5 Investment Strategies To Earn Money From The Stock Market

Stock market investment is a battle of wits and timing and, like all battles, it’s important to have a strategy if you want to win.

Today, we present to you 5 investment strategies to help you earn money from the stock market, even if you’re just a beginner.

Day Trading

Day trading is the most common kind of trading for active traders or people who do stock market trading for a living.

With day trading, investors, better known as traders, perform trades consistently throughout the entire day, buying and selling shares as fast as the market moves. In day trading, all shares are bought and sold by the end of the day, so no position is ever held overnight.

It’s not recommended for beginners or hobbyists since it’s very risky and can take up a lot of your time. You’ll have to be focused on the market daily, actively watching out for any changes. Nevertheless, many novice traders are starting to discover the fun in day trading using online stockbrokers, as the process does feel like calculated gambling to many.

Cost-Averaging

For investors who don’t want to spend as much time checking on their stock investments, the cost-averaging method may be the best strategy.

Simply put, you just have to invest in a specific stock at regular intervals, regardless of the current stock price. Even if its value is at $50, $60, or even $70, you’ll just keep buying the stock over and over. Suppose that you choose to buy 100 shares of a certain stock twice a year for 10 years. As long as the economy doesn’t experience a major downtrend, the fluctuating prices are expected to average themselves out. If all goes well, you’ll be receiving a small amount of profit. The worst thing that could happen is that your money only grows with the economy, resulting in a breakeven.

Not only is it a hassle-free way of investing, it also carries little to no risk since it’s a form of long-term trading. That said, there are still some risks associated with long-term trading, such as when a company fails completely or when the economy suffers from a crisis.

Buy-Hold Trading

Buy-hold trading is an investment strategy that involves a bit more effort than cost-averaging, but when done right, it usually gives the highest profits as well.

Investors who opt for this strategy buy shares at a low price and wait later on to sell shares at a high, sometimes much higher, price. How long you’ll have to wait until the value appreciates, however, depends on the economy and the performance of your chosen stock. Some stocks fluctuate wildly on a regular basis, while others may have a more steady performance in the market.

While buy-hold trading is usually done as a form of long-term trading, many active traders are able to do it as day trading, too. They simply buy large amounts of stock at the beginning of the day and wait for the perfect time to sell the shares at a higher price before the day ends.

Income Generation

Some people only invest in the stock market in order to make sure that their money isn’t sleeping in the bank. For these people, income-generating methods may be a lot more attractive than any other form of trading, since that means they can both protect their money from inflation and even receive ‘income’ from it.

One way to generate income from the stock market without being an active trader is by investing only in stocks that give out cash dividends. This usually means blue-chip stocks or companies that are already big enough that they no longer need stock market investors as much. These companies are typically the ones who pay out cash earnings to their shareholders on a regular basis.

Scalping

Scalping is a form of day trading that involves aiming for several quick gains rather than just one big gain. It can be very profitable but also very risky, as one wrong move could cause a big loss, canceling out all the other small gains.

Although they’re almost identical to regular traders, there are some key differences as well. Unlike day traders that target the most profit, scalpers usually don’t care how big their gains are, as long as they gain something. Since they can get away with just small gains, this also means that they can trade on a quicker and more frequent basis than regular day traders.

For example, a day trader could have made $100 in a single day after waiting for 5 hours to hit the perfect stock price before selling. However, a scalper could have also made $100 in a single day after performing 5 different trades in the same amount of time that it took the regular trader.