Stock market is the place to be in, if you are willing to take a risk for potential upward movement of your investment portfolio. Stocks are said to give maximum returns over a period of time. This is especially true if you are willing to wait for a longer period. You can also reduce your acquisition costs by making additional purchases every time the market falls so that you are able to reduce your average cost of investment. There are different strategies and ways for making money from the market. The ultimate objective of all these strategies is to help you maximize your gains and build a good portfolio for you and your family.
Let us have a look at a few of the investment strategies followed by informed investors to make a killing out of the market:
This is by far the most traditional and yet the most effective way of making money in stock markets. Irrespective of the market conditions, there will be certain companies, which have great potential of rise and yet undiscovered by the market. There will be certain stocks, which are not part of momentum and are a great value buy. You need to do a bit of research in identifying such scrips and make an investment. The idea is to identify their potential early, make an investment and remain committed. You are bound to make a killing at an appropriate time. The objective of the strategy is long term growth as most of the purchases are at a relatively lower levels.
The strategy involves identifying scrips which have risen too much and too short as well as scrips which are lagging behind without any reason and which have a great upside potential. Thus you may go short in scrips which you think are not worth the price and are expected to fall. So that when these scrips actually fall, you buy back and make a profit of the difference At the same time, you go long in scrips which have the potential to catch the market fancy. This way you will be making contra positions in certain scrips or sectors and make a profit if the market moves as per your expectations. This strategy is used world over by hedge funds and other high net worth investors who spend time and money on research about companies and sectors to identify the targets for investment.
This is the reverse of herd mentality. Thus when everyone is buying as if there is no tomorrow, you sell as you expect that big correction is round the corner and when market is in doldrums as everyone wants to get out of the market, you go long as markets are expected to stage a smart rally. This way you make your own path irrespective of what people around you are saying and make a profit from the market. The strategy is quite popular amongst informed traders and those who keep a keen eye on the market.