Stock market strategies

If you want to profit from the market, you have to decide what stock market strategies you want to proceed with. But then, you cannot decide on your strategy unless you are clear about what you are trying to achieve, that is defining your goals.

Basically you can select 3 types of strategies. Short term, mid term and long term.

Short-term strategy: You are basically interested in a quick kill. Your policy is to identify opportunities, buy the stocks and sell them quickly to earn your money fast. Quickly may even mean in the same day and the margins can be very small. But when you are dealing in volumes, these small margins can become huge when accumulated. This approach though attractive, is not recommended for beginners.

Mid term strategy: In this policy, you buy stocks of a company and back in your mind you know that it should do well over time, and so decide to hold it for a defined time. This can be anything between 6 months to 2 and even 5 years. You know that in 2 years time, you should be gaining around 50% if you want to sell it off. And in the meantime, you enjoy the dividends.

Long-term strategy: The purpose of this approach is to identify those stocks that do well almost at all times and then buy some of them. The buyer is more of an investor here and not a trader. He wants to create an impressive portfolio and then just sit back and enjoy the annual dividends. These dividends are then rolled back to buy more stocks so that in turn, the dividend amounts rise even more.

Your stock market strategy can also depend on whether you want to invest directly through a broker or want to go with the institutions such as the mutual funds. If you have 1 or 2 particular stock in mind, then it is probably better to go with a broker. Because funds are more wide when it comes to investing your money. But mutual funds too have their advantages and that’s why they have become so popular these days.