October 4th, 2009
How To Generate Wealth By Trading Stocks Online
Before we try and answer the question: “how to generate wealth”, we should at first try and define exactly what wealth is. I don’t think the best course of action for this is to go by some technical definition, so I’ll try and share my personal view on wealth. Being wealthy means being affluent and able to afford plenty of material things. In other words, you’re wealthy when money is not an object when it comes to getting what you want.
There are plenty of means by which people become wealthy, and if you take a look at the Forbes 400, you’ll notice that there is a very obvious diversity in how those very successful individuals achieved their fortunes. But there are a few proven principles that you have to abide by if you want to reach that level of success. Becoming wealthy is not some mysterious process. If you know how to attract and generate it, it will show itself automatically: the key to generating wealth is to have more coming in than going out.
Spend less than you earn. Wealth doesn’t require a high income. Most millionaires don’t have million-dollar incomes. They accumulated their wealth the old-fashioned way — by living beneath their means and giving their money time to grow.
Have a vision and break it down into goals. In the Book of Proverbs it is said, “Where there is no vision, the people perish”. Vision is broader than merely wishing for something. It is deeper than simply wanting more. It is the ability to envision a desirable future with such clarity you can see plainly the steps you must take to get there. Those steps are your goals; Goals are what keep us going. You should set yourself goals in order stay motivated. Having specific targets which are challenging, yet achievable, will give you something to work toward.
Have backup plans. What would happen if you were to lose your job? Or if your income was cut in half? Don’t get caught unprepared: start researching other jobs in your field, entry-level jobs in other career fields, or contracting jobs. Extra income is always available as many companies are more comfortable paying by contract or hiring part time workers. Decide on a base weekly or monthly income by which to survive and pay your most important expenses. Set some money aside for emergencies. Get life insurance.
Be disciplined. Good habits breed success. Getting things done brings you closer to your goals. The more solid your vision, the more disciplined you’ll have to be to make it come true. On the other hand, the clearer it is, the higher your motivation will be and the stronger you will be mentally. So you’ll have enough strength to pursue your vision and achieve what you truly desire out of life.
Think positive for motivation. Positive thinking is a mental attitude that admits into the mind thoughts, words and images that are conductive to growth, expansion and success. It is a mental attitude that expects good and favorable results. You have the power to think and dream and manifesting it into reality. Therefore all your thoughts precede your actions. Before you put it into action it’s always a thought in your mind. Let your imagination flow to infinite levels and let the true visionary inside you reveal. If you want more wealth your thoughts would make it possible for you. It would provide you with means and ideas which would provide help in further wealth generation.
Trade Stocks Online
One way to generate wealth is to trade stocks online. It’s an excellent way to start increasing your income, which will go a long way towards generating that surplus that will allow you to keep investing and further increase your income, in a snowball effect. Today’s technology allows you to sit in the comfort of your home and trade stocks online. Here are the rules to follow if you want to trade stocks successfully.
Find A Good Brokerage Firm
There are so many brokerage firms out there that you will need to sit down and evaluate which one will serve your needs better. Do you want to do your stock market research yourself and just need someone to actually carry out your trades? Will you be making just a few transactions or will you be an active trader? Do you need access to market research and/or investment newsletters? How much money are you going to have in your portfolio? The answers to these questions will determine whether you will need a discount broker, full-service broker, or an intermediate solution.
Choose What Companies And/Or Sectors You Want To Invest In
You may want to buy stocks in a specific company that you’ve researched and determined is poised for growth. You may want to invest in a specific sector for the same reasons. You may even want to invest in specific instruments, like index funds. In any case, research is crucial if you want to succeed. Educate yourself on what makes a good investment opportunity. A good company doesn’t necessarily mean that the current stock is a good value: maybe the company is trading at a high price, maybe you’re better off waiting for it to come down a little before buying. Read books, look up online stock trading topics on the internet from reputable websites. Keep reading and soaking up knowledge. All the most successful investors do.
Know Your Stock Trading Style
There’s the long term investor, the swing trader, and the day trader. They each have their own investment horizon, and behave accordingly. They each also know what their exit strategy is before they decide to invest in any investment vehicle. The thing is, in order to make money trading stocks online, you have to know what your stock trading style is. The long term investor goes for the long term trend, being very patient and persistent, looking for the one stock that will earn them a huge profit down the line. The day trader looks to make small profits from positions they buy and sell each day, usually closing the trading day without overnight positions. The middle ground is the swing trader, who looks to profit from the swings that stocks make over a few days to a few weeks.
Each of those styles has its pros and cons, which are beyond the scope of this post. The point is that the most important part about stock trading is to do your homework. Make sure whatever you do you put enough time and research before you make your decision. This goes from the moment you choose your stock brokerage firm to every transaction you make. Although the media has termed online stock trading as “easy money”, any investor in the market will tell you that this is not true. You should cover all the risks and make informed decisions at all times. Yes, the returns can be great but the risk-reward principle is always there in any investment.