Stock Trading Strategies

Employing certain stock trading strategies helps investors safeguard assets and prevent losses during a volatile market. When an adverse economic climate threatens to capsize national and global infrastructures, veteran traders know how to maneuver through turbulent waters of monetary woes to continue realizing returns. Novice investors would be wise to carefully study market makers to assess how they react to stock fluctuations in order to stay afloat. Devising keen investment strategies begins with knowing which industries are likely to remain stable in spite of a fluctuating economy. Such industries represent products, goods, and services which remain in constant demand regardless of a failing housing market, bank mergers, or job layoffs. And in uncertain economic times, our confidence must be in God: "Trust in the Lord with all thine heart; and lean not unto thine own understanding. In all thy ways acknowledge him, and he shall direct thy paths" (Proverbs 3:5-6).

In spite of the economy, industries connected with food production and distribution or usage of electrical power, water, or oil will continue to remain relatively stable. Net profits may fluctuate only slightly due to a steady demand. Part of market maker's stock trading strategies may include buying and selling shares in companies with greater stability and avoiding those which are cyclical and rise and fall with the economy, such as automobile manufacturers and construction. It stands to reason that in a bear market, consumers and lenders tighten the purse strings. Buying an expensive automobile or a new home is out of reach for the average consumer who is just concerned with making ends meet. The housing market crisis left most mortgage banks and lending institutions reluctant to lend money to anyone but those with impeccable credit scores. Fewer home and auto loans translates into negative profits and lower yields for investors.

Savvy stock trading strategies would include buying and selling securities in non-cyclical industries and either unloading or holding onto stock from lesser performing companies, at least until systems stabilize. Companies related to the construction or housing industries, such as lumber mills, steel or masonry would be unwise investments. In an economic downturn, retail goods will also suffer significant lows when consumer spending is tight and families cut back on luxury items, such as electronics, recreation, or media expenses. However, investing in commodities, such as wheat, oil, chemicals, pharmaceuticals, or precious metals would be expected to see steady gains in spite of economic woes.

While some seasoned investors may suggest only taking a risk on well-known companies with an historic performance of stable gains, other traders may utilize stock trading strategies by buying into green industries and new corporations with little or no track record of earnings. Some "new kids on the block" are undervalued and lack sufficient performance records to be rated by Standard and Poor's or NASDAQ. However, day traders and speculators may take a chance on putting money into newly formed corporations which offer high yield returns. Undervalued stocks may prove to be profitable, especially in green industries, which have gleaned the interest of environmentalists and energy-conscious corporations worldwide. Socially-responsible investing in businesses which are independent of the economy, yet dedicated to improving the quality of life for global citizens has increased significantly over the last decade. Investments in socially responsible mutual funds also offer high returns and carry fewer risks.

To circumvent volatile markets, smart investors also employ stock trading strategies and technical analyses to diversify portfolios to safeguard a portion of assets. By investing in several types of securities, stocks, and bonds, savvy market makers can ride out any economic storm. Good portfolio diversification might include liquid assets, such as high-yield money market accounts, federally-backed Treasury bills, short-term certificates of deposit, or municipal bonds. Liquid assets can be easily converted into cash to tide investors over for six months to a year in the event of job layoffs due to plant closures or corporate restructuring. Stock trading strategies also include buying long-term securities that traders can afford to hold onto until interest rates peak. Long-term shares in reputable corporations could yield considerable returns if traders are patient enough to wait until turbulent markets subside.

Other stock trading strategies include investing small sums of money into seven to ten undervalued stocks and waiting to see how those stocks perform. At the end of a certain term, investors can assess which stocks remain viable and make greater investments in those which perform well. The advantage to investing small sums in several different corporations is that there is little risk involved. Monies lost on slow- or low-performing companies will not be substantial; and those stocks which realized a return are proven to be worthwhile investments for the future. Instead of putting all the proverbial eggs into one basket, smart traders wisely disperse assets in hopes of gleaning greater returns from one or more stocks.

Finally, in a volatile market, it is best for the seasoned trader and the novice investor to consult a professional broker before risking losing all or part of hard earned assets. When cash is scarce, the economy waning, and stocks fluctuating wildly from hour to hour and day to day, by employing tried and true stock trading strategies, investors don't have to be afraid of venturing out into uncharted waters to buy undervalued stocks with little performance histories. The forecast looks promising for new and emerging industries, especially those which offer opportunities for socially responsible investing. Building a diverse portfolio of long- and short-term stocks, bonds, and securities could be a formidable hedge against present and future threats of domestic and foreign economic instability.