Different Ways to Trade or Invest in the Stock Market
★ SUMMARY ★
in this week’s lesson what I’d like to do is share with you the different ways or the methods that you can actually trade. I’m not going to go into every little concept or detail of how to execute these and how to be profitable in them.
I just want to show you the different varieties that you can actually put on for your trades or investments.
Trading based on Direction
The first way that you can trade is trade based on direction, when you’re trading based on direction there’s two directions that you can trade. You can trade stocks to the up side or the you can trade them to the down side.
If you trade stocks to the upside, you’re looking for a long or a bullish position, the reason they call it bullish is because bulls attack to the up side or long is you’re going to the up side and if you’re trading to the down side it’s a bearish position or typically a short position.
Because what you need to do is if you’re going to the long side maybe people understand the long direction because you buy a stock lower and you sell it at a higher price.
However, not everybody understands a bearish position or a short position, and the way that this works is you sell something at a higher price, let’s say 50 dollars per share and then you buy back at a lower price of let’s say 20 dollars per share.
So you borrowed these shares from a friend or your broker in this case and then you buy them back from market price, allowing you to make money on the difference of $30 per share.
The first way to trade is based on direction and you can trade it either to the long or bullish side or to the down side or the bearish side which is the short position.
Trading based on time
The second way that you can do trade is trade based on time and trading based on time allows you to define how big of an outlook you have and trading based on time, you can have a day trader or you have a swing trader.
Now you also have a long term investor there as well but these are the main two that in the trading community people define them as.
In the day trading world you basically buy and sell a stock within 24 hours, it’s within a day, technically it’s 6 and a half hours because a trading day lasts 6 and a half hours.
A swing trader can hold a stock for multiple days, it could be 1 to 14 days, it could even be multiple months, when you’re holding a stock for multiple months.
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