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Stock Market Volatility Helps In Making Money Using Stocks

Sep 6, 2008
Anyone who has ever ventured into the stock market would have gotten to know by now that the index can go up and down on any given date. That gyration can actually help you make good returns on the stock market.

For the beginners in the stock market game this movement of the stock market is commonly known as stock market volatility. The reasons for the movement of the index or the individual stocks can be varied. These can be some political factors coming into play or the large macro economic factors. A lot industry specific factor can cause the stock to move up or down.

A lot of stock market traders take advantage of this movement of stocks to make money. The traders who use the day trading method will always be using their software to track which stock is showing what trend and will usually pounce on the stock which is showing upward trend during the day. They will usually sell before the end of the day and make a killing.

Then there are people who believe in the fundamental strength of the stock and will buy the stock at any cost but yes given the volatility they will actually buy more of the good stocks given its long term potential.

As a small investor most people do not have enough money to adopt a particular strategy or make bold moves. That is where some of the bets principles of the stock market can come to your help. So make sure that when you start investing in the market you should focus on only a few stocks.

Also make sure that you adopt a framework to sell particular stocks when you hit a particular amount of target for profit on a particular stock. That will then free up your money for future investments. Also make sure to keep tab on the stock movements as that will help you curb your losses. So the bets way is to have a stop loss on each stock so that you do not lose too much should the stock market volatility goes on too much or the market goes into a total slide.

Of course if you have enough money to play with then your best bet is to invest at every dip in the stock market and keep accumulating good stocks for their long term potential.
Otherwise you can go in for a systematic investment plan for buying stocks as that will help average out your holding cost.
About the Author
The author has a resource for stock market lessons for beginners and suggests a few stock market tips for beginners.
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