How to Make Money in Stocks: 10 Tactics That Actually Work

How to Make Money in Stocks: 10 Tactics That Actually Work

Given that half of the country is invested in the stock market, there are good reasons why people get emotional when the market drops. They could be losing out on retirement money, a college fund, or an investment they feel connected to.

If you want to know how to make money in stocks, you need to know which tactics work.

Here are four tips to help you make more money in stocks this year.

  1. No Feelings Allowed

One of the basic facts of investing in stocks is that you’re going to have your heart broken. That’s why you can’t come through the door with any emotions at all.

Your success has nothing to do with your intelligence or your emotions, instead, it’s all in how well you can handle a loss and manage your emotions if you do well.

People get carried away all the time when they’re investing in stocks. Most people know how important it is to avoid becoming emotional, but that doesn’t mean they don’t still fall victim to those problems. It’s important for you to find ways to express your anger and frustration without getting in the way of your investments.

You also need to know how to express your happiness when things are going well. When you start hitting a good streak and building wealth, you might be tempted to make some irrational decisions. Rather than saving that wealth, you might be tempted to start taking risks with it and putting it into investments that aren’t ideal.

Trading due to your emotions is one of the best ways to end up hurting your own portfolio.

If you want to protect your investments, you need to avoid those emotional decisions around your money. You might need to take a few hits on your climb up and you might have to back out of a climbing stock if there’s clear evidence it’s going to tank.

  1. Invest In Companies Over What’s Hot

While you might be enticed by the hot new stock that’s just been released via an IPO, you need to think beyond the letters and numbers on the page. Every one of these listed stock quotes is actually a functional business that you need to learn about and pay attention to. If you’re looking to pick a winner, you need to think about what that business does and how they do it.

You should be thinking about how much it costs for them to procure their raw materials. You need to think about whether or not there are social or political changes coming that will make production more difficult. There could be any number of hurdles that the company is going to face that, if you’re not prepared for those changes, is going to impact your investment.

When you buy a stock, you’re now a part owner of that business. That means that you’re now invested in the decisions they make and why they do what they do.

Every one of these businesses that you invest in will require at least some cursory investigation. If they’ve had cybersecurity issues or problems with their executives, you should be wary about investing with them.

Know what matters and you’ll be able to calculate the long term prospects of working with them and how it’ll improve your own portfolio.

Invest with a goal and you’ll make much better decisions when it comes to your money.

  1. Plan Ahead

While it might seem challenging to predict the future, there are a few ways to figure out what could happen. So long as you’re not making hard decisions in the heat of the moment or when tensions are running high, you won’t have to buy low and sell high.

Make a journal of your decisions as you start investing. It might seem odd, but if you write down where the stock was when you bought it, why you bought it, and how you were feeling that day, you get some insight. If you know what was attractive about the stock, you’ll be able to fairly assess your own investing patterns.

Write down what you find attractive about the company and list some goals for your investment. Think about how this company fits into your overall goals and what you’re hoping to get out of your investing.

There should be milestones that you’re trying to hit, so make sure you’re clear on what they are and what it takes to get there.

Write a few notes on what it would take for you to sell the stock. While every investment is going to be a little bit different, there are some basics that may apply to each one of your investments. Based on what you were looking for at the time, you can know how well that overall strategy has helped you and your portfolio.

  1. Watch Your Own Trading Overactivity

While you might want to check in on your stocks every so often, if you took the time to make good decisions, you shouldn’t need to check in on them too often. Once per quarter is usually enough for most stocks. If need be, you can see what’s going on day to day online.

If you watch the scoreboard, you’re going to be tempted to make quick decisions at the last minute. Even when you should be sitting on the sidelines, you’ll be tempted to jump into the fray and start trading.

Rather than taking action when you should be resting, take that energy and figure out what triggered the change. If your stocks were hit by something else in the market, start investigating. When you know the underlying reasons for changes, you won’t be tempted to overreact.

Use a stock market analysis tool if you need to watch things more regularly.

Learning How To Make Money In Stocks Takes Discipline

Figuring out how to make money in stocks takes time and practice. If you take the time to learn how to build up that discipline, you’ll have a lucrative future making money in the stock market.

After you’ve made your money, check out our guide for how to set yourself up for relaxing and rewarding travel abroad.