Our favorite way of making money online. We have succesfully traded stocks, options, ETFs and even cryptocurrencies. There are some misunderstandings surrounding this way of making money and thus we are here to help you out a bit.
There are several strategies to consistently make a profit with your trading, it should however be noted that if you're not able or willing to take a loss then trading might not be for you. If you can't stand the heat, better stay out of the kitchen!
The most sound 'sound' trading advice is simultaneously probably the most boring one: go for long-term holding of a diversified portfolio. This has proven to be the most consistent and safe way to make money in the stock market and on average beats stock picking or hedgefund performance. But at the same time, unless you start with a solid amount of money to invest this will not make you rich and certainly not overnight. I would also not call this trading but investing. If anything it for sure beats trading if you don't know what you are doing.
Stock or sector picking
If you are convinced you have some knowledge that the broader market does not fully take into account, you might consider setting up a trade to profit from this. For example if you notice among peers in you age group that a certain company is becoming increasingly popular, you might want to take a look at their valuation. Notice however that a good product or even a good company guarantees the stock is a good one to hold. Sometimes the financial part of the picture does not make sense and makes the stock less attractive. On the other hand some companies with bad financials still outperform in the market because there is a huge expectations placed on the performance. A lot of Silicon Valley companies that went public did not present profit for years while their stock was going up. I wrote a piece about how to make informed trades.
This type of trading is mainly reserved for institutional traders and high tech trading firms, but now and then a opportunity presents itself that can be traded upon by the average joe or 'mom-and-dad' traders like us. In general it comes down to spotting a mispricing that can profitably be traded upon. This could for example be a product that is traded upon multiple exchanges but with different prices. If at one exchange the bid (the price at which you can sell) exceeds the ask on another exchange, you can profitably sell it on the first, buy it on the second, end up with a 'flat position' and pocket the difference. Note that to make this calculation you should consider any trading fees incurred and consider the risk of execution. Examples of these trading opportunities are stocks that are trading in Germany and the Netherlands at the same time, or more recently a wide range of cryptocurrencies that were trading on several exchanges, sometimes with abritrage opportunities of more 10%.
This is a highly popular method of trading. And although we ourselves don't follow any technical analysis. There is a high number of traders reporting good results with different methods.
Volatility is a measure of the pricemovement of a product (could be a stock, or an index for example). A hihg volatility means the prices changes a lot, while a low volatility means the price is quite stable. To trade volatility -or more accurately implied or expected volatility- you can trade instruments like the VIX ETF's or to get more specific exposure you can trade options.
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