How can I make a lot of money in the stock market without having a lot of money to invest?

Question

penny stocks?

Answer 1

Take it from a retired stockbroker and current investor... say "No" to penny stocks. If you really want to build wealth without much money, you'll need to have TIME work for you. Did you know for that for as little as $250 you can invest in mutual funds? The trick is to then discipline yourself to invest $50 per month until you are able to increase it. If you are in your early twenties, you could retire early and live off this kind of investment... you might be surprised to learn how money compounds over time... you could literally have a million dollars or more by retirement. You can even ask mutual funds to run a projection for you based on a compounded rate to see how much money you could possibly have. Good luck!

Answer 2

There is often a "catch-22" to this suggestion, because while it is usually cheaper, some brokerages have such requirements that you have to put a pretty substantial amount on account before they will let you--trade stock options.

Options allow you to buy (call) or sell (put) blocks (100 shares) of stocks with a single option contract. In trading options, you are looking for current or anticipated value to increase or decrease in the stock. Say a stock is selling for $20. You can sell an option on that stock for someone to buy it from you at $20 (called the striking price). You usually get a premium, say about $1 or 2 per share for options sold at or above the striking price when the market for that stock is moving up, it is called being in the money. If the price of the stock goes up to, say, $25, your option would be worth something like $5 a share. If you sold another option then for another block of stock, you would make $500 at that price. Now think from the other side of the trade. Instead of having the stock and making a little extra (or simply selling the option without having the stock, something called "naked" and it can be dangerous, you could have to buy the stock to cover your obligation if someone exercised the option, says they will take your shares at the contracted price), consider buying that option for $100 or $200 when the stock is at $20 and then when the stock rises to $25, selling the option at $5 and keeping the $300 or $400 difference. Say you shelled out $200 and got back $500 (less commissions, of course), would that help you make money in the stock market? Of course it would--if your position is right.

What can you lose? Assuming (a dangerous thing, but this is just an illustration) your options are not exercised, you can lose no more than the money you put in. If they are exercised, then you have paid for the option AND need to shell out cash for the stock (or rebuy the stock if you sold an option that was exercised). Think of that like a store stocking and restocking its shelves. When the time for the option to expire arrives, you may need to "cover" your trades by selling (real cheap loss, just a couple of cents or so) the options you have out or buying back the options you sold. Some people sell options when they are expensive, hold them until they are about to expire, pay a few bucks to buy them back to cover, just because the price of the option, whatever you sold it at will be dirt cheap before it expires, so you close the books on your trade without much risk of people exercising your options.

It gets tricky, but it can involve the profits (or losses) of a large value of stock, with a small amount of money you have to put up. They call that leverage. When it works well, it is beautiful.

Answer 3

Mike S. gives you sound and excellent advice. No matter what else you do, it is wise to put REGULAR sums into a good mutual fund, or other vehicle, that you intend to leave alone and let time work the magic of compound interest earning!

For other investing, first you should study everything you can on the markets. Many good books out there, and a whole lot more bad ones! :)

In the long run, you will be better off not trying to hit 'home runs'.

Answer 4

You want to make the best possible stock picks. You might want to see what the best traders are buying and selling at http://www.top10traders.com - this is a free site that lets you create a portfolio of stocks with $100,000 in "play" money. Each day the site ranks the best performing portfolios, so you can see how your picks perform compared to other investors. You can read posts on investing from the best traders, as well as share your own investing ideas. There is a charting feature, so you can see how your portfolio performs compared to the S&P 500. Also, you can create your own "group" so that you can see how you are doing compared to your friends.

Here are this month's best traders:

http://www.top10traders.com/Top10Standings.aspx

Good luck.

Answer 5

Just invest in the stocks that are going to make a lot of money the next day, simple!

Answer 6

There is no magical quick way. You have to start a with a little bit, and always re-invest your earnings into other stocks. Placing money in the international funds is the safest bet right now. If you have a checking account (and I hope you do), contact your bank's investment specialists. They should be able to give some good ideas.

Answer 7

You can't, However, if you have 50,000 dollars and invest in american stocks and just put 5000 on 10 stocks you will make money guarenteed. Get out a dart board and put all the stocks on it and just throw darts. YOU WILL MAKE MONEY IF YOU DON'T SELL THE STOCKS. TIME WILL SAVE YOU.

Answer 8

I recommend you the prudent slow process advised by Mike S.

For quick profits you must take great risks. The two main ways you have are penny shares and stock options. The latter is quicker and riskier and needs great skill.

Answer 9

You can't! If it were the case couldn't we all be rich? It takes only three things, income, time and discipline(to save). With little money your investment will grow with regular $ contributions. If you decide to invest your $ in a high risk investment with little money, your chances of success is minimum.

Answer 10

options, but it's even more risky.