As a beginner in trading, you may be wondering what are the best trading strategies for beginners? The answer will be the one that fits your circumstances and your lifestyle. One could easily say that the best strategy for trading can be price action strategy, but this may not be true for everyone. This is because you may be able to trade more hours that others. This is the reason why you need to find a trading strategy that is custom-built for you. However, as a beginner, getting a customer made strategy can be a aunting task. Lucky for you, here are the best stock trading strategies that you can do as a beginner.
- Traditional vs Roth IRA
The first step for beginners is to invest on tax-advantaged accounts like the Roth and traditional individual retirement accounts. You can invest roughly $5,500 – $6,500 dollars annually to either or combination of these individual retirement accounts. Each of them has different tax advantage so be sure to check which kind of IRA is best for you. Aside from the tax benefits, you have the freedom to make better choices of investments in traditional and Roth IRAs unlike the 401 (k) plans.
- Only Invest Money You Will Not Need for At Least 5 Years
The huge setback of traditional and Roth IRAs are the tax consequences and penalties if you decided to take back your investments before you reach the age of senior (60 years old). Although Roth IRAs are forgiving, you will need to wait for five years before you can take back your earnings or your full investments.
- Passive Management Strategies
One of the best stock trading strategies is to take advantage of the passive stock market technique. Ideally, what you want tis to keep costs down while having a balanced portfolio. Most traders depends on strategies such as index funds, exchange-traded funds, and mutual funds. Instead on investing on a single company, they pool different stocks together to balance the unpreventable losses and gains.
Contrary to active strategies trying to outperform the market by buying and selling stocks, these funds lean on passive management strategies which means investing to seek only to even wider gains. In addition, passive stock trading strategies has lower costs and can even become fewer as your investments grow.
- Limit your Portfolio of Stock Trade by 10%
If you trade stocks through buy and sell, you would want to limit these at 10% of even lower on your actual investment portfolio. As mentioned, active stocks that seeks to beat the market normally underperform passive stocks. If you decide to invest all your money to a single or couple company stocks, you’re putting a stop on your progress in the event of regulatory problem, PR disaster, or new competitor. If you desire to trade active stocks, you must chose brokers that offer low trading cost.
For more stock trading strategies for beginners and seasoned traders, visit https://tradingstrategyguides.com/best-trading-strategy/.