Five Strategies To Beat The Stock Market
Days of Buy and Hold Stock Investing Strategy may be over. Stock investing is a process of continuous education and training. If you want to make superior returns in the market, you should keep on learning new stock investing strategies. Here are five stock investing strategies that have been proven to work again and again without ever letting you down:
Stock Investing Strategy #1: Always Look For Those Companies That Others Are Ignoring
Many investors don't do much research while investing in a stock. They tend to invest on the recommendations of friends or analysts they hear recommending stocks on CNBC or other financial channels. This is a wrong way to invest and will only make you repent later on. Before investing in any stock, first do your thorough research. Make a list of stocks that you think will be best for your portfolio. Do research on them, on the company, about the future prospects of that company and about the market sector in which that stock is. Never invest in stocks that have been hyped by the media. Most stocks that get hyped up the media get overpriced in matter of days. When you invest in them, chances are already you have lost a major portion of the price appreciation. Always hunt for ignored stocks that might have gone out of favor of the market but still have sound fundamentals. The possibility of these ignored stocks making a comeback is always there.
Stock Investing Strategy #2: Enter And Exit The Market Using Stock Charts
Always time your entry and exit into the market. Good entry and exit are much more important than a good stock selection. Suppose, you had selected a very good stock but your entry and exit into the market was wrong. What do you get, a poor return on your stock. Learn how to use charts to make your entry and exit into the market.
Stock Investing Strategy #3: Always use limit order to enter and exit the market
Don't simply enter and exit using Market Orders. Using a market order means getting the current market price. When you use the market order, your order might get filled at a price higher or lower than you had in mind when you placed the order. This is due to the fast nature of the stock market where stock prices are always moving up or down. Use Limit Orders and get the price that you had wanted for your stock.
Stock Investing Strategy #4: Watch other markets too!
Suppose, you had included foreign stocks in your stock portfolio or you had invested in a market sector that is correlated in a positive or negative way with the currency market. In case of foreign stock, if the currency of that country appreciates, this helps increase your return on that stock. Similarly, if you had invested in oil company, weakening dollar means higher prices for oil and more return on your oil stock.
Stock Investing Strategy #5: Keep your mind open
Maybe you can get a better return in the currency market or the commodity market. It is always good to keep an open mind. Always go where you can get the best return on your investment. Commodities over the last decade have made higher returns as compared to stocks. In the same way, in the currency market, you can make a consistent return of 5-10% that can easily translate into an annual return of 60-120%. Compare this rate of return with that possible in the stock market.
If you follow the above 5 stock investing strategies and implement it practically in building your stock portfolio, you can beat the market return easily!
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