3 Key Steps To Make Money Trading Stocks in the Stock Market

Stocks in the Stock Market

We feel the first key question that needs to be asked is how to save enough capital so the investor has enough capital or money to invest that money into the stock market and trading stocks in the market. Whether it be buying stocks, mutual funds or ETFs, they first step is to save enough money so that you can obtain a meaningful return on your investments within the stock market. The first key step in answering the question of how to save, is living within your means and putting some money away on a monthly basis. Be it $250, $500, $5000/month, it is crucial to have a decent source of capital and it requires money to make money.

After you have accumulated enough money to be able to deploy a meaningful amount of money into the stock market, they next question that needs to be answered is how to trade stocks within the stock market. Our first answer to this is, you need to expand into all investment products that reside on a given stock market and these include commodities, ETFs, mutual funds and other investment products. The next step is to determine your risk appetite as if you are looking to generate an annualized 8 to 10% return and have a lower risk tolerance you should probable look at large cap stocks, yield stocks, bonds, mutual funds and certain ETFs. Whereas is you are willing to take on risk and are looking to hit the homerun, we would suggest you look at small cap stocks, penny stocks, leveraged ETFs and commodities. Even if your rick appetite is extreme, we strongly suggest a diversified portfolio. Once you narrow down your investment product, stocks, bonds, etfs, mutual funds, we suggest you analyze valuation multiples, yields and growth potential as even though the current market appears beaten up, there continue to be numerous stocks which we feel are over-valued in relation to their peers.

The third and final question is likely the most important and it is when do I sell. Whether it is a stock, a mutual fund, an ETF or any other investment product, we strong suggest taking money off the table when you have reached your targeted rate of return. We suggest, at the time you buy the stock, mutual fund or ETF in question that you set a threshold whereby you will liquidate all or a portion of your investment.

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