Stock trading is one of the trickiest and riskiest businesses to be involved in. To reach the heights of success in this field, one must be super sensitive and responsive to the minute changes that take place in the stock market. For every change that you ignore, one golden opportunity to maximize your profits passes you by.
Strategizing is key to prosperity in stock trading. You need to constantly come up with new strategies to stay in the game. If you don’t stick to a game plan, you may find yourself lost in the vast and unpredictable world of stock trading. Here are 3 vital ways in which you can avoid slipping into the whirlwind of stock market failure.
1) Find opportune hours to trade
Successful stock traders all have one thing in common, and that is immaculate timing. You need to know when to play your cards and when to fold. As you probably, stock trading can be done at any time of the day, but is there any particular time that’s more conducive for trading than other hours? Well, the answer is yes. The hours of 1 pm to 2:30 pm are considered as an opportune time for trading stocks. There are a couple of reasons for this.
Firstly, it’s the time of the day when every individual and organization is engrossed with work. In other words, the stock market operations are in full flight and the activity is at an all time high. Don’t sit back and relax during these hours. Be as active and engaged like the others
Secondly, this is the time by which the effects of any global or local events can already be seen on the financial market. In simpler words, any event that may have an impact on the stock market, takes place before the hours of midday. As a result, the risks involved in trading after 1 pm is relatively low.
2) Trade in season
There is a peak season and an off season for everything. Stock trading is no exception. According to the experts, the best time of the month to make investments in stock is between the 18th and the 22nd. This is when the prices are low, and the cash flow in the market is smooth.
If you are eager to sell stocks, then forget about the aforementioned dates. Selling stocks is a whole different ball game from buying stocks. As a seller, it’s the first two days or the last two days of the month that you should be aiming at.
It’s also worth noting that April and early May are the two months that prove to be most favourable for selling stocks.
3) Keep an eye on $10 shares
$10 shares should be your investment of choice. The only other shares that you should keep an eye on are closed end funds. Closed end funds are low priced (below $10 a share) so that small and medium investors can purchase them with ease. However, it’s important for you to not confuse closed end funds with cheap shares that are well below $10.
Stocks lower than $10 are usually quoted at greater percentage spreads between the buying and selling prices. As a result, you will need a heftier price to break even. In addition to that, companies that are going through financial troubles, or the ones that are on the verge of bankruptcy have really low priced stocks. Whichever the case is, it is always preferable to buy stocks that have a trading value of $10 or more.
Stepping into the world of stock trading without adequate knowledge can be a fatal mistake. Failing to evolve as you go along in this business will also pull you down to the bottom end of the food chain. Keep these 3 tips in mind and you will give yourself a chance of surviving in this hostile and volatile environment.