Stock Market Trading Tips From Professional Investors
During this market condition, a professional trader suggested buying the dip
“After getting crushed Friday, the markets are moving higher on renewed hopes of a trade deal.
Whether or not this recovery can be sustained remains to be seen. However, if you’re feeling bullish in the short term, Optimize Advisors President Michael Khouw has a way for you to get in on the cheap.
“We are seeing considerable volatility, and relative to the volatility we are seeing, we are not actually seeing options premiums as high as they might otherwise be.”
As Khouw pointed out, a big reason for this is that the Volatility Index , the VIX, is probably not as elevated as it should be.
“We’ve averaged just under 1.5% intraday moves since the beginning of the month. With the VIX sitting around 20, [it] should be probably 50% higher than that when you’re seeing moves of that kind of magnitude,” said Khouw.
“I was looking out to September,” said Khouw. “You could buy the 295/300 call spread. You’d be spending about $1.20 to put that trade on, so the payoff is going to be better than 3 to 1 if we get a move up to 300 which, by the way, is approximately where we were at the beginning of this month.” Read more…
Here are more trading tips from professional traders:
Avoid placing all your eggs in one basket. If you put all of your money into one or two stocks and those stocks fail, you have lost everything. If instead you choose to diversify, you will have stocks in many different areas to turn to, and therefore a more diverse portfolio that you can see gains from.
Diversify your holdings. By investing your money in various sectors and investment vehicles, you limit the risk of losing money. It is wise to invest in a combination of stocks, bonds and cash vehicles, with the allocations varying depending on your age and your comfort level with regard to risk.
If you are investing in the stock market be sure to shop around on the front and back load fees, in addition to any other fees. Depending on the type of trading you plan to participate in, fees can eat away quickly at your earnings. Compare the rates of many investment companies before making your decision.
Before you decide that how much you want to invest in the stock market, take some time to figure out what you want your investments to do for you. Are you looking forward to building a retirement fund? Alternatively, make some extra income? When you get this figured out, you will be able to decide how much you are willing to risk on the market.
Do not blindly follow the recommendations of your investment broker without doing some due diligence of your own. Ensure that the investment is registered with the SEC and find some background information on the way that the investment has performed in the past. There have been instances of fraud whereby the information presented by the broker was fabricated.
Keep your objective and time horizon in mind when choosing your stocks. If you have many years left and are saving for a retirement decade away, invest aggressively. Look at small-cap growth stocks or related mutual funds. The percentage of your portfolio in the stock market should be as high as 80%, if this is your personal situation.
Having a good education is important when it comes to the stock market. Investors who understand basic accounting principles are much more likely to have success with trading. This does not mean you have to get an accounting degree. You just need to know the basic scoring system of how the stock market works, such as annual reports and stock history.
Before you invest in the stock market, be sure to investigate the companies that have succeeded through the recent versatile economy. If a company has maintained a steady increase in earnings, despite a down economy, they are likely to continue to do so, regardless of how bad the economy gets.
Learn to invest on the long term, as well as, on the short term. When you invest in a stock, you should have a pretty good idea of how long it will take for the stock to gain value. A short-term investment should be made if you notice a trend. However, you should make a long-term investment, if you know a certain company has a good chance at beating its competitors in the next year or so.
You need to take the stock market seriously. You don’t dabble in it. Your involvement with the stock market can generate you legitimate money, but it can also be the cause of serious losses as well. Treat your time investing with respect and learn all you can to make sure you are on the positive sign of that equation as often as possible.
Hopefully, you have found the information that was presented to you in this article, quite helpful and that it was just what you needed to get started with investing. If you keep this information in mind as you invest, you will be sure to see a big difference on your returns.
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