Everybody always asks me what is a stock? What’s the stock market? I like to think of stocks as pie. When you buy a stock, you are investing in a slice of a company. One company represents one pie, and let’s say you buy 1,000 shares, and the company has a million shares, you’re taking a very small slice of that pie. You believe in that company. You believe in that pie. But, you have to think about how long you want to hold on to your slice of the pie.
If you buy a stock, there’s long-term investing where you think the company is going to grow and succeed over several months, over several years, over several decades. Long-term investing is the most popular strategy in the stock market. You buy a small slice of a company, and you hold it, with the hope that it’s going to get bigger and be better over time. I don’t think that is good strategy. For me, pies get stale; I like it when it’s fresh-baked. So, I want to hold onto my slice for a very short amount of time, and then I eat it.
So usually holding onto a stock for a few minutes, a few hours, a few days, a few weeks max. Because pies get stale, companies get stale, and in this world, in this economy, everything is changing so fast you don’t know what technology is going to be popular in five or 10 years.
When you see a stock, trade it as opposed to invest in it long-term. You want to use that slice of pie, and ride it as much as you can. For me, in the stock market, and for my top millionaire students, we invest in these stocks, we trade these stocks very quickly because we think that it’s a good company, and maybe they just had good news.
Companies release news all the time, whether they report earnings or have some licensing deal for new technology to a bigger company, or they acquire another company.
There’s all sorts of news that a company can release that will boost a stock. I like buying these stocks and trading these stocks when there’s news because I’m only using the stock for a short period. Based on the news from the company I want to trade their stock to make money.
Average gains per trade can rage from cents to thousands. Typically short term gains are ideal. vs holding stocks for years. I’m not thinking that this stock is going to be the next Microsoft. This is a mistake that a lot of people make. They get married to their stocks. You want to trade it, and use it to grow my account.
Stocks go up and down, and I just want to trade them when they fit predictable patterns. When they fit those predictable patterns, I want to ride it, and I want to take the meat of the move.
Make a goal that is right for you- example $1,000 or $2,000 per trade. Once you reach that goal, that’s it. The stock market is beneficial for creating wealth, The stock market, for me, is kind of like researched gambling. It’s very, very simple. I’m going to use the stock to grow my account, or if I’m wrong, I will take a small loss.
That’s how you can grow your account over time. If you ask me what a stock is, I will tell you that it’s something you can trade to get richer.
A stock is something that you can utilize if you study the past because the patterns repeat, and you can use that stock, you can use that company, you can use the company’s news to try to get a little richer. You have to understand that this is more of an art than a science, and that’s why I’m always saying study the past, study patterns, see what’s worked in the past. Then you can really start to study the stock market in the right way rather than thinking getting rich is just in hot picks or investing for the long term.
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