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Online Trading
– What Type of Investor Are You?
By: Daniel B. Johnson
June 13, 2008 (http://PennyStocksRising.BlogSpot.com) – There
are different types of investors who take control of their own
destiny and trade stocks online. These types can be defined
across many variables including their investing goals and
their investment timeframe. Where you fall within these two
variables will determine which type of investor you are. And
which type of investor you are determine the investing
strategies you use as well as the tools that will help you the
most. Here is one way to define the categories:
Investing Timeframe: Long-Term (1-30 Years) Investing Goal:
Earn returns superior to savings accounts, CD’s Think of this
investor type as the traditional investor. Their goal is to
continually add money to their principal over time and invest
it a low-risk way. This is the strategy someone would use to
build up their retirement account. Their investment choices
would be made up of blue-chip stocks, other NYSE stocks and
mutual funds. If they make 15% per year, they are happy
because over a period of years, this rather small profit will
build on itself and create a multiple of the initial
principal.
Investing Timeframe: Intermediate-Term (Days to Weeks) Investing Goal:
Earn a meaningful profit to supplement current income streams Think of this
investor type as the part-time trader who trades stocks as a way to generate a
second income stream. With all the online tools available, an average person can
work with a very small initial fund (let’s use $500 as an example) and conduct
their own research and place their own trades with the hope of doubling that
over weeks or months. If you can do it once, you can do it again and pretty soon
you have made a significant gain. This investor will trade in penny stocks or
other small cap issues and options because they have the potential for large
percentage gains in a short period of time.
Investing Timeframe: Short-Term (Minutes to Hours) Investing Goal: Earn a
Consistent Profit to Serve as a Primary Income Source This investor type is the
day-trader. Their goal is to trade full-time and generate enough income to pay
the bills, replacing their regular job. This is very risky for lots of different
reasons and is not for the casual investor.
The folks who can make it here are pros and very sophisticated in their ability
to spot trends, act on them quickly and get out fast. They will trade all
variations of stocks as well as more advanced vehicles. If you are an
Intermediate-term trader, there are many resources available on the Internet
that can give you a fast and easy way to get good stock information. Finding the
right sources will save you lots of time and, more importantly, help you
generate significant profits. So just what is “significant profits”? That is up
to you and your investing style and depends on how much money you have to
invest, how much time you will spend finding good stocks and how much time you
will devote to placing trades and tracking their progress.
Daniel B. Johnson is vice-president of a wireless communications
company based in Dallas. You can learn more about
Online Trading
for Beginners and penny stock investing by visiting his blog at
http://pennystocksrising.blogspot.com
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