Stock Trading Strategies - Comparing/Contrasting Day Trading, Swing Trading, and Extraordinary Investing. . .
Stock Trading Strategies as described on this site are:
• Those strategies used by each of the major systems of trading discussed. For instance, day trading, swing trading and Extraordinary Investing are major systems of trading stocks.
• Those personal variations of strategies that each unique trader develops within the major system of trading he/she is identified with.
Unlike swing trading, the Extraordinary Investor's stock trading strategies does allow trades for the longer term, holding onto shares of a stock for as long as 3 months. Maybe even much longer depending on the foreseen potential of the stock and marketing efforts...
NOTE: A stock may also be held longer than 3 months if the trend is up for the long term as in the case of a unique high demand product(s) finally going to market with increasing profits and/or increasing profit outlook and/or if the products being developed are very significant with high demand, and funding has been secured for continued development of unique needed products.
Unlike Swing Trading, the stock trading strategies of the Extraordinary Investor are as follows...
• Concentrates most of his study on complete fundamental analysis along with basic technical data as an aid and confirmation - just the opposite strategy of swing traders. The basic technical data required (charts in different time frames and a basic choice of technical indicators) is available on most investment sites such as on yahoo finance or google finance.
• Mission and expertise is being able to accurately discern, locate, and then invest in stocks with the greatest potential for an explosive new trend in share prices BEFORE the stock explodes in value whether technical signals form or not.
• will then wait for the explosion in prices to occur, and then sell shares at a time when new highs of the trend begin to level off. This insures safe, low risk returns.
• Only requires a small investment, no leveraging, very little risk of losing, less time watching the stock, and will likely make an average 3% to 20% on his investment per trade based on peer performance and fundamentals of the economy.
• Can realistically make 10 to 25 trades per year with a far better yield - commonly doubling or tripling his investment - with far less investment, no leverage, far less risk, and far less pressure, stress and time trading and watching trades than all other stock trading strategies I am aware of.
• Utilizes far more time preparing for and setting up trades and far less time trading - prepare to succeed!
The stock trading strategies of Day trading and swing trading are primarily founded in technical analysis.
Such technical stock trading strategies are becoming ever more difficult to accomplish successfully because. . .
1. as more investors are rushing to use the ever more complex technical formulas and algorithms to make such trades, the less effective those technical formulas become to predict price movement.
2. professionals, including market makers (defined later), have learned to buy or sell shares, or share lots, in such a way that false signals are formed that fool technical programs of investors.
3. The false signals created by this trickery causes investor' technical programs to create trades that make investors lose money to the market makers rather than make money for which the programs were designed. Remember, even market makers are there to make a profit and will compete with traders to do so.
4. the market is being manipulated to ever higher degrees by every little emotional whim of the public in general, of the media, and investors making it ever more difficult to calculate small up or down trends necessary for day trading and swing trading strategies to work.
For the reasons mentioned and more, the stock trading strategies used to predict tiny price moves are becoming less effective over time in setting up successful day trades. Technical trading is, therefore, more stressful and far less predictable and far more risky even with day trading and swing trading strategies.
Still, 15% to 30% profit or far more on an investor's principle per year in a lack luster stock market and economy is good but very labor/emotionally/time intensive and high risk compared to the huge profits you will make as an extraordinary investor with far less trades, time, investment, expenses and far less stress per year.
Unlike day trading, the stock trading strategies of the Extraordinary Investor requires minimal investment capital, no leveraging, far fewer trades, far less broker fees, far less stress or pressure, more fun researching the latest product developments, far less time and effort making trades, and far more profit per trade than day traders and swing traders.
In contrast to day trader and swing trader stock trading strategies, the Extraordinary Investor, spends most of his/her time researching, locating and then creating a hot list of companies most likely to explode in value.
After creating the Hot List comes the setting up of trades with stocks from his/her hot list that are most likely to explode in value soon or in the near future usually before technical signals reveal such a move in share prices.
• The extraordinary investor will know what to look for that are conductive to a successful explosive trade.
• No pressure involved here. Take all the time in the world you need to find that stock with high potential. You only need several good trades a year to potentially double or triple all your investments or far more! So research is of prime importance.
• The better you prepare, the less trades you will need to reach your investment goals. Remember, Your desire must be to possess an unfair advantage over other traders. Make that research count! . . . Feed Your Mind!
• Invest only when you have found that super deal of a stock for huge future rewards that easily surpass 10% per trade. This site shows you how.
• And you will find those stock deals - they are NOT uncommon.
• Not all trades explode in value, but if you do your research and keep close watch of your investments you will not lose money, or lose very little on bad trades.
• The less you understand a stock and the sector of stocks you choose to invest in, the more you enter the realm of risk and loss. Then You will lose money, confidence, and peace of mind.
The author's stock trading strategies - to help you gain understanding of how this works in real time.
My present "personal" stock trading strategies include researching stocks for 1 to 2 hours per day. By using this schedule of research, I am able to find at least 75 stocks with high potential to explode per year. Half of these stock are almost sure winners - the greatest potential.
• I thin my stock list down from 25 to 50 of the best hot stocks - all that I am able to reasonably study and keep track of efficiently at one time for potential investing.
• I will then thin my list again to about 10 or 15 stocks and only invest in the best of the best 5 to 15 stocks on my hot list per year. That is the maximum number of stocks I care to keep track of and invest in per year, but I may trade one or more of those stocks several times a year to reap profits over and over on explosive moves.
• Some of the stocks on my hot list might take a month or more before fundamentals reveal they are ready to explode. Others I trade almost immediately. Others are no longer potentials due to changing fundamentals. Others just remain on my list as potentials, but are not yet convincing to me that they will explode in the near future.
• Other stocks on my list I trade and sell and then leave on my list for future trading opportunities, which happens often because what goes up will go down again and then go up again.
With penny stocks we see a continual cycle of explosive trends up and down in share prices. On a single piece of news, or far too little new news, a stock plunges in value when all technical data seemed to predict a future explosive upward trend.
• Those I do invest in, I may hold shares of a stock for as little as an hour to capture a trend soon to occur. I may also hold shares of another stock for as long as three months for the fundamentals to create an explosive move in that stock. I will buy early like this with more popular penny stocks to make sure I capture the future explosive move before others find them and before marketeers begin promoting them.
Three months holding onto a stock may seem like tying up good investment money - and that might be true. . .
Remember though that it takes time before media promotes a penny stock enough to capture the attention of investors in general.
If you are right, you are anticipating a major move of your stock of focus once other investors take notice of the exciting stock. If you anticipate correctly, your yield will likely be 50% to 500% or more. Even a 10% move in three months time is pretty good!
• My advice is to sow your investment seed into the most promising penny stocks you can find, ones that must go up and then sit back and wait to reap the harvest in due time.
• I do not wish to take the time to invest in and keep track of more than 3 to 5 stocks at a time and 7 to 15 stocks per year. All I need is a few successful explosive trades to double or triple my investments. The less stocks I invest in at a time, the more time I can concentrate on those few I invested in. To me, that is most important.
• I do not desire to stash my profits away. I spend a portion of what I make in my penny stock investments and re-invest a portion of it because I realize penny stocks are best used with smaller investments.
These are my personal stock trading strategies for investing as an Extraordinary Investor, and it works for me at this time.
Everyone is unique. Remember though, that the more stock research you do initially, the less stock research you will have to do later. . .
Researching for the best stocks takes the most time.
Once the stocks are on my list I can follow them for potential future investment possibilities many times over because I am already familiar with the companies, their finances, products, history and the stages of development those products are undergoing.
Other fundamentals may come into play that will make some stocks on my hot list obsolete or no longer potentials - at least for the time being. Everything changes; Nothing remains constant.
You have completed this section on:
When you are ready, click on the next lesson: Technical Analysis Benefits