Different Styles Of Investing
When investing in stocks even more so than in gambling, you've got to know when to hold them and you've got to know when to sell.Stocks can be a risky business, but there are several ways that people use to help mitigate this risk.One person may invest in strictly large companies with a proven track record.Another may set up a stop loss order to sell when the stock gets to a price that seems like an acceptable loss while at the same time putting in a sell order for an acceptable gain.A third person might not get involved in stocks and may choose other ways to invest or may not invest at all.
The buy and hold stick investor believes that over the course of a long period of time, the stock market will present an acceptable number of gains, and the companies that this investor chooses will be ones that will be around for a long time.These stocks are stable and unexciting, but they offer a better return than the paltry sum a savings account will give the investor.Plus, the investor can put his or her money into the stock and forget about it.That peace of mind is hard to come by with some other types of investing.Buy and Hold has been the acceptable way to invest for a long time, but it doesn't offer the excitement or the return that other strategies may offer.It also doesn't offer the risk associated with those other strategies.
Day traders like to get in quick make a few bucks and get out.They believe that the more shares of stock they turn around, the more money they can make.Every one of them has a different threshold for what is acceptable, but it is the trading on volume that lets them shine in the money making department.They may buy a hundred shares of stock that they expect to go up by a dollar, and sell when it gets there.They will also set up an automatic order that allows them to sell the stock if it drops a dollar below the price at which it was purchased.This is a way to mitigate their risk and to take the emotion out of the purchase.It may have been a good deal and they were sure that it was going up, but they aren't going to worry about it if it doesn't work out.
Those who are not in the stock market may not have the money, may not have the risk tolerance or may just not have the knowledge about investing to make it worth their while.Someone who doesn't have money cannot invest in the stock market wisely.The person may be able to get a loan to put into the market, but that is a terrible bet to take or make.
Risk tolerance can come from several places.Some people naturally have a high risk tolerance.They take risks, and it doesn't bother them.Others are highly risk averse.They do not like taking chances, and most likely after the last stock market fall, they left the market if they were ever in it for some strange reason to begin with.
It takes knowledge to be able to invest wisely and to understand what is going on with the market.Symbols aren't readily discernible by the average person as to what letters represent which companies.Other words that are used in the financial world may turn these people off especially if they have no way of learning the jargon that others use..