There are essentially two kinds of people who invest in the stock market. Those who invest money when the prices are going up, and those who put in their money when the prices are falling. What should you be doing? What is the better approach? Let us investigate.

At the outset let us make it very clear that both these kinds of people, as mentioned above, can make money through stock trading. Yes, there are definitely different strategies that can work successfully in the market. And so, what strategy you will want to put in place depends completely on you and what your targets are. It also depends often on the mindset of a particular investor.

Stock Trading – Investing In The Stocks That Are Rising

Most investors, particularly small or retail investors and those who are beginners follow this strategy. The fact is, it is quite easy to find out which stocks are climbing rapidly and since the opportunity to make money is glaring enough, many of them do not think deeply before putting their money in. And if the prices of these stocks keep rising, they can sell them off later and the balance is the profit margin.

There are two kinds of investors here. Those who invest for the short term, and those who invest for the mid to long term. Short term investors buy at a price and then sell it off once the stock price has climbed somewhat – say about 20% or 30%. Mid to long term investors want to hold the stock for some time – perhaps for 2 to 3 years and in this time, if the stock is fundamentally strong, then the investor sure enough makes good money.

Stock Trading – Investing In The Stocks That Are Going Down

Now here’s another strategy that many follow. Rather than picking the gaining ones, they pick the dying ones. And since their prices are going down, the investor can either save money or pick up more number of stocks for the same money. This is based on the belief that the downturn is just a temporary thing and soon enough, price of the stock will begin to climb and once it does, the person can sell of to book profit.

Stock trading is very interesting because the prices are always either going up or going down. So perhaps for long term success, it has to be a bit of both – you need to sometimes buy on the rise and sometimes buy on the fall.

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