How to Make Money in a Down Stock Market
My clients often ask me if they can still make money trading stocks even when the stock market is down. The answer depends on the kind of holdings an investor has.
If you hold stocks, stock mutual funds, or your investment is in the standard asset allocation accounts the answer is probably no. The simple explanation for this is that these types of accounts are so large that they are not allowed by the regulators to hold short stock positions. This means that if the stock market goes down over the next 3-5 years, the accounts will lose money every single year.
Short positions, however, will allow you to make money whether or not the market goes down. These types of investments are only available to companies and individuals who trade individual accounts.
If you trade through your individual account rather than a fund, it is possible to for you to take charge of your own investment and make money in the stock market almost every day. This is because regardless of the direction a stock is moving, you can make money, by buying if you expect it to go up, or selling short if you expect it to go down.
Well, then, why doesn't everyone do it? It does take an investment of about $25,000 to set up your individual account. Some people don't have the funds, or are reluctant to risk it in an individual account. After all, trading stock for a novice can be complicated. You could lose all your investment fast if you aren't sure what to do.
Luckily, there are strategies to mitigate the anxieties of a new trader.
The first step is to find a trading system that provides you minimal risk recommendations. The system I and my students use has stock pickers with an average experience level of thirty one year. This means that you can just follow their suggestions and are fairly assured that you will make a profit. And if you set your stops to tie in with your personal risk tolerance level, your loss over time will be minimal.
Its also critical to find a system that will walk you step by step until you achieve your goals. As an example, in the nine day trading course that I lead, the participants actively learn every piece to the process it takes to successfully trade stock whether it goes up or down.
Despite the program you choose, if it has advisors with the needed know-how and experience as well as a turnkey process you can follow, you can be enjoying profitable stock trading success while those around you are complaining over the declining markets. - 23159
If you hold stocks, stock mutual funds, or your investment is in the standard asset allocation accounts the answer is probably no. The simple explanation for this is that these types of accounts are so large that they are not allowed by the regulators to hold short stock positions. This means that if the stock market goes down over the next 3-5 years, the accounts will lose money every single year.
Short positions, however, will allow you to make money whether or not the market goes down. These types of investments are only available to companies and individuals who trade individual accounts.
If you trade through your individual account rather than a fund, it is possible to for you to take charge of your own investment and make money in the stock market almost every day. This is because regardless of the direction a stock is moving, you can make money, by buying if you expect it to go up, or selling short if you expect it to go down.
Well, then, why doesn't everyone do it? It does take an investment of about $25,000 to set up your individual account. Some people don't have the funds, or are reluctant to risk it in an individual account. After all, trading stock for a novice can be complicated. You could lose all your investment fast if you aren't sure what to do.
Luckily, there are strategies to mitigate the anxieties of a new trader.
The first step is to find a trading system that provides you minimal risk recommendations. The system I and my students use has stock pickers with an average experience level of thirty one year. This means that you can just follow their suggestions and are fairly assured that you will make a profit. And if you set your stops to tie in with your personal risk tolerance level, your loss over time will be minimal.
Its also critical to find a system that will walk you step by step until you achieve your goals. As an example, in the nine day trading course that I lead, the participants actively learn every piece to the process it takes to successfully trade stock whether it goes up or down.
Despite the program you choose, if it has advisors with the needed know-how and experience as well as a turnkey process you can follow, you can be enjoying profitable stock trading success while those around you are complaining over the declining markets. - 23159
About the Author:
W. Alan Gay has been a day trader and coach for fifteen years. His free report describes Alan's voyage to becoming successful at trading stocks and gives useful tips he and his students have used to repeatedly trade successfully. Click to obtain a free copy of his report and learn more about how you could be trading stocks successfully in as little as fourteen days.
posted by X - Men @ 2:15 AM
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