It doesn’t matter what kind of objects or financial instruments you’re setting for trading. If you constantly want to gain a profit, it is important to set your trading system properly. This system of trading includes excellent money management as well as some sound and efficient trading strategies. Now when it comes to looking for suitable strategies for trading, it’s important to make use of the one that is properly tested and experimented. And once you figure out such effective strategies, maintaining a consistent profit in trading will be easier for investors.
Also, when it comes to putting strategies together, it’s always easier for investors to choose one according to their flexibility. This way, when you align a few investing strategies for yourself, and one doesn’t seem to work for them, you can surely move on to the other while reducing the risk of loss. So whether you’re spread betting or simply trading; it’s important to understand some effective investment strategies that’ll make you profit. Because just as much as it is important to understand what trading method you’ll be adopting, the right investing strategies are equally important to understand too. This way, you can follow the most effective ways other investors tend to gain profit and make more out of your trading, even if you don’t know much about it.
So once you’re aware of what trading type you’re heading to, it’s time to understand the most effective investing strategies mentioned below.
Value Investing:
If you’re willing to stay in the trading and investing business for a long time, while you do an effort and research on the stock selection for yourself; value investing is exactly what you’ll need to do. Simply put, when you’re a value investor, you’ll be acting more like a bargain shopper in your trading. Yet, when you’re a value investor, you aren’t really bound to invest a lot of your financial data to get to the right deals. Instead, you can easily own some stocks that might be considered undervalued; as they are provided to investors by mutual funds. One of the greatest investment books that focuses on value investing is Seth Klarman’s Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor. If you would like to learn more about how the most successful value investors in history like Warren Buffett grow their wealth, Klarman’s Margin of Safety book is a must-read.
Growth Investing:
So if you’re more of an investor who is highly efficient to head towards growth strategies that work in the market to gain profit, it’s better you go for growth investing. In order to follow growth strategies in trading, you’ll need to be active and watchful on the executive trading teams as well as all the latest and trending news about its economy. This way, you’ll be investing in what would offer you a higher earning potential in the future; instead of what the low-cost deals would give you. Growth investors often seek out opportunities with the potential to become ten baggers – stocks that may increase their value tenfold – by closely analysing emerging markets, innovative industries, and disruptive companies. This requires a keen eye for market trends and a tolerance for higher levels of risk. Also, if you’ll be opting for growth investing, it’d be obvious for you to keep looking for the ‘next big thing’ in trading.
Momentum Investing:
When you’re more up for buying stocks while experiencing the uptrend in the market, momentum investing is just your thing. Yet, when you’re opting for momentum investing, you choose more on short-selling your securities while trading. This simply makes you more of a technical analyst, who’d buy uptrend experiencing stocks and then short-sell the securities; rather than opting to drop as a loser. This method takes you to a strict data-driven approach towards the trading mechanisms while making all your purchasing or investing decisions according to the stock price patterns. So when you’re opting for a momentum strategy in trading, it’s important at all times to be ready for buying or selling.
Guaranteed Investment Certificates
If you are new to investing and want a safer investing option, you can consider a guaranteed investment certificate (GIC). GICs are low-risk investment options offered by banks. Instead of investing in stock, you pay a bank a certain amount to invest for you over a set period of time, with the exact details determined by the investor. After this time period, the bank will return not only the original amount but an amount of the profit gained too. This way you can make a guaranteed profit and your initial investment is protected. Before you decide to invest with your bank you may want to shop around and look here at other banks’ return rates, as you may be able to get a higher rate elsewhere.
Dollar-Cost Averaging:
When you’re ready to make regular investments in the market according to your practice and maintained skills in trading over time, the investing method would most likely turn into dollar-cost averaging. This strategy might not be mutually exclusive to the other strategies that are mentioned above, as it mainly allows you to execute the strategy you chose in this matter. When you’re following the DCA strategy, you’ll need to put a fixed amount in your investment account on a continuous basis; like you can choose to add $250 in your investment account every month. This method makes it a lot easier to follow a specific plan, as you don’t have to put much or any oversight into it.
Once you finalize and understand on which trading strategy would most likely be easily adopted by you as an investor, half the important work here is all done and managed. But before you go ahead and start implementing the mentioned strategies in your trading, it’s important you make sure that you understand your financial situation as well as goals. This way, when you do apply a strategy, it’ll be easier for you to manage it according to your needs and status; allowing it to gain you more consistent profit than loss.
