subject: Hot Stock Market Tip #39: Can I Get Rich Through Online Trading? [print this page] Over the past 10 years, the stock market has changed dramatically. In order to make money in the stock market now, you need to change your strategy and mindset.In the 1980s and 1990s, people made money in the stock market by buying solid, stable companies like IBM, GE and Coca Cola. Investors would buy these company stocks and watch their stock price slowly go higher in the long term. They would hold these stocks for at least 5-10 years and expect to get a return of 7-8% per year. This was the way to make money in the stock market.
However, since the late 1990s, everything changed drastically. Lots of people made money during the technology and dot com boom but then lost it all when the stock market crashed in 2000. Then, the market went lower after the Sept 11 terrorist attacks. Then from 2002-2006, the stock market went into a bull market again due to low interest rates and the housing boom. Then, since 2007, the stock market had experienced one of the worst performances since the Great Depression of the 1930s due to the inflated housing market and financial crisis.
If you were a long term investor and started investing in the stock market in 2000 and looked at your stock market portfolio today, you would notice that you didnt make any money at all or in fact, lost money in the stock market. This shows that long term investing does not work anymore. In todays stock market, you have to an active trader.
Heres an example. If you were an active trader, you may have avoided the major stock market decline from late 2007 to early 2009 and then started to get back in March/April 2009 when it seemed like the world was about to end. Since March 2009, the stock market has been on fire and gone a lot tremendously. In fact, if you look at a lot of stocks, many of them have gone up 50% or more since March 2009. One example is Bank of America which is the largest bank in the US. If you bought Bank of America stock in 2005 and held it to today, you would be down as much as 65%. However, if you waited until early this year to buy the stock, you could be up as much as 600%.
So while many investors are still recovering from their losses, active traders were making huge money in the stock market. In the past, you can expect the stock market to move up or down 5 to 10% per year. Nowadays, you can see these movements in a month or a week and sometimes in a day. Therefore, many investors are becoming active traders in todays stock market due to the volatility and amount of daily movements. As well, due to the poor economy and lack of jobs, people are forced to create their own jobs and have found stock trading as a way to make a living.
In todays stock market, there are two types of Active Traders. One is called a Swing Trader who looks at stock charts to determine when to buy or sell stocks and holds stock for a short period of time (from a few days to a few weeks). The other type of trader is called a Day trader who also trades using stock charts but hold stocks for only a few minutes to a few hours and does not hold any stock position overnight. This type of active trading has helped traders avoid any stock market crash and benefit from the fast movements in the stock market.
This type of active trading is not for everyone but if you have the passion and enjoy the benefits of active trading then this will be a very good career for you.
