Investing in the stock or commodity markets can be challenging because prices can rise or fall suddenly. According to an article published by MarketWatch, market volatility is one of the biggest risks faced by every trader. In fact, most seasoned traders usually pay close attention to the CBOE Volatility Index (VIX). With that in mind, here are four tips for trading stocks:
Go for Long-Term Investments
Although there are many traders who make short-term investments, long-term plays are more sensible. This is because most short-term investments tend to be based on rumors, fears, speculation, and unsubstantiated news. These factors cause the volatility or "fear" index to rise significantly, which translates to increased likelihood of losing money. Over the long term, you are likely to make money because fundamentals such as earnings determine a stock's price.
Identify an Investment Strategy and Stick with It
To succeed as a trader, you have to choose an investment strategy and stick with it. A good example is the Oracle of Omaha, Warren Buffet, who has parlayed his "value investing" strategy into a fortune worth billions of dollars. During the dotcom era, he resisted call...