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Make Money Trading Stocks and Shares

Aug 17, 2007
You make money by day trading online. So, bullish call and bearish put spreads are two of the very basic option trading strategies. However, it is not guaranteed a 100 % win from the stock market. You still need to learn to predict the stock price direction accurately using technical, fundamental and news analysis.

Your choice of what method to enter and exit stocks plays a critical part in your stock market success. Numerous academic studies have shown that more than 90% of mutual funds failed to beat market over the long run and that more than 90% of individual investors lost money in the stock market. Too many people and too many Wall Street experts or mutual fund managers are buying and selling stocks like madmen, with no sound strategy or any hope of long term success. Ironically, they're the ones who create opportunities for prudent, long term oriented investors.

Are you ready to follow the wealth cycle so that you're earning more when you're ready to retire? Or, do you want to depend on social security and the ever-volatile stock market for your future well-being. You can choose a wealth cycle today. All it takes is the first step.

But be very aware. The NASDAQ or SP&500 averaged about -6% per year for 5 years between 1999 and 2003. Many individual investors who made killing in the internet bubble period got wiped out during those 5 years. Many who trusted Wall Street experts by investing their life savings into mutual funds had rude awakenings after the huge losses and scandals in many of the famous fund names.

I remember reading some years ago that 97 percent of all gamblers lose over time. If you gamble on the stock market then the odds are well stacked against you. However, if you invest in the stock market then you have the potential to do very well.

Also be wary of mechanical trading systems, the thought of having mechanical trading systems you can simply use to generate automatic profits, is obviously very attractive to many traders. Most traders however, end up disappointed with mechanical trading systems, as they never seem to live up to the sales hype, and the performance figures used to sell the system never seem to be repeated in real life.

Another problem is curve fitting or optimization of mechanical trading systems. These systems yield extraordinary performance in back testing because of the tweaking of the system rules to make them fit the data. A trader once likened this to shooting holes in a barn door, and then drawing circles around every hole to make each shot a bulls-eye!

Not all mechanical trading systems are doomed to failure, but if you want to get one that works, be realistic and do your homework first. As mechanical trading systems need historical data inputted into them in order to calculate what might happen in the future. Of course what has happened in the past is not always an accurate predictor of how any kind of stock will behave in the future. If this was true then we would all be rich!
About the Author
Allen Jesson writes for several sites, making sense of internet marketing strategy and shows you how to make money online with a home based net marketing business.
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