When markets are bullish investors are always looking for a good investment in stock. If you invest in stock now, and current market shows a slight downturn, your gains may be cut short. Or, stocks could plunge far higher and miss out entirely on a good earning opportunity should you jump in before the frenzy dies down. A smart move is to do what’s called an in-the-money trade as soon as possible when markets are doing well, buy low and sell high when the markets are trending up.
That is exactly what many investors are doing these days, and why companies are willing to take risks to give you the opportunity to make money with stocks. In reality, it isn’t so much risky as it is smart investing. Many people believe that buying low and selling high makes sense, but the real value of a stock is what you can get from them when the price goes up. There are two methods for in-the-money stocks: cost averaging and momentum trading.
Cost Averaging: Some investors buy several different types of stocks at once. For example, they might have five penny stocks they’re interested in. They might also owe money on some of those stocks – and when they owe money on them the penny stocks drop in price, which they must sell to pay off their creditors. The most likely scenario for this kind of stock market investment is that it will make them money, but only if they sell all of their stocks before the price of each one drops.
Momentum Trading: Investors who have a lot of long term investments often use momentum trading to gain income from a stock market trend. This works the same way as cost averaging except instead of buying several stocks each time the price goes up, they just buy one stock. However, unlike cost averaging, if a stock goes up too far the investors may end up holding on to it too long, which means they’ll owe more money when it drops. They can use this to their advantage by using momentum to ride the trend and not have to sell all of their stocks.
Individual Stock ETFs: You can also invest in individual stock ETFs. These are usually known as exchange-traded funds. Similar to mutual funds, these are managed by professionals who look after the interests of investors who don’t have the time or knowledge to manage their own portfolios. The advantage of these types of stock market investing strategies is that you can lose money on the majority of your investments, but you only lose money on one or two percent of your holdings.
Smallcase Funds: Also known as micro cap and nano stocks, small case ETFs are less expensive than other types of stock markets strategies. Since there’s no trading commission like there is with large cap and large nano stocks, small case ETFs have become quite popular. There are even some small case ETFs available for as little as $100. As with other types of etfs, you can usually lose money on the majority of your smallcase portfolio, but you can offset this by making sure that the small case stocks that you do invest in are ones that have great growth potential. The drawback to these types of small stock markets investing strategies is that you typically won’t make as much money on your smaller cap stock investments because the gains will be small.