Stock Market Trading Strategies

There are several trading strategies used by investors in buying and selling in the stock market. These strategies are used by investors to check out the stocks to buy and the time to sell them.

These strategies count up to more than a hundred ways, all tried and tested, all effective, and have been so for many years. Experts advise beginners to investigate some more of these basic trading strategies.


Hedging is a way of protecting an investment through the reduction of the risks involved in holding a particular stock. One way is buying a put option.

This allows the selling of the stock at a particular price within a certain time period. In turn, this offsets the risk of a decrease in the stock prices. (There will be a value increase of the put option as soon as the stock price falls.)

Selling financial futures like the S&P 500 is another way of hedging against market declines. However, the most expensive hedging strategy is to buy put options against individual stocks.

Investors with big portfolios is better off if they buy a put option on the stock market itself for the reason that it protects them from general market declines.

Dogs of the Dow

This strategy (popular in the 90s) entail the buying of the best-value stocks in the Dow Industrial Average. These are the ten stocks with the lowest P/E ratios but with the highest dividend yields.

This tactic hinges on the idea that these ten lowest companies have the most potential for growth. The Dow Index have their listed companies as those which have a reliable investment performance.

Pigs of the Dow

This is a 180-degree variation of the Dogs of the Dow strategy. In Pigs of the Dow, five of the worst-performing stocks on the Dow are selected, based on their price decline percentage from previous years.

The twist lies in the assumption that these Pigs of the Dow, the worst-performing five stocks, are going to rebound more than the others will.

Buying on margin

Buying on margin is buying stocks using money from a broker. Because of more stocks received despite the low investment, the investor is given more by margin buying rather than by full payments.

In the event the stock loses value, the losses in margin buying is correspondingly bigger. In order to limit these, investors have stop-loss orders when buying on margin. This is usually about 10% of the total account value.

Dollar cost averaging

This is investing fixed dollar amounts on a regular basis. (Example: monthly buys of shares from a mutual fund.)

A price drop will cause the investors to receive more shares for their money. Conversely, a raise in the price will cause fewer shares bought.

Value averaging

Value averaging is the alternative to dollar cost averaging. This involves a decision to have investments set to a regular value.

If the price of the fund increases, the investors will put in higher dollar amounts to match the increase. If the fund price decreases, they will spend less money. Their investment will average out to the actual cost of the fund.

To date, value averaging performs better than dollar cost averaging strategy most of the time. When used in tandem with the other stock market strategies, value averaging can actually help in securing investment fund growth.

Other Stock Market Trading and Your Life Articles

Stock Market Indexes
Benefits Of Virtual Stock Market Trading
Investing on Stock Market Safe and Secure Venture
The Bull And Bear In The Stock Market
How To Get Started In The Stock Market
Trends And Timing In The Stock Market
Stock Market Trading Strategies
Looking at the Stock Market and Other Investments to Plan for the Future
Simple Peek at the Two Methods of Trading Used in the Stock Market
Choosing Your Stock Market Broker
Pricing In The Stock Market
Stock Market Trading Benefits & Advantages
Stock Options In The Stock Market
Stock Market For Beginners
Name-Calling At The Stock Market
Successful Venture In The Stock Market
The Stock Market A Quick Run-Through
Stock Market Trading And Exchanges
The Pitfalls Of Stock Market
Types of Stock Market Trading
Stock Market Terms
Investing In The Stock Market
Reaping Rewards From The Stock Market
Surviving The Stock Market
Animals At The Stock Market

Stock Market Trading and Your Emotions Videos

Site Index Page * Home Page * Privacy Policy * Conditions * Disclaimer * Contact

Disclosure: Advertisements are placed on this website to offset the cost of maintenance and to keep this site free for everyone to use. Owners of this website will receive compensation for products and services purchased through featured advertisements.
All claims of actual user results should be considered as a-typical.

© 2011 Copyrighted by OkiDoki - All Rights Worldwide Reserved!
Site and articles redirected and transformed by Hans Peter M. Mul