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Step 1
Do your homework on a company before buying its stock. There are several ways to buy stock, either through a full-service broker who makes recommendations, a discount broker who may supply research or directly online through a site such as Scottrade. Websites like Morningstar.com can provide you with a wealth of research and tools that can help you analyze a company.
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Step 2
Short-term traders should find a trading platform that allows instant charting of a stock's movements for tracking its momentum. Don't forget to take capital gains taxes into account when buying and selling. It's great to make a killing on a stock, but keep in mind that a huge gain may push you into a higher overall tax bracket.
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Step 3
Use a professional money manager to trade stocks for you if you don't want to make your own investment decisions, or you can invest in mutual funds that use portfolio managers who trade stocks to achieve specific objectives, such as growth or value.
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Step 4
Invest in unit investment trusts (UITs) if you want to keep your short-term capital gains under control. Most UITs are held for more than a year, thus ensuring favorable capital gains treatment. Invest in a trust that holds the type of stocks that you want, like large or small cap stocks or stocks of a particular sector.
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Step 5
Invest in options if you are high-risk investor seeking speculative returns. If you feel that a stock is going to rise sharply in price, consider buying call options to amplify your gains. Buy puts if you feel that the price will go the other direction. You can also trade on margin to leverage your positions.
