Stock Market the Fastest Ways to Make Money in the Stock Market

An exciting theory on how to make money fast in the stock market was discussed with the author and a financial entrepreneur friend only recently. As a myriad of people know, the stock market is as unpredictable as the weather. Thus, swimming against the tide could lead to investors turning small investments into very large profits very rapidly.

Swim against the tide:

This principal is defined as ‘contrary opinion’ by those in the know. Although this is a relatively unsophisticated approach to share marketing, it can be very effective and profitable if one has the financial backing to take the risk. This concept goes along with the very common theory that the crowd is seldom right. As a myriad of experienced stock market investors will agree, the stock market is notorious for reacting in the opposite manner to what is usually expected.Using a type of reverse psychology goes against the norm, yet it often pays off in the long run.

Just like a two year old child, the stock market hardly ever behaves according to preconceived expectations. Thus, veer away from majority opinion and one could end up with more valuable stock market shares than they ever imagined. When a plethora of people expect the stock market to boom, it usually does the exact opposite. Yet whilst they have faith, the expectations transform into what is deemed ‘majority opinion’.  People buy on majority opinion and this increases their peak levels and then comes the downside.

Foolishly investors forget that the prices cannot go up any more if there are no more stock market investors left.  Consequently, the share prices begin to fall and the investors suffer. Yet the one who decided to swim against the tide has profited indeed. This is the ideal way to make fast money. Yes, it is a big risk, yet not as big as most people tend to assume. One can then offload their holdings and make a huge profit. Yet for this to be successful, one needs to watch, listen and anticipate the way the crowd will behave.

One will also need to do a little research to know exactly when their chances of gaining maximum benefit from this investment tactic will come available. But timing is crucial and one needs to scrutinize the goings on of the stock market with a fine-tooth comb. For this to be successful though there must be a marked trend in stock market investing and selling. Only then will one have more chances of this vice-versa tactic being a successful strategy.  Of course this strategy is not fool proof, yet nothing is fool proof in the stock market world.

“Do just once what others say you can’t do, and you will never pay attention to their limitations again.” -James R. Cook-

Get involved in ‘Options Trading’:

Now ‘Options Trading’ is the ultimate wealth building tool and this could be another way to make money fast in the stock market. But it will only be beneficial is you trade the right way. Trading stock options can be risky but if done the correct way it can be highly rewarding. You don’t wish to lose money so this needs to be approached with caution.  The flexibility and profits of stock option investing is unrivalled in the stock market world.

An option trading is the trading of stock options over an exchange. This is more commonly done through online option trading brokers. This is usually classified as Online Options Trading. This is NOT ‘futures trading’, there is a difference.  Option Trading means trading options that are offered on stocks, instead of stocks themselves. 

One does not need to own the stock to be able to trade options.  There are two types of options; these are CALL OPTIONS and PUT OPTIONS.  Using them wisely can lead to a host of option strategies which can be financially beneficial from both and up or down perspective. Even when an underlying stock is immobile, one can make money.

Call options is defined as security that trades on one of the option exchanges that gives the possessor the right to purchase 100 shares of a stock or index at a specific price by a specified date. That price is called the ‘strike price’. The specified date is called the expiration date. For example; shares in a company could be at $25.81. The April options expire on 16th April, 2012. The strike prices for examples’ sake, ranges from $23-$28 and every dollar between.

Now because a call option gives one the right to buy back stock at a fixed price, one can lock in the maximum purchase price for the stock. This is a maximum purchase price due to the fact that if the market price is lower that one’s strike price, they would purchase the stock at the lower market price not at the higher price. Thus, one has a ‘call’ option because they can ‘call’ the stock (purchase it away from somebody else). Call options, just like stocks do, trade on an exchange. They have a ticker symbol like all securities and their price is determined by the market.  What determines the current price is the group of buyers and sellers of the option.  

An investor would purchase a ‘PUT’ option in either the futures market or the commodities, if he/she expected the principal future prices to drop. Buying a put option gives the buyer the right to sell the underlying futures contract at the strike price any time prior to the expiration of the contract. The majority of traders, who purchase put options, do so because they are of the opinion that a commodity market is decreasing and they wish to profit from that. One can exit the option during market hours before it expires. But all options have a restricted life. They are basically defined by a specific expiration date by the futures exchange.

Prior to buying a put option, one must know their objective and seek out the best option to purchase. Give a considerable amount of thought to the amount you can allocate to purchasing the put option. Know the duration of time you intend to be involved in this and exactly what you expect from the market. There will be wide range of options with varied expiration dates and an assortment of strike prices available, so choose one that suits your best objective. Do be aware though, that the time premium of options usually starts to decay rapidly in the last thirty days.

As one can see, there are ways to make money fast in the stock market. But do be cautious, do some research and don’t go into this without a little pre-planning.

Other source of information: www.forbes.com-