How to Make Money in a Down Stock Market
One of the core questions my coaching clients have asked me over the past few months is: "Can I still make money in stocks with the market down like its been?" The answer is yes, or no, depending on the type of investments you have.
Stock holdings, mutual funds, or asset allocation investment accounts make it very difficult to make money in a down market. This is because these investments are held in large, regulated accounts that don't allow short stock positions. So, if the stock market goes down, as it probably will over the next three to five years, these accounts will lose money year after year.
Short positions, however, will allow you to make money whether or not the market goes down. These types of investments are only available to companies and individuals who trade individual accounts.
Trading through an individual trading account rather than a fund gives you the leverage to control your investments and make profits daily. The reason for this is that you can buy low if you expect an increase in the stock value, or sell short if you expect it to decline.
So, if that's all there is to it, why isn't everyone taking advantage of it? Well, first, you have to be willing to invest around $25,000 into an individual trading account. A lot of folks don't have the money, or don't want to take the risk. And there are a lot of challenges for a new trader. You could lose your money fast if you don't know what you're doing.
Luckily, there are strategies to mitigate the anxieties of a new trader.
First, find a trading program that gives you low risk trade picks. The program I use and that I recommend to my coaching clients has a 31 year average experience level for its trade pickers. So a trader can simply follow their trade recommendations and have a very high probability of realizing returns. If you remember to set your stops at a level that suits your comfort zone, you will have a maximum loss that is very small and insignificant over the course of time.
You also need to find a program where you will walk through step by step until you feel comfortable trading on your own. To illustrate, I teach a nine day course where my students are taught each and every step needed to successfully trade stocks on their own, no matter if the market is up or down.
The goal with any system you choose is to find one that will give you stock trading success while those around you complain over poor performance; by making sure that you are working with experienced advisors and a step by step process, you can achieve that goal. - 23221
Stock holdings, mutual funds, or asset allocation investment accounts make it very difficult to make money in a down market. This is because these investments are held in large, regulated accounts that don't allow short stock positions. So, if the stock market goes down, as it probably will over the next three to five years, these accounts will lose money year after year.
Short positions, however, will allow you to make money whether or not the market goes down. These types of investments are only available to companies and individuals who trade individual accounts.
Trading through an individual trading account rather than a fund gives you the leverage to control your investments and make profits daily. The reason for this is that you can buy low if you expect an increase in the stock value, or sell short if you expect it to decline.
So, if that's all there is to it, why isn't everyone taking advantage of it? Well, first, you have to be willing to invest around $25,000 into an individual trading account. A lot of folks don't have the money, or don't want to take the risk. And there are a lot of challenges for a new trader. You could lose your money fast if you don't know what you're doing.
Luckily, there are strategies to mitigate the anxieties of a new trader.
First, find a trading program that gives you low risk trade picks. The program I use and that I recommend to my coaching clients has a 31 year average experience level for its trade pickers. So a trader can simply follow their trade recommendations and have a very high probability of realizing returns. If you remember to set your stops at a level that suits your comfort zone, you will have a maximum loss that is very small and insignificant over the course of time.
You also need to find a program where you will walk through step by step until you feel comfortable trading on your own. To illustrate, I teach a nine day course where my students are taught each and every step needed to successfully trade stocks on their own, no matter if the market is up or down.
The goal with any system you choose is to find one that will give you stock trading success while those around you complain over poor performance; by making sure that you are working with experienced advisors and a step by step process, you can achieve that goal. - 23221
About the Author:
W. Alan Gay has been a day trader and trainer for fifteen years. His free report describes Alan's voyage to becoming successful at trading stocks and gives useful techniques he and his students have used to consistently trade successfully. Click to obtain a free copy of his report and learn more about how you could be trading stocks successfully in as little as fourteen days.
posted by X - Men @ 2:33 AM
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