Do not trade stocks at random, but try to follow a strategy. If you have a plan, you have something to follow that signals buying, selling, or sitting still in the boat. Of course, you should edit or change your strategy over time if you notice that it does not work.
Below, we list five common strategies for beginners in stocks. Of course, there are more strategies simultaneously as many experienced stock traders mix different approaches. But these are excellent bases to start.
Strategy 1: Invest in Companies You Believe in
It may sound simple, but it is not a completely stupid strategy: buying shares in companies you believe in and know about. Are you interested in, e.g., cars and the automotive industry – why not buy shares in that sector? Ask yourself a few questions, in this case for companies in the automotive industry:
- How do I think the automotive industry will develop soon?
- Is the company prepared for changes in the automotive industry?
- What are the company’s strategy, goals, and results?
- Are the company’s services or goods popular?
An important reason this is a good strategy is that you will be more easily interested in news in something you are interested in. It will be more accessible but also more fun to keep up with.
Strategy 2: Copy a Pro
Pros that you can copy. Another common strategy is trading the stocks simultaneously and at the same price as a professional. As a beginner, why should you analyze and study stocks when some are already professionals?
By making the same buy and sell at the same time, you achieve, in theory, the same results as the pros. Several platforms, such as eToro, let you automatically copy a professional for a low platform fee. Buy and sell are done automatically and simultaneously as you follow the professional set.
Strategy 3: Buy Shares with a High Dividend
Use a strategy to buy shares in companies with a high dividend, preferably in companies with a history of raising their dividends to shareholders yearly.
It is easy to check before buying shares in a company. Go to the company’s website to know how often and how much the dividend is usually.
Compare with other companies to get an idea of whether the company has a high and frequent share dividend compared to similar companies.
Strategy 4: Own Shares in Investment Companies
Investment companies have a history of doing well on the Stockholm Stock Exchange. Therefore, it is an excellent strategy to buy shares in these companies. An investment company’s business concept is to own shares in other companies. It works much like a fund but with ownership in a slightly smaller number of companies.
Investing in investment companies is an excellent way to spread your risks. Perfect for you who have just started stock trading. Some examples (but there are many more) of investment companies on the Stockholm Stock Exchange:
- Investor – holds shares in companies in telecom, electronics, and industry
- Industries – owns the most prominent Swedish companies within, among others. Finance, telecom, and industry
- Ratos – has shares in medium-sized unlisted companies in the Nordic region
Strategy 5: Invest in Small Companies
Another good strategy for beginners is to invest in smaller companies. Why? Well, because small companies usually grow faster than larger companies, which can lead to the share rising in value more quickly.
Many experts do not analyze smaller companies either, which may mean you can find undervalued companies here.
Go too slowly than the opposite. When you start trading stocks for beginners, avoiding big mistakes that can cost money while the motivation may run out is more important.
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