Trade Ideas for Stock Investing can help you regularly make money in the stock market. That’s because, without trading ideas your stock investing will stagnate. On the other hand, having an appreciation for trading your stock investments can help you compound your return and reduce volatility. Sounds pretty good, right?
But you might be wondering…
Are trade ideas for your stock investing really necessary? Can’t you just buy and hold your way to the bank? And isn’t short term trading expensive? Well, in this short blog post we’ll explore these questions and look at why having some trade ideas for your stock investing can pay off…
Trade Ideas for Core Stock Investments:
If you’ve been a long term buy-and-hold stock investor then you might not be interested in any trade ideas. You might even think that trading stocks is really expensive and erodes your returns. But when you learn to trade stocks online the commission costs of trading are so low that having trading ideas for your stock investing can really improve your returns, (even if you are only trading around a few core long-term positions).
I have a long term outlook in all of my stock investing. I primarily buy stocks because of their fundamental valuation and growth outlook. And then it usually takes anywhere from 6 months to 3 years for my stock investing thesis to play out – so there is actually very little turnover in my portfolio… BUT… while my main thesis ideas might take a long time to play out, there is usually lots of volatility in the interim that I try to take advantage of by applying trade ideas to my long term stock investing.
Even though I’m a fundamental investor, I realize the value of technical analysis and I appreciate it can make sense to have trading ideas for your core stock investments.
So if you are also a fundamental investor who picks stock ideas based on your investment theses, then I encourage you to also open your mind to the possibility of short term trading ideas. You don’t need to go crazy day trading stocks every day, but if you accept that the market is inefficient in the short term then you can use stock trading techniques to improve your return and reduce your volatility. So how does that look in practice?
Trade Ideas for Value-Based Stock Investing:
Trade ideas for value-based stock investing might sound like an oxymoron at first. But I assure you this approach to trading stock ideas makes lots of sense. Now I’m assuming that if you’re a value investor then you are concerned with the intrinsic value of the business and how it relates to share price… So…
By creating a simple trading plan you can use very basic technical analysis to help you take profits and reduce or add to your stock position when the short term price action gets out of step with the intrinsic value. Often you will see stocks spike up in price by 5-10% in a single day without any news. In these cases I often take a little bit of profit, just to be safe. Then when the stock sells off to a support level without any news (or change to the intrinsic value of the company) I put the money back to work by re-buying the stock lower than where I bought it.
Keep in mind that I’m still long the stock and always maintain a “core position” since it’s unlikely I will time every uptick and downtick perfectly. But even if you are only semi-proficient at this kind of short term trading you can really pad your long-term returns and improve your capital gains. By the way, this is the basic system outlined in the book, The Best Trading System by Chris Beanie.
Swing Trade Ideas for Stock Investing:
If you’re a more active trader then you might consider learning more about swing trade ideas to improve your stock investing. While most swing traders use only technical analysis to make their stock trading decisions, I find you can use fundamental analysis with swing trading quite well. If you have a long list of fundamental stock ideas you like you can use swing trading techniques to really help you actively manage your investments. If you’re unfamiliar with swing trading but curious to learn more about how it can help you make more money from your stock ideas I encourage you to follow ChessnWine.
Just keep in mind…
To some extent your ability to find trade ideas for stock investing will come down to how much time you have to watch the market during the day and how much planning you can do each evening after the stock market closes. To be sure, it takes dedication and practice. But using trade ideas to improve your stock investing can be a very profitable approach to managing your own portfolio.
And By The Way: If you’re interested in learning more techniques to improve your returns and help you make more money in the stock market then sign up below for email-only analysis and investment ideas.