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Investing In The Stock Market Hoping For A Quick Profit

With the Dow Jones breaking record after record, it is very easy to see why the stock market functions as the fast track to financial freedom for many traders. The good news is that you don’t have to be a Wall Street broker or an MBA holder with extensive experience in capital markets to enjoy some of the amazing windfalls Wall Street is capable of producing. You only need to have the right strategy, the right tools, an eye for spotting opportunities, and, most importantly, the emotional make up to know when to dive in and when to let go. Read below to see how you can invest in the stock market for some quick profits.

Defining quick profits

Thanks to the huge amount of stock and options traded in the stock market on a daily basis, it is very possible for even small traders to make quick profits. If you are interested in getting in the market for a quick payday, you have to first define ‘quick profits.’ Your definitions set your expectations, and your expectations determine how you respond to certain events while you’re playing the stock market for quick profits. You have to enter this game with a clear mindset. You can’t be fuzzy-headed or else the wild roller-coaster ride your investments will take might send you to the nuthouse. While many different people would define ‘quick profits’ differently, we could all agree that ‘quick profits’ mean making money from stocks in the shortest time possible. Note that this definition doesn’t define quick profits as involving low risk. The truth is simple: if you want to make lots of money and don’t have much time to make that money, you have to take lots of risk. As the classic Wall Street saying goes, the higher the risk, the higher the return. Quick profits are all about big returns.

The main driver of quick profits: Risk

As mentioned above, if you want quick profits, you have to make risky bets. You simply can’t get the return you’re looking for if you take low-risk bets like government securities. If you want to make quick and substantial profits, you have to take risks. The good news is that there are many different levels of risk you can undertake. Keep reading below to see how you can pick among different risk levels and manage the risks you take with your investment money.

Different stock markets: big boards, over the counter

Most people have heard of the NYSE or NASDAQ. However, these are just the most well-known stock markets. There are other markets which are riskier like the Pink Sheets and OTC:BB markets. These stock markets focus on the risky market for penny stocks. Don’t let the name fool you. If you want to make quick money in a relatively short time, you should investigate penny stocks. They are very risky. Many appreciate quite well but don’t have enough a big enough market of buyers. Sure, your stock has gone up in price, but no one wants to buy the whole lot you’re ready to unload. Also, these smaller stocks are less regulated than equities listed on the big boards. Still, if you want to invest very little and see your investment zoom up in price, penny stocks offer lots of opportunities. They also offer lots of chills and thrills.

Emerging market risk

If you don’t want to play the local Big Board and you don’t want to mess around with penny stocks, you might want to try trading in blue-chip stocks of emerging market economies like Turkey, Brazil, India, and other countries. The great opportunity with emerging markets is that they often rise up when many investors from developed economies would buy up index stocks. By buying non-index or more speculative emerging market stocks, you take on lots of risk. There is an information gap. Often, many of these developing equity markets don’t have transparent rules. Still, the general rise in the broader market can result in huge spikes for lesser-known, but otherwise fundamentally sound, emerging market stocks.

Quick profit strategy: trade on momentum

Want one of these? You can make enough money in the stock market.

If you want to play the Big Boards but you want to take lots of risks so you can snap up some big gains, you can try trading on momentum. You need to pick a stock that has a wide daily range between daily lows and daily highs. Also, the stock has to have a huge daily volume. These two factors ensure that you can get in and out quickly. Track the stock for some time until some news comes out that drives the price lower. Put in a programmed order with your online trading platform to buy the stock once it hits a price that is lower than its current price. Once you’re in, pay attention to its momentum and be ready to click the sell button at a moment’s notice. You’re riding the momentum of the stock. You didn’t buy it to hold on to it forever. Once you reach your target appreciation (measured in percentage points) or there’s some bad news, sell the stock. Alternatively, you can subscribe to a stock charting service and put in a programmed order to sell the stock when it hits a certain resistance level.

Quick profit strategy: use a month to month profit window

While day trading and quick trades make for quick profits, you might have to jump from stock to stock depending on the trends for those particular stocks. Another approach is to stay within a particularly volatile stock but trade it on a month to month window. You buy in at a very low point for the month and you closely watch the stock for a month. You either exit when it spikes up really high during the month or you leave the stock once a month passes This strategy prevents you from hanging on to a stock for too long.

The secret to quick profits: Don’t get emotional and don’t get attached

Regardless of which strategy you choose, the secret to quick profits in the stock market is to never get emotional. Don’t get greedy when everyone is buying. Don’t get too fearful when everyone is dumping. In fact, it pays to be greedy when everyone is afraid and to be fearful when everyone is getting greedy. Finally, you have to make sure you don’t get too attached to your positions. Don’t keep thinking that you only need to hang on to ‘get back’ all the money you’ve lost. Learn to let go and focus on the upside to recoup your investments. Otherwise, you might be waiting for a long time, and your loss might become permanent.

It is possible to make quick profits with the stock market. People do it all the time. Every single day, in fact. The good news is that not all these people work for big banks, investment banks, or hedge funds. Many are regular small investors like you. The key to making quick profits is to have a healthy appetite for risk and having the right strategy.

Has the Stock Market Hit the Bottom?

Just this morning I was driving into the office.  The stop and go traffic was nothing short of normal.  My to-go coffee mug was full and the sun was starting to break above the hills.  That’s when I heard a really interesting comment from the radio announcer.  “Up next, this industry’s doing well in tough economic times.  Stay tuned for more details.”

My ears perked up – they had my attention . . . I wasn’t about to go anywhere.

I just had to wait for the end of a long line of forgettable commercials.  If you’re anything like me, you’re always interested in learning new things.  Especially when it’s something new about business or the markets.

You never know where a great investment idea’s coming from.

That’s why I’m always listening to the financial news network on the radio.  It doesn’t matter if I’m driving up to the corner market, or across the state.  The financial station’s the first one I turn on.  If nothing else, I at least get a good gauge on the current market psychology.

Finally the commercials ended – I couldn’t wait.

Then they went to a quick market update.  You’ve got to be kidding! Finally, the radio host put on his guest.  It was a locksmith.

No offense to the locksmiths of the world, but I was a bit disappointed. What inside knowledge about business or the stock markets am I going to gather from a locksmith?  Then I started listening to the interview and that’s when I realized something…

The locksmith was pretty interesting.

He commented on how business was booming.  No, more people weren’t locking themselves out of the house.  It was the other part of his business that was off the charts.  Selling and installing safes.  Small ones, big ones, it didn’t matter.  They were flying out of his shop faster than he could keep them in stock.  The really interesting part was that his customers were not businesses – but individuals.

Driving his business – mistrust in the banks.

More and more of his customers were concerned about their banks failing.  They knew they were insured, but people felt safer with a bunch of cash at home.  They didn’t want their money tied up for weeks as the FDIC sorted out what money would be made available.

The other issue driving the business was one of crime.

As the economy softened, several customers mentioned being afraid of rising crime in their neighborhoods.  It’s believed that crime and the economy are inversely correlated.  Simply as the economy falls, crime goes up.  A better economy means less crime.  These customers wanted their important possessions to be safely locked away.

It doesn’t seem like much, but I made an important realization during this interview.

Fear’s moved from the traders on “Wall Street” to the everyday person on “Main Street.”

It’s not just the big central bankers concerned about our economy and financial system.  Our neighbors and friends are starting to get concerned.  People who normally don’t follow the markets are starting to follow it.

This is a big indicator.

There’s a famous story about Joe Kennedy exiting the market shortly before the 1929 collapse.  He sold because his shoe shine boy was giving stock tips and knew the latest news on the markets.  He figured if the shoe shine boy was buying stocks, there was nobody left to buy.

I’m putting that theory into practice here . . . only in reverse.

It seems everybody’s afraid of the markets.  Heck, people are afraid of their own banks.  You can’t visit a local Starbucks without listening to a conversation or two about how much money someone’s lost.  All the news is focused on how horrible the markets are, and how much worse it’s going to get.

Everyone’s been selling, and I don’t think there are many people left to sell.

I know it seems odd, but this tells me the worst is almost over.  Don’t be surprised to see the market put in a bottom sometime this quarter and rally toward the end of the year.