The is a new game in the stock market these days called hot stocks. This goes against the normal Wall St. Advice of buy low and sell high. The new hot stocks method is to buy high and sell even higher. The way it works is that you buy stocks that are rising in worth and sell them while they are still rising. The time between the buy and the sale is short.
The advantage of buying stocks this way is the short turn around time. Your cash is not tied up waiting for an undervalued stock to rise. The old method is still good, but adding hot stocks trading to your investment planning will help grow your money quicker.
This investment plan is especially suited to day traders. You have to be aware of the market trends and select stocks that are showing an obvious steady increase. Buy the stock and after it increases enough to give you a profit, sell it. Do not feel tempted to hang onto it beyond making an honest profit. This is a tactic, not a get rich fast scheme.
If you happen to pick a stock that starts to stagnate or drop in price, sell it straight away, even if you have to take a loss. Never think the stock will recover and you'll get your investment back. If it drops lower you will lose even more. The concept is to maximize your gains and keep your losses as low as possible.
With hot stocks, you'll choose to buy and sell a selected stock in one day. To utilize this method of stocking trading, you have to keep a lid on of your investments and watch the stocks closely. Study market trends. When a stock drops, sell it immediately. Do not get greedy or use the old gamblers instinct that tells you you can still come out smiling. You can not on this one stock, but they are lots of others.
Do not put all your money into hot stocks. This is just one way to earn a profit in the stock exchange. Investors should have a portfolio with solid stocks from different areas of business to protect their investments. Do not neglect your long-term investments in favor of hot stocks. Some of your profits from hot stocks should be put into long tern investments.
These stocks are meant to be very short term investments. Never hang onto a hot stock for at least a few days. You sold and the stock continued to rise, you feel like you were unprofitable. You made money, the indisputable fact that the stock continued to rise did not cost anything.
Many speculators employ a broker to buy and sell stocks. Hot stock investing is not designed to be used with a broker. If you have to pay a broker's fee for every transaction, hot stocks could cost more than you are making from them. Online services for buying and selling stocks are better suited to this investment system. Look into paths to avoid brokerage fees if you plan to add hot stocks to your investments.
The stock market is a good way to grow your investments. Hot stocks is a way to make reasonable profits in a short period of time. When investing your money always use more than one strategy and make sure that at least part of your money is in a safe, if low yield, financial instrument. Never bet on the market with money you are unable to afford to lose. Remember the old Wall St. Saying "often you eat the bear, and often the bear eats you." Good luck!