Investing can be made much easier if you follow a few tips discussed below. Spend less time, get better profits, reduce your risk and lessen your draw-down. Diversify Pundits and financial advisers advise you to diversify your holdings. Spread out your risk into different categories of the market. Diversify by buying unrelated stocks, too.
Trade Leveraged ETFs
The SPX doesn't usually move as fast as an individual stock, so many people are dissatisfied trading the SPX. Because SPX isn't volatile, you will need to trade leveraged ETFs to get the movement you desire. Leverage can be provided by trading options on SPX, or, a much easier method is to trade leveraged ETFs like SSO and SDS .SSO is a leveraged ETF that represents the S&P 500, or SPX and SDS is the 2X bearish leveraged ETF. With a leveraged ETF like SSO, a 5% move in SPX gives you approximately a 10% move in SSO. You can trade the bearish ETF, SDS, if you want to profit from a falling market - even in your IRA account.
Earnings
As a stock approaches their earnings report, the stock usually rises in anticipation of a good report. What happens if the earnings report is not good? People anticipate an excellent earnings report, and if the report is less than excellent, the stock will crash. This situation can be aggravating. Why hold a stock over earnings? It is best to profit by the rising stock price, but get sell out your shares before the earnings announcement. Be careful here. Sometimes they announce before the open. Sometimes they announce earnings after the close. Sometimes, you will be sorry you sold before earnings, when the stock rockets up. That's OK, because the likelihood of that happening is about one in five.
Homework
Do you have the time to go to finance.Yahoo and find the exact date that a company is to announce earnings? If you hold ten stocks, this can take a great deal of your time. Hold the ETF and you won't have to check earnings dates and times again.
Volatility Risk
Buying one stock is potentially very risky. Be careful about taking on too much risk. Buying an individual stock can be profitable. However, you will need to study the K-10, the industry, the history, the management, the competition, and the overall sector in which they reside. Do you have that much time? Can you make this much time available? The vast majority of people don't spend this much effort to analyze their stocks. If you buy an ETF, you will be shaded by the large number of stocks in the ETF.
To summarize
Successful investing is about controlling risk, to a great extent. You can control, or lessen your risk component by diversifying your holdings. This can be accomplished by buying an ETF. Keep it simple, don't hold a stock through the earnings announcement - sell out your holdings just before the announcement. You don't need to study stocks. Instead, just study the sector or industry that the ETF you are considering represents. That takes much less time, and the results can be excellent if you trade the leveraged version of the ETF.
Trade Leveraged ETFs
The SPX doesn't usually move as fast as an individual stock, so many people are dissatisfied trading the SPX. Because SPX isn't volatile, you will need to trade leveraged ETFs to get the movement you desire. Leverage can be provided by trading options on SPX, or, a much easier method is to trade leveraged ETFs like SSO and SDS .SSO is a leveraged ETF that represents the S&P 500, or SPX and SDS is the 2X bearish leveraged ETF. With a leveraged ETF like SSO, a 5% move in SPX gives you approximately a 10% move in SSO. You can trade the bearish ETF, SDS, if you want to profit from a falling market - even in your IRA account.
Earnings
As a stock approaches their earnings report, the stock usually rises in anticipation of a good report. What happens if the earnings report is not good? People anticipate an excellent earnings report, and if the report is less than excellent, the stock will crash. This situation can be aggravating. Why hold a stock over earnings? It is best to profit by the rising stock price, but get sell out your shares before the earnings announcement. Be careful here. Sometimes they announce before the open. Sometimes they announce earnings after the close. Sometimes, you will be sorry you sold before earnings, when the stock rockets up. That's OK, because the likelihood of that happening is about one in five.
Homework
Do you have the time to go to finance.Yahoo and find the exact date that a company is to announce earnings? If you hold ten stocks, this can take a great deal of your time. Hold the ETF and you won't have to check earnings dates and times again.
Volatility Risk
Buying one stock is potentially very risky. Be careful about taking on too much risk. Buying an individual stock can be profitable. However, you will need to study the K-10, the industry, the history, the management, the competition, and the overall sector in which they reside. Do you have that much time? Can you make this much time available? The vast majority of people don't spend this much effort to analyze their stocks. If you buy an ETF, you will be shaded by the large number of stocks in the ETF.
To summarize
Successful investing is about controlling risk, to a great extent. You can control, or lessen your risk component by diversifying your holdings. This can be accomplished by buying an ETF. Keep it simple, don't hold a stock through the earnings announcement - sell out your holdings just before the announcement. You don't need to study stocks. Instead, just study the sector or industry that the ETF you are considering represents. That takes much less time, and the results can be excellent if you trade the leveraged version of the ETF.