Here’s how to choose the best stocks for swing trade.
If you’re like most investors, you love to trade stocks. You can go long when you want to make a bunch of money, or you can go short in order to get a little money quickly. In either case, you like to trade every stock you can to make money.
But how can you make your best profits and minimize losses when trading short?
The good news is that if you follow these 7 things to trading stocks, you’ll be making a decent chunk of extra cash on average, and you’ll find that stocks in your market are much less volatile these days.
Here are seven things you need to consider when choosing stocks for your short and long trades.
1. Stock Trading is About Market Dominance
Before trading stocks you must think about the market. If you think about the market through the lens of power structures and companies, you’ll have no problem trading stocks, however if you look only at the company and nothing else, you’ll struggle.
In many cases, just trading a stock with the worst stock price is not enough to beat the market. A stock’s trading price simply means you will make a lot of money. There are other factors that matter in deciding whether to trade the company or not but you should keep all of them in mind.
2. Stock Trading is About Leverage
You won’t lose a lot of money if you trade just one stock, but if you buy 10 or 20 stocks, you may be able to make a lot of money.
Stock trading is about the leverage. If you trade just one stock, you want to spread as much as possible before you trade it, but if you buy 10 or 20 stock, you will be making the same amount of money if you sell a stock for, say, $20 and buy another stock for $25. So if you trade 10 stocks the same amount, you will only lose the same amount of money. But if you trade 10 and 100 and 50, you will make even more money if one of those stocks goes up.
Think about it this way…
For one trader, buying one stock at $20 may result in them selling that stock for $40. After buying 10 stocks, the trade is made in one sitting… but you could buy 50 stocks without leaving the house. You can gain a lot of money if you buy 100 stock at $20 while trading 10 at $50
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