How To Trade Stocks In 2010?
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Stock markets are down right now. But 2010 is expected to be the year when stock markets are going to bang again. Many good stocks that have fallen on bad times are expected to recover and regain their lost glory. This is best buying time. Stock prices are at their historical lows. Investing in stocks right now is expected to give good rewards in 2010. So what style of investing is better? Buy and hold that may last from 2-5 years or short term like day trading or swing trading. Well, it all depends on your personality and style. If you want a lazy man’s way to getting rich than buy and hold may be the best for you. On the other hand, you are an active person that day trading and swing trading may have huge rewards for you.
In the beginning of each year, identify ten highest performing stocks. Now there are thousands of stocks that are listed. In the US alone there are more than 50,000 stocks that are listed on the different stock exchanges. Once you have identified the ten top performing stocks, study them.
Focus on its price action and how well it matches with the S&P 500 Index. Before you invest in any stock, observe it for at least one week and do not put any money into it unless you probe it thoroughly and feel comfortable with it.
In the past few years, Exchange Traded Funds or what you call ETFs have become highly popular. ETF share can be traded like a stock with no uptick rule that can prevent you from shorting it. In addition to that an ETF gives you the diversification benefits of a mutual fund with less fees as compared to the mutual fund. ETFs are a much superior investment right now as compared to directly investing in stocks or mutual funds.
You can sell as share of a mutual fund until the close of the trading day whereas you can always buy or sell an ETF share just like a stock. You can think of ETFs as stock indexes as most of these ETFs have been designed in such a manner as to mimic a stock index or a sector index or a industry index.
Since an ETF is mimicing a specific index, it is much more broadly diversified as compared to an individual stock. So ETFs are not much affected by breaking news or other economic news as compared to individual stocks.
What can be the best investment strategy for you in 2010? What type of stocks should you choose? Should they be micr caps, mid caps, large caps? Should you invest in a value stock like Warren Buffet or should you go for a growth stock? Any investor dreams of making a fortune in the stock market by investing only a few hundred dollars. Now this is possible, some lucky people did made a huge fortune by investing in micro caps. So you might of thinking of finding a super hot micro cap stock that has the potential of skyrocketing into a mid cap and eventually into a large cap in 2010.If you can just find such a micro cap stock, you can make astronomical rewards. Your percentage gain can be huge. Can you find such a micro cap? The chances are slim. I am not trying to discourage you but this is the hard facts of life. We need to be realistic.
So what to do? Shatter your dream of making a fortune in 2010? No, not at all, invest in Micro Cap ETFs. Yeah, Investing in Micro Cap ETFs will provide you with more diversification as compared to investing in a individual micro cap. If a few micro caps soar, the micro cap index will also soar with them giving you rewards that might not be as large but they will be less risky! Micro cap ETFs is just one example. There are many ETFs that mimic different indexes, commodities or currencies. Explore the world of ETFs in 2010! You can reap huge rewards!
Tags: hot stocks, stock trading, stock trading system, stocks, super stocks