- Most of the rumors you see on the Internet are creations used to manipulate the price of the stock. Don't follow them blindly; do your own investigation. Check the information on the company: its profits, the management team and the product it makes. Look at the movement of the stock, and if you still believe the rumor, act on it.
- One simple rule for making easy money in the stock market is to buy stock in companies that make superior products or offer the best service. Well-known investors often start as consumers first, analyzing their favorite companies' financials and technicals.
- A bullish market requires a different mentality than a flat or bear market. When the stock price rises in a bull market, take some profit, but keep a partial position open. During the height of the late-1990s tech stock surge, those who made money sold half their stock every time the price doubled. When the stock started to drop, they had an exit plan that involved selling portions as the losses reached 5 percent and 10 percent.
- If the market is bullish, bumps in the stock's price aren't impressive. In flat markets and bear markets, upward bumps might be the key to making money. Find a stock that has a short-term cyclical bump strong enough to make a profit when you include the cost of the trade. Purchase it at the low end of the cycle and sell it at the high end. You might only make a 1 percent gain, but it has the potential for repeated gains every few days or weeks.
- Consider writing an option and selling it instead of trading stock. An option is a contract to buy or sell a stock. They cost far less than the stock itself, but lock in the price for the purchaser. If you sell a call, the person that buys it has the right, but not the requirement, to buy your security at a specific price. You are required to sell, however. Selling a put requires you to purchase a stock at a specific price. The person who buys it doesn't have to sell if the price doesn't drop. If you own stock that lost some money, consider selling a covered call on the stock. If you believe that market is in a downward mode, the covered call sale is one way to make money. In a bullish market, buying a call or selling a put is the way to go.
- Dividends are the way the company pays profits to owners: the stockholders. Buying a stock for its dividends is another way to make easy money in the stock market. During bear market times, the dividend percentage often soars because the price of the stock is low. As the market improves, so does the price of the stock, and selling shares provides another method of making money. Reinvesting dividends also increases the amount of stock and, thus, the number of shares that produce dividends.
