Buying and holding, building and gathering dividends for reinvestment purposes is always a great idea. But the temptation to trade is certainly there. After all, small gains on the daily or every few days can lead to larger gains cumulatively. You don’t have to be a day trader to make a quick buck or two.
Trade ideas can come from simply amassing more money and having a large portfolio. You can sell your positions that are on an upswing, buying back in when they tick downwards. Keep your positions that are losing money, and average down if you don’t need to cut your losses.
And then there are stock options. If you have enough money in the market, you can be writing covered calls on your positions. You make a premium at the very least, and you can instead trade those options vs allowing them to expire. You would be surprised as to how much money you can make doing that.
If you read up on trading stocks, you’re also going to learn about candlestick charts and L2 data. If you plan to day trade, however, you do need a good software program. Otherwise, you’re going to be playing too much of a guessing game. And you need some practice first, too.
Even though you’re already investing large sums of money, it would be a good idea to first practice virtual day trading. That way you can get the hang of it because it is completely different than regular investing. But again, you can simply swing trade stocks vs digging a hole that deep.
For me, that is how I prefer to approach the market. I’m a buy and hold guy, so the farthest I would typically go is swing trading for profits. And I am an options guy, too. If you’re going to invest large sums of money, you need to know options, bottom line.
Do you already use stock options? You can make some serious money selling puts. Selling naked puts is a lot riskier, but you don’t have to put up as much cash. Puts sold and covered by collateral tie up your cash, but you can still make a significant amount of money off the premium or by trading them. It’s up to you how you want to approach trading, but the quicker you book profits and look for another move, the better.
Another good trade idea is to grab shares of a company before it reporting earnings. You need to be versed enough to know what to expect. And to be truthful, it’s still a guessing game. When it comes to earnings, however, stocks are usually moving more, whether up or down.
And you do know I hope that you can make money in the market, whether stocks are moving up, down or sideways. People even have trading strategies where they buy stocks before their div ex dates and after the dividend is secure, they look to sell them for a profit. There are all kinds of great trading strategies.