How often are you supposed to trade stocks?

Question

I just got started. I've been tracking the market and I noticed that prices go up and down everyday. Do I want to put my money on say for example "YAHOO" and leave it there for short or long period of time? Obviously YAHOO is well stablished and it isn't going to gain huge margins so does that mean that putting my money on YAHOO means I have to leave it in just to get the average 11% annual profit?

I'm using the $100,000 stock simulator and I made 1200 dollars in a couple of days but I haven't been able to get passed that. Am I supposed to sell or is this a cycle in which a few days or weeks have to go buy before it goes up again?

How often am I supposed to trade? Everday or every week on average?

Answer 1

There is no hard and fast rule. Some traders do trade every day, mabe several times a day in the same stock. That does require a $25,000 account to do that.

There are technical market sites that provide technical indicators that predict when a stock is over bought or over sold. Many traders use those. That limits trading to once every couple of weeks or even a month or so. Some stocks such as oil stock for example are real good candidates for that type of trading.

Others, such as myself, are fundamentalists. We will buy and hold a stock for years maybe. The daily and weekly cycles do not mean too much to us other than perhaps providing an opportune buying point. After all why settle for 2 or 3 points when there are 20 or 30 to be reaped, maybe more?

There is also the tax question to consider. Taxes on short term trades are considerably more than long term. Another point to consider is as long as a stock is not sold there are no taxes to pay. If a company is a growing company, why sell at all?

Answer 2

Realistically you hold your stock until you feel that the company is no longer a good investment for you, or that there are better investments out there. You generally are supposed to hold for a long time on companys that you think are good, solid blue-chip stocks. (my philosophy anyway, there are plenty of people richer than me who have done it differently) But for the sake of your simulation where there are no broker fees, you can trade daily and its really no big deal. I personally don't recommend day trading, and I suggest for when you do real money to break it up into different core industrys and invest in good value companys for the long haul. I have had a lot of success with this method and have never owned a stock that has lost me money. If you day trade, you probably wont be able to say that after a week, too much guessing involved.

Answer 3

First of all, you need to understand a little more about the stock market and the taxes you pay on capital gains.

Any stock you sell that you've owned less than a year, you will pay short term capital gains tax on it which is higher than the tax rate you'll pay on long term capital gains. Long term comes in after you've owned the stock for a year.

Whether you sell or not depends on what your goals are. I know people that have owned a particular stock for 50 years.

I would suggest that before you do anything else, you read some good books on investing and the tax ramifications of capital gains. You need to learn a lot more about the market in general and what stocks make good investments.

For me personally, I never sell any stock unless the reason I bought it in the first place changes. If the company is no longer a good financial investment, then I sell. If it continues to be a good investment, then I hold.

You do not pay taxes on capital gains until you sell. You do pay taxes on dividends, however, during the year you receive them.

Answer 4

if there was a set answer to this question, EVERYBODY would be rich.

You have to know how the market works. A lot of people panic when their stock drops and sell too early and lose out when it goes back up again. Still other people hang on to it too long and watch as it keeps plummeting and they lose everything. The stock market is a gamble like the lottery. That's why they say never invest what you can't afford to lose. there is no set time period to sell or buy.

you have to do research, read magazines, learn how to analyze. some stocks are big sellers at different times of the year based on what's going on (the stock of department stores generally go up around Christmas time... guess why). Some people learn to jump on new emerging trends. (If you have bought Apple stock when it first came out about 20 years ago, you'd be a very rich man).

but you have to learn to analyze or find someone who's good at it.

Answer 5

I wish I knew the answer of when to buy and when to sell. It's very, very difficult to time the market. You have to be right twice - buy at the right time and sell at the right time. It is a fool's endeavor. The best way to make money is to become a long term investor - learn how to pick stocks and be patient about when you buy them. Don't buy on big up days, wait for down days. Personally, I like good quality US stocks that pay a decent dividend. Long term investing is good, but don't "buy and hold." These days, a winner can turn into a loser within months - e.g Netflix, Research in Motion, Green Mountain Coffee. Watch your stocks and unload them if they drop more than 8%.

Answer 6

Before you begin to trade, you need to head to your local library or bookstore and get a book on technical analysis. Most of these books are quite similar in nature. Additionally, pick up a copy of Reminiscences of a Stock Operator by Edwin Lefevre. I've never known a successful trader who hasn't read this book.

Answer 7

Warren Buffet almost never trades stocks and he is almost as rich as Bill Gates

Jim Cramer trades stocks faster than a kid with ADD changes songs on an IPOD and he is as rich as Bill Gates cousin.

http://www.thestreet.com/funds/smarter/891820.html

Read the above article, check out the companies that Cramer is touting (the ones that aren't bankrupt) then decide if trading is up your alley.

If you don't know what you are doing or why, than plan on losing all your money.

http://www.cnbc.com/
http://money.cnn.com/

Get yourself educated before you get your self broke.

I might also suggest:
http://www.wealthybarber.com/

This is probably the best book for beginners I have ever read.

Answer 8

I'd say it all depends on what you're investing in. If you're investing in something seasonal like casinos, trade pretty frequently. If it's something like Yahoo, invest and let it grow. It'll take a little time, but you might find a better turn out in the long run.

Answer 9

There are way too many variables to determine this. If you don't know, you need to stick w/ mutual funds & let someone who's done the research/analysis decide this.

Answer 10

if its sim and you are learning, check it once a day maybe

learn about book value and P/E ratios and things

try to maximize it

when its real money maybe check once a month or once a year