The simplest stock market investing strategies are about achieving 20% or more annual returns on the capital used. So let’s see some of the easiest ways to invest in the stock market:
First of all, beware of seasonal trends! If it’s early February or September and the markets are falling, then chances are they will keep falling further until they eventually bottom out around March or late October respectively. Bear in mind that when the whole stock market falls, so do 75% of the stocks listed!
Stock Market Investing Strategy A
If the seasonal trend is in place, look for high quality growth stocks, ones that have fallen a lot as the market went down, but historically, ones that have shown great value and long term growth. These stocks will jump higher as the market recovers, and they are ideal for safe stock market investing.
Stock Market Investing Strategy B
Assess the direction of the whole market and then look for stocks that are trading near their 200 day moving average, like Qualcomm (NASDAQ:QCOM) on this chart:
Qualcomm, a great stock, but for some reason it didn’t follow the broader market rally, once it dropped below its 200 day moving average it looked like nobody wanted to invest in this stock for any longer than few days. Much like all stocks, it rallied as long as it stayed above its 200 day average, but once below it, it called for more selling. The 200 day average rule is one of the golden rules of successful stock market investing! Watch what happened with QCOM on the above chart – notice the $43.28 level and the attempted crossover from the downside to the upside, it was a failure! Had QCOM closed above the average for at least 2 days, it may well have triggered a new rally.
We have seen that either the seasonal factor, or the 200 day moving average can be used as a rough, yet often reliable guide, to assess where the stock market is going. In order to invest in the stock market and keep the odds stacked in your favour, you should pay attention to these simple concepts and incorporate them into your current stock market investing strategies where applicable.
Finally, you should realize that it is not essential for the stock in question to go up, for you to make money. Stock brokers allow what is known as short selling, which is really the exact opposite of buying low and selling high. It is still profitable, though markets tend to be more volatile and trade more wildly during down trends. You can still however use the seasonal factor and the 200 day moving average to figure out the chances of a stock falling further, or stalling. You can profit from the fall too!
Investing in the stock Market is great, but unfortunately 80% of the time markets remain flat, that is, they don’t go either up or down. Worse yet, trying to profit from the up trends alone, offers much less opportunity. You should play both sides!
Here’s to successful investing and healthy portfolios!
Stock Market Investing Strategies written by..
Scotty Smith
Investing The Stock Market © 2008 – 2010
Its great to see a site who so much honest content. Thank you for the great read. Looking forward to reading more.
Have a few strategies up your sleeves and apply them at the right time to profit from up and down trends. Covered call writing is pretty good when the market is flat lining.