Investing in the stock exchange is not as easy as grocery shopping. The first thing to know after you open an account is learning the types of stock trading strategies and decide which one suits your needs and condition.
Once you are done with that, you can deal with the rest of the procedures.
Blue-chip stocks
Blue-chip stocks refer to the strong and longtime standbys shares of stocks. These are the stocks that have little to no possibility to have major negative stories in the near future.
If at some point, they get negative publicity, they are the old and sturdy traded companies that can stand any storms. Blue chips are good for new stock trader since they usually move in a predictable way.
The example of blue-chip stocks is Coca Cola (KO) and JPMorgan Chase (JPM).
Value Stocks
In a value investing strategy, you can analyze the finance of enough traded companies to predict fair stock prices and undervalued stocks.
One of the metrics to find undervalued stock is by looking at the traded company’s book value per share. Avoid smaller companies, as they are riskier and more volatile than older and stable value stocks.
The example of value stocks is Transocean (RIG) and Nelnet (NNI).
Dividend stocks
Every quarter, dividend stocks (Phillips 66 ‘PSX’ and Coca Cola ‘KO’) pay a small cash dividend per share to the investor.
You have to look for a trend of steady dividends when you look for dividends or growth stocks. The market looks at dividend cutting negatively, thus, the new stock trader should avoid stocks that have cut the dividend.
Also read: Stock Trading 10: The Best Time to Sell Winning Stock
Growth stocks
Growth stocks (Amazon ‘AMZN’ and Facebook ‘FB’) can come out of any industry. Yet, high-tech companies in Silicon Valley usually have great growth prospects. Larger growth stocks are more stable and less risky than smaller, new businesses.
