Stock Trading Strategies|Buy low and sell high – this is the mantra to success as far as stock investments are concerned. Sounds easy, doesn’t it? But ask someone who has lost money in trading stocks and they will tell you that it takes a lot more than buying stocks at lower valuations and selling them high.
Best Stock Trading Strategies You Need to Know
First-time investors often fall victim to greed or lack of information when it comes to choosing the right stocks and strategies.
They often end up timing their entry and exit wrongly and have to bear losses. While stock trading is rewarding, the path is also fraught with risks. Make the wrong choice and you can see your investments diminish in a quick time.
The ongoing volatility in the markets adds to the challenge. If you are planning to enter the stock market it is very important that you measure your steps carefully.
Stock market investment isn’t for the faint-hearted and it isn’t even for people who are too greedy or like playing it safe.
You need to approach the market objectively keeping out all emotions. Your buying and selling decisions should be based on the information and choosing the right strategy.
To achieve success one must be willing to study the fundamentals of the market, learn the tricks of reading charts and research reports and also have the courage to take decisions at the right time.
If you are hesitant the market isn’t the place for you. It takes an objective thought process, an eye for detail and a little bit of luck to make money in the market.
This brings us to a very important question – what are the best stock trading strategies for 2019? Do you have to change your stock trading strategies every year?
To answer the second question first – stock markets have their own dynamics and the approach that worked last year probably won’t work this year or even may prove to be counterproductive.
This is where you need to spend quality time doing your research on the market. There are no shortcuts to growing your capital exponentially in the stock market and you will need to approach this strategically.
Here we take you through the best stock trading strategies that work in 2019. We aren’t looking at these strategies from a technical point of view rather objectively in this post.
You may be wondering why we have mentioned this as the first among the best stock trading strategies. But markets are such in 2019 that you need to be extremely patient. For every good news that we hear about the economy, there are triple the amount of bad news.
Trade wars, unrest in major economic hubs and of course the major technological shifts happening, the market isn’t a runaway success anymore. While you may be able to make good profits shorting in this market occasionally this is more of a patient man’s (woman’s) game.
Choosing stocks that have healthy fundamentals will fetch decent returns both in the short as well as long term. We aren’t talking about day trading strategies as being a newbie in the market you are unlikely to try your hands at day trades.
Study the swing…
Swing trading strategy has fetched good returns for many investors in 2019 and you can follow it if you have the time to do your research on the stocks to understand their likely swing patters.
The idea here is to catch a stock when it swings back to lower levels and then sells it when the prices move upward. Repeat and you have a success recipe. You may use this for a company that is likely to come up with a strong result or one where a breakthrough development is likely to take place.
Here you may have to hold over your positions for weeks or even months and if you have the patience of doing it, this can work for you. But this is one strategy that will require you to follow the charts and do technical analysis on the stocks.
There are several online guides that teach you the basics of technical analysis and if you find yourself comfortable with this you can definitely follow the swing trading strategy.
Follow the sunshine…
Imagine if you were investing in the 18th century, putting your money into coal-based stocks would have fetched you good returns. Coal was driving the industrial revolution back then. Come to the middle of the 20th century and automobile stocks were delivering double-digit returns.
In the 90s and the 2000s, the talk in the market was about technology stocks. Some sectors tend to outperform the market and this is what is often termed as ‘sunshine sectors‘ in the parlance of the stock markets. So what are the sunshine sectors in 2019?
There are a few and renewable energy stocks that are surely one sector that you should start investing in. Both in the short and the long term this is one sector that is going to fetch you good returns.
Other sectors that have done well in 2019 and are likely to do so in the coming years are Biotechnology, Cybersecurity and Artificial Intelligence. Companies that are shifting focus to these sectors are the ones you should invest in.
Set aside funds…
Markets are highly volatile these days given the uncertainty that exists around the world economy. The threats of trade wars aren’t helping the matters and this has resulted in high levels of volatility in the markets across the globe.
This is where it is very important to tread every step carefully. Seasoned investors would always suggest you set aside funds while trading. In other words, you must only invest a fraction of your overall capital in a single day’s trade.
This strategy has become all the more important in 2019. If you have a big chunk of money to invest don’t bet more than 1-2% of your capital in a single day. For smaller sums, you can invest 5-8% on a day but never exceed beyond that.
This strategy is important as it saves you from getting locked up with your capital in a falling market and at the same time, this allows you to cash in on the opportunities when good stocks are available dirt cheap.
Spread it out….
While this might sound contradictory to the strategy of choosing the sunshine sectors but it is important for you to spread out your investments across different sectors. There are two reasons this is important and working in 2019.
First, the uncertainty in the markets has resulted in some of the best performing equities losing a huge chunk of their market cap. They are available dirt cheap right now and if you are looking for mid-term investments these stocks are likely to fetch you good returns the moment there is more stability in the global economy.
Secondly, many apprehensive investors are likely to switch their capital from sunshine sectors and other sources when the markets see a bull run. In such an event you will see your investments appreciating in a quick time. The sunshine sectors that we have mentioned are more of a long term investment option and maybe good for a retirement fund.
Avoid beaten-down stocks….
You may come across several of the big names that have seen the bulk of their market capital being eroded over the last two years or so. At the price point that they are available right now, they may seem like the perfect multi-bagger.
As a newbie, you should avoid buying these stocks as of 2019. The world economy is going through a big churning and some of the stocks that made it to the bulletin boards for decades aren’t likely to do so in the future. In fact, very few stocks over the last decade or so have made a ceremonious comeback after losing much of their market cap.
If they are down 70, 80 or 90% from their prices a year or two back it would definitely be for good reasons and you shouldn’t fall into the trap, not now at least. You can bet on a stock or two but you should invest only what you won’t care about if the bet falls flat.
To conclude these stock trading strategies have offered good returns to the investors in 2019 and they are likely to keep doing so in the near future. It is important for you to stay updated with the emerging trends in the market and also keep an eye on the stocks and sectors that are likely to fetch you higher returns in the future.
There are blogs and e-magazines that offer you deep insights into the market. From case studies to tracking the growth of the best stocks they help you choose the right stocks and strategies. Above all, they help you make informed choices in a volatile market. Follow them and you will be able to earn healthy returns from the market.
Summary – In this write-up, we look at some of the stock trading strategies that work in 2019 and how you can use them to earn high returns.
Author Bio: Are you a Stock Market Investor? Do you want to learn how to invest in stocks? Traders-Paradise is the financial news blog and provides the best information with a proven strategy for investing in the stock trading strategies for beginners.