Strategy

  • Strategy – A trading plan for buying and selling stocks with a specific idea of how to earn a profit.
  • Long Term Investment Strategies
    • Buy and hold – Buying stocks with no predetermined holding period.
    • Buy and hold – Buying a stock until something changes.
    • Dollar cost averaging – Investing a set amount of money into stocks, ETFs, or index funds on a regular, systematic basis such as every month or every quarter.
    • Lump sum – To make a single investment or invest at random whenever there is extra money in your pocket.
    • Buy the dip – Buy good stocks for bargain prices.
    • Bottom fishing – Look for stocks whose prices are so low that they appear to have hit bottom and have nowhere to go but up.
    • Averaging down – An investing idea that involves buying additional shares whenever you choose to do so, and almost always when the purchase price is lower than it was last time.
    • Value stocks – Shares of companies that sell at a discount compared with their true worth, or value.
    • Growth stocks – The stocks of companies that consistently grow their earnings year after year.
  • Short Term Trading Strategies
    • Day trading – Open and exit positions within seconds, minutes, or hours, but always within the same day.
    • Swing trading – Buying and selling stock within three to five days.
    • Position trading – Buy a stock and hold the position for weeks or even a few months.
    • Trend trading – Identify the current market or stock trend and follow it.
      • Uptrend, downtrend, and sideways trend.
    • Momentum trading – Buying stocks whose prices have exploded higher on strong volume and hoping that momentum will drive prices even higher.
    • Countertrend – Involve trading in the opposite direction of the trend.
    • CAN SLIM
      • C – Current quarterly earnings per share
      • A – Annual earnings increases
      • N – New products, new management, or new highs
      • S – Supply and demand
      • L – Leader or laggard
      • I – Institutional sponsorship
      • M – Market direction
  • Diversification – Instead of betting your entire portfolio on one ore two stocks, or a single market sector, spread the risk by investing in a variety of securities.
  • Asset Allocation – Decide how much of your money to allocate (or assign) to each investment.
  • Compounding
  • Classification