Trade Stocks like a Master

The investing world is rich with opportunity, and there are hundreds of trading strategies out there. Each strategy has its strengths and risks. Each needs different kinds of input and information to make it work. You need to pick about five that will work for you. Initially, pick relatively simple and lower risk strategies.

Avoid "buy and hold" strategies! The recent stock market crashes have thoroughly debunked this one! Imagine losing 40% of your portfolio (or worse) in a matter of days, after having spent years building it up. No thank you!

You may want to look at investing in high dividend stocks and funds. These are great, because if you invest a certain amount each month, you actually benefit when the market drops, because your savings investment gets more shares for the same money. When the market goes up again, your shares increase in value. On top of that, your dividends re-invested set up a nice compounding snowball!

Or what about credit spreads, the lowest risk strategy that far exceeds stock returns? Or how about momentum investing?

Save strategies like buying calls and puts for later, as you gain mastery over the simple ones first.

Education always gives good returns on investment. It always pays off. However, be careful what you choose.

There is tons and tons of free education on the net about every strategy you could name. Wikinvest is a classic example. The Options council has a good site, as does the CBOE. In fact, if you go the CBOE site, you can download for free the Options Toolboox. This has lots of free lessons and a position simulator. Start there.

Never buy a course that tries to sell you an automated proprietary system. Buy one that offers you a thorough education in your topic of interest, and then lets you build your own trading plan.

Treat trading as a business, not a hobby. An orchestra conductor gives himself to his field and does not allow himself to become distracted. He practises as a matter of discipline, and he has a plan of growth and development. To become a master trader, you need to do the same. Don't try and drift your way into it....the tide will dump you out at sea!

For each trading strategy, have write down (yes, write it down, because you WILL forget when the heat is turned up) the steps you will take to execute a trade, the information and analysis that you will need to gather in order to make a decision, the measurement of your success, and the exact way that you will control risk. Stick to this plan, and only modify it as your education grows.

Build education into your plan. You only grow old when you stop learning!