How to Make a Stock Market Fortune

By: Emma Drosy
Submitted: 2007-01-17 16:17:34
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"Basic Strategies for success"

Imagine being able to make a fortune every day from the stock markets by a strategy that's unfailing. Sounds good? However, if experts are to be believed there are no short cuts to making a fortune, although you can follow certain time tested principles to ensure that you come out a winner from the stock markets.

First of all, you must realize that there is no single strategy that can be repeated every day to give you guaranteed and consistent results on the stock market. In order to maximize your returns form the stock markets, you need to develop skills to identify and play with hot stocks. Some of the things that you should be looking at are:

  1. You can make a fortune in stock market by investing in the long term. If you want to make a fortune in the long-term look at small cap stocks today that offer the potential. How do you spot them? If you're not the expert, take the advice of one. Look at small cap stocks that offer potential. Review your portfolio frequently and hold on to the stocks as long as they are performing well.
  2. The short-term approach is more risky but can give you greater profits within a short period of time. For this, you will need to closely attune yourself to the market sentiment. Pick on stocks that are currently on a rising trend, and invest in them. Spread your risks.
  3. You should know when to quit. That's part of the secret of success. Set limits for your losses. For example, set yourself a limit of 10% and if your stock falls by more than 10% sell it off. Remember you can always buy it back if it reaches the price at which you sold it, and seems to be rising.
  4. Know when to book profits. You should look for signs of a reversal of the rising trend and sell off at the peak.
  5. Your preference should be towards lower priced stocks, as these will have a better chance of rising faster, and also reduce your risk. However, make sure that the stocks that you choose are showing a rising trend.
  6. Remember that no one can guarantee the trends of prices. You must be prepared to make losses on individual stocks - that's where rule no. 3 comes in. What is important is that on the whole you make money - not that you should make money in each and every stock that you buy.
  7. Take advantage of market variations. You will find that stocks that do well suddenly start losing - only to gain again later. The trick is to know when to invest in these stocks so that you make money. Ultimately, it's all about knowing when to buy and when to sell.
  8. If you want to play it even safer, keep an eye on fundamentals. There are certain prices at which, irrespective of market performance, you are bound to make money in the long run, because the stock has the potential to earn. Invest a reasonable amount on such stocks. Don't hold on to them, you should book profits on them as you would in any other stock, but a good mix of such stocks in your portfolio will ensure that you will minimize your chances of losing any money.

Article source: Expert Articles

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