June 17, 2009

How to Make Money in a Down Stock Market

 

One of the core questions my coaching clients have asked me over the past few months is: “Can I still make money in stocks with the market down like its been?” The answer is yes, or no, depending on the type of investments you have.

 

If you hold stocks, stock mutual funds, or your investment is in the standard asset allocation accounts the answer is probably no. The simple explanation for this is that these types of accounts are so large that they are not allowed by the regulators to hold short stock positions. This means that if the stock market goes down over the next 3-5 years, the accounts will lose money every single year.

 

Short positions, however, will allow you to make money whether or not the market goes down. These types of investments are only available to companies and individuals who trade individual accounts.

 

If you trade through your individual account rather than a fund, it is possible to for you to take charge of your own investment and make money in the stock market almost every day. he reason for this is that you can buy low if you expect an increase in the stock value, or sell short if you expect it to decline.

 

If it’s that easy, why isn’t everyone doing it? Well, first, you have to be willing to invest around $25,000 into an individual trading account. A lot of folks don’t have the money, or don’t want to take the risk. And, it is true that stock trading for a novice can be very challenging. You could lose all your investment fast if you aren’t sure what to do.

 

There are tactics to alleviate these two concerns of the novice trader.

 

First, find a trading program that gives you low risk trade picks. The program I use and that I recommend to my coaching clients has a 31 year average experience level for its trade pickers. With such experienced pickers, a trader can follow their picks with a high probability that they will profit from the trade. And if you set your stops to tie in with your personal risk tolerance level, your loss over time will be minimal.

 

Secondly, it’s important to find a program that walks you through every step to success. For example, in my 9 day trading class the students learn every aspect of using a turnkey system that is both safe and profitable to buy and sell short stocks, so that you can make money even if the stock market goes down.

 

Regardless of the system you choose, if you make sure that it has experienced advisors and a program that walks you through every step of the way, you can be smiling all the way to the bank while everyone around you is moaning about the poor performing stock market.

 

To read about other lessons I learned in my fifteen years as a day trader and coach, as well as tips and techniques for becoming successful at stock trading, even in a bad economy, read my free report “From Video Junkie to Day Trader,” and learn more about how you could be trading stocks profitably in as little as two weeks.

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