Schaeffer’s Investment Research experts recently offered swing trading tips for beginners.
The coronavirus pandemic has brought a rise in day trading enthusiasts. Citizens across the country are spending more time at home and many are not working as much as they were pre-pandemic. The experts at Schaeffer’s Investment Research stated that options trading can be a lucrative and fun game. However, it can also be a dangerous one, so they provided several tips to help options trading beginners start on the right track.
“One of the most important things to keep in mind is that options trading isn’t an easy way to make money,” Schaeffer’s Investment Research experts emphasized. “It takes a lot of research and time to make a real profit.”
Schaeffer’s Investment Research experts explained so many people have entered options trading, because they’re seeing their friends post profits on Facebook, Instagram, and other social media platforms. However, those profits can be deceiving and the people making them may be spending a lot more time researching than they suggest. Schaeffer’s Investment Research experts explained that knowledge is power when it comes to options trading, so it’s essential to keep up with stock market events and news.
“Be sure to set yourself a portfolio trading limit before you begin,” Schaeffer’s Investment Research experts added. “Assess the amount of capital you’re willing to risk overall as well as on each individual trade.”
Schaeffer’s Investment Research experts explained it can be easy to pour a lot of capital into options trading. It’s most important to put a specific amount of capital in your account and choose a percentage you’re willing to risk on each trade. Many successful traders only risk about 1 percent of their available capital per trade. Schaeffer’s Investment Research suggest also setting aside any surplus funds you’re willing to trade at a higher risk percentage.
“We always suggest avoiding crazy deals like penny stocks,” Schaeffer’s Investment Research experts added. “You may be looking for a great price, but these stocks rarely produce solid profits.”
Schaeffer’s Investment Research experts explained that most stocks trading for under $5 per share are not listed on major stock exchanges, so the chances of a reliable profit are nearly zero. They suggest steering clear of these types of stocks from the start. However, Schaeffer’s Investment Research did explain that starting small, in terms of the number of stocks you choose in a session, is ideal at first. Focus on one to two stocks per session then move up from there as you gain experience.
“Options trading can thrilling and profitable if done correctly,” Schaeffer’s Investment Research experts said. “Remember to take it slow, do your research, and keep your expectations realistic.”