The world of finance is changing, and since the early days of speculation, stock trading has come a long way. From your neighbourhood broker to electronic trading, people are moving away from traditional methods in the hope of quicker returns.
While there are outliers that continue to do well with traditional style investing, one should consider making a switch to position trading strategies to maximize their returns in this day and age.
The Stop-Loss
How many times have you bought a stock and watched it go to the moon before quickly returning to earth? You were surely disappointed and possibly out some money. The stop-loss is your solution to this problem. A stop-loss order will, after X number of days, automatically sell your stock at market price for a pre-determined amount. This way, you will never lose more than a certain % of your initial investment while still allowing you to participate in short term trending movements should they occur.
Portfolio Diversification
It’s not easy being green unless we’re talking about investing in multiple companies. It would be best to continuously diversify your portfolio so that no one company can potentially knock down the whole house. If you own numerous stocks and one of them is not doing so well, the others will help keep the portfolio afloat and the overall value of your investment strong.
Hedging Funds with Options
If you’re a little more experienced in terms of your investments, you can use options to even further diversify your portfolio risk. An option gives you both the right but not the obligation to buy or sell shares at a specific price – another tool to aid better decision making for those more comfortable with riskier companies.
Intra-day Trades
Lastly, don’t just watch your investments like a hawk during regular market hours. We’re in the 21st century, information is everywhere, and you can do some severe trading while waiting in line for coffee. Keep an eye on the ticker tape to stay up to date with company performance over time so that when it’s prime time for buying or selling, you can act quickly to maximize returns.
Actively Manage Your Portfolio With Tools
Technology has transformed all characteristics of life, including the financial sector. There are tools out there that make tracking your investments more effortless than ever before. Let the experts do it for you if you don’t know what stocks to buy or when to sell them.
Investment Funds Are Not Just For Old People
Investing in funds is a great way to diversify your portfolio across multiple companies and protect yourself from individual risks. You can find some great deals with these without getting too involved in managing them.
What Else Can You Do?
Conduct Research
Find out which stocks are doing better than others by looking at historical data, earnings reports, etc. Knowing what will perform well in the future allows you to invest ahead of the curve and take advantage of increasing prices before they get too high.
Don’t be afraid to ask questions. If you don’t understand something, there are plenty of resources online to help you learn more. Talk with other investors and get feedback on your strategies to make sure they are sound before taking action.
Lastly, pay attention to detail. Don’t forget about trading fees or brokerage commissions – these can quickly eat away at your profits if not accounted for.
Don’t Be Afraid To Make A Switch
Often, people think they have made the perfect choice for investing, only to realize later that they could have done better elsewhere. Many banks cut their teeth on transaction charges, so switching makes a lot of sense in this digital age where information is readily accessible.
Make The Right Choice
If you can’t find a reliable company with potential, it may be time to move on and try again. No one said investing was easy, but mastering your position trading strategies will make all the difference in maximizing your returns.
If you have a solid company with a great future, then, by all means, buy that share and keep on riding the gains.
