Investing in stocks and funds is becoming more and more popular, as the economy improves and more people get back to work. So if you’re looking for a way to make extra cash, why not consider trading? There are a variety of ways you can make money in online trading, depending on your experience. Whether you’re looking to get involved in day trading, trend following, or are simply interested in earning a little bit of extra cash, this article will enlighten you on how to make money in online trading.
Day Trading
Day trading is one of the most popular ways to make money in online trading. You purchase a stock, hold it for a day, and then sell it at a profit, or at least break even. The key to day trading is finding profitable trades and staying committed to them. Some successful day traders say that 80% of their successful trades are a result of good research and the remaining 20% are pure luck. Day trading requires a lot of self-discipline and mental stimulation, so it can be a good source of income for those who are interested in pursuing a second career along these lines. The income generated from day trading is usually modest, but it’s still able to support a comfortable lifestyle. Day trading can also be good for those who want to diversify their investments and try something new (as long as they know what they’re doing).
Long-Term Investing
For those who want to make a long-term investment and enjoy the potential for higher earnings, there are a variety of index funds that track stock market indices like the S&P 500 or the Nasdaq 100 that offer attractive investment opportunities. The advantage of long-term investing is that you can set and forget about your investment, with the expectation that it will generate positive returns over time. This kind of investing provides good opportunities for those who want to make extra cash and aren’t looking to participate in day trading. Keep in mind that long-term investing requires a significant amount of money; otherwise, you’ll likely lose a large part of it purchasing securities on the cheap, as prices tend to drop significantly once a trend is established. One option is to invest in reputable dividend paying stocks where you can earn a passive income stream. Another way to make long-term investing more attractive is to take an active role in selecting under-valued stocks that you believe have the potential for growth. For example, you might buy a few hundred shares of Apple at $400 per share, simply to take a short position on the stock (in other words, bet that the price will decline). In doing so, you earn money when the stock price declines and make money when the price rises. This strategy can be profitable if executed correctly, but it comes with a high level of risk. Finally, you might consider looking into put options, which are essentially a type of insurance policy that gives you the right, but not the obligation, to sell a stock at a certain price for a certain period of time. This kind of strategy gives you the benefit of both a rising and falling stock price, but it also has the potential to generate large losses if the stock price fluctuates widely. When used correctly, put options can be a great way to make extra cash and potentially even make money when buying stocks that are rising in value. For more information on put options, it’s important to consult with a professional financial advisor who can help you determine if this is the right strategy for you, given your personal financial situation and risk profile.
Treating Trading As a Real Job
A lot of people view trading as a hobby or a way to make a little extra money on the side. However, treating trading as a real job (at least in terms of the amount of time you put in) can be very profitable. One good mentor of mine, Josh Sigurdson, actually encourages his students to take trading as seriously as they would any other job. Josh has a real job, a family, and keeps busy with his day trading, yet still manages to find the time to mentor and help others succeed in the field. He makes around $500,000 a year trading commodities, and he’s able to do this because he treats trading as a real job. He doesn’t do this foolishly: he sets aside time every week, makes note of all the important information, and focuses on being consistent and determined, all of which lead to better investing results and more money in his pocket. If you’re curious as to how he does it, he has an entire blog post on what he does and why he does it, where he sets aside time to study, his thought process, and the like. I highly recommend that you read it, as it provides a great overview of the steps involved in successfully day trading.
The key takeaway from this portion of the article is that you don’t necessarily need to have millions of dollars to invest in the stock market in order to make money. There are plenty of opportunities for those who want to make a side income stream, or even a full-time income, from investing in the right stocks and funds. Just make sure that you keep in mind the risks and write down all your trading-specific thoughts and concerns in a trade journal so that you can review your decisions and track your progress objectively. With the right information and the right approach, there is no reason why anyone shouldn’t be able to make money in online trading. Just make sure that you have your own dedicated space to keep all your investment-related documents, as this will make it much easier to keep track of everything. At the very least, you should have a separate, secure space for your trade journals and records, as this will make it far easier to go back and review past performances and determine how you’re doing relative to plan, objective, and budget. Without these things, it’s very hard to have a good grasp of where you stand financially, which can make or break your attempts at self-sufficiency and financial security.