How to Make Income Trading Stock
Many people see the stock market as a way of investing for the long term. They plan on putting money into safe companies and, after a few years, maybe dumping those shares and reinvesting elsewhere. There are people, though, that make an income on trading stock and there are a few ways to do it.
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Instructions
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Earning an Income
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Day trade. What this means is that you buy a stock at a certain price and if it goes up even a percent, you sell it later in the day. For example, you might spend $1,000 and buy 100 shares of a stock trading at $10. The stock then goes up to $10.25 a share. You decide to sell and you walk away with a profit of $25 (minus the commission). Most people who day trade, though, deal in much higher purchases of shares such as 10,000.
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Buy stock for the long run and hold on to it. If a company is doing real well, it will begin to pay dividends. A dividend is what the company pays out to the stockholders for each share of stock. For example, on Nov. 4, 2009, Intel gave a 14-cent dividend. That meant you got 14 cents for each share of Intel you owned. If you only own a few shares, this doesn't amount to much; however, if you owned 10,000 shares, this could come out to $1,400. What many investors do with their dividends, though, is have them automatically purchase more shares of stock so that the investment is consistently growing.
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Buy and hold as an investment. While it is not instant income, by holding the stock, you are developing assets to expand your portfolio. Then, when the time comes that you want an income, you can dump the shares. The best way to make a profit doing this is to ensure that you buy the stock at a discounted price and then wait for it to go up. Determine the percentage that you want it to go up so that, when it reaches that, you can sell. Otherwise, you might hold on to it for too long because of mentality that "it can still go up" and then it could start going down and you missed out on profit.
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