BEGINNER TRADING STRATEGIES
Beginner trading strategies use simple signals to watch for, or they use a step by step approach to selecting stocks or ETF’s to invest in. It’s often best to start out with the basics before employing more advanced techniques and chart patterns.
In this article, I’ve gathered some of the easiest to follow trading strategies for beginners. Let’s dive in and begin your journey of amassing a huge fortune from the stock market.
There are basically two approaches beginner trading strategies use, buy and hold, or active trading (buy low, sell high, and repeat). I’ll go over each one individually. I recommend starting with a “Buy and Hold” approach as you get familiar with making trades and doing research. Slowly ease into timing for bigger profits.
BUY AND HOLD
Buy and hold is the simplest and easiest (but can be boring and possibly not as profitable) so I’ll discuss it first. This is taken from a real life example.
Back in 2013 I opened a Roth IRA for my daughter. I deposited $3,000 into it and invested the money into a Health and Science mutual fund. Since this is a buy and hold approach and being held for 40 years, I wanted to invest in something that people will always need. People will always need the healthcare industry. Using a mutual fund instead of buying health stocks protects you from any company that may go bankrupt or not do well. The mutual fund has you in many companies. A nice diversification.
By 2023 this investment was now worth $8,000. If it continues the same growth rate (10.4% annually), after 40 years my daughter will have $156,000 in her retirement account. All from a single $3,000 investment. $3,000 a year is equal to saving $250 a month. Get rid of that car lease and you have the $250 needed to be a millionaire.
Now imagine if every year, during the 40 year time frame, you add another $3,000 to your portfolio. If you start this beginner trading strategy at 20 years old. When you are 65, you should have close to $1.6 million to retire on.
The rate of return my daughter received on her ROTH IRA for those 10 years comes out to 10.4% annual gain. Assuming that happens the rest of her life, that $1.6 million at retirement will provide $160,000 a year income to retire and live on. That is a lot more than Social Security pays. I’m willing to bet, you and your employer pay a lot more into your Social Security account than $250 a month. This is why Social Security is a scam and should be replaced with an investment program like one of the beginner trading strategies I’ve outlined here.
Another take on the above investing strategy is to use stock symbol SPY instead of a mutual fund. SPY is designed to return the same as the S&P 500 index. Since SPY has historically returned 12% (with dividends reinvested), you should be able to do a little better than that mutual fund.
TIMING YOUR TRADES
There are some beginner trading strategies that attempt to buy low and sell high. They come with a set of rules as to when the stock is at a low and at a high so you’ll know when to buy and sell. They call this ‘mechanical investing‘. These can be a bit more time consuming (as you’ll need to hunt for your potential winners) and you’ll need to be able to follow instructions. Not to worry. I’ve put together a collection of mechanical trading strategies for beginners that are easy to follow.
Sell In May And Go Away
This strategy has you invested in the stock market (using the above Buy And Hold strategy) only during the months of November through April. The rest of the year you have your funds in something else. Click to get all the details on Sell In May And Go Away
Buy High And Sell Higher
This strategy gives you a step by step approach to locating stocks that are breaking past resistance and ready for big gains. Click to get all the details on Buy High And Sell Higher
STOCK PICKING SERVICES
There are also companies out there that will do the tedious research of finding investing opportunities for you. They usually charge a monthly or annual fee. You get sent a trade alert of what to buy and when to buy and when to sell. All you need do is place the trades.
Here at Stocklocater.com we offer two such services. Our Index Trading System times the ups and downs in the S&P and uses index ETF’s to profit off the moves. We send a trade alert to you each time we sense the market is about to switch directions.
Our ETF TIMER service times the ups and downs of several popular ETF’s. With this one, you need to login to the Member’s Area. There you will find the buy and sell prices for each of the eight ETF’s being timed.
There are many services out there for beginners to choose from. Not all of them are so reputable. To help you weed out the crooks, we put together this article that contains seven signs you should look for when searching for a reputable trading system.
That concludes this post on beginner trading strategies. We hope it gave you some simple ways to make nice profits in the stock market. We’ve also put together many other free trading strategies that you can find by clicking here.
