How to make a million dollars trading one stock! This is a great idea if you can do it. Evaluating how this could be done is a good exercise in various methods of trading. How to make a million dollars trading one stock could be relatively easy if one had one hundred million to invest and only needed to make a little over one percent return on investment with your trade in order to keep the million dollars after fees and commissions. For most of us in the real world how to make a million dollars trading one stock will have to start with a substantially smaller investment pool, stocks with significant room for appreciation, and finding ways to leverage our investment. Many learn how to trade penny stocks with this sort of goal in mind.
Options trading also comes to mind as trading options allows one to profit in both up and down markets. Options trading leverage works in favor of the options trader in that one can purchase out of the money calls on a stock with a distant expiration date. If the trader does his homework he may be able to spot a stock with substantially more upside potential than the market realizes. How to make a million dollars trading one stock in this case is to purchase options on a sufficient number of shares with enough capital so that the gain in share price times the number of shares in the options contract will exceed a million dollars by enough to pay for the premium, fees, and commissions. Thirty thousand invested and a slightly more than $33 rise in share price will just about make it. Although this scenario may occur from time to time it is a long shot. In general, how to become a successful stock trader is not to wait for once in a lifetime long shots.
In posing the question how to make a million dollars trading one stock we are not necessary setting any time limits. As such a trader could spend years trading one stock, buying at the bottom of each market cycle and selling at the top. For an extremely cyclical stock such trading is often profitable. Also, such trading is not a matter of waiting for a once in a lifetime opportunity. It does mean finding and tracking a stock that has a significant degree of volatility and that has a significant enough margin of safety in terms of cash or other assets so that it does not go out of business half way to your million in trading profits. If a trader picks a stock that cycles up and down quite substantially and uses options to leverage his investment he makes the task of how to make a million dollars trading one stock somewhat easier. Then again, to accomplish this goal, the trader needs to pay close attention to the economy, which tends to be the driver of cyclical stock prices, and buy and sell as the most oopportune times. He will need to become expert on the fundamentals of the stock in question as well as in technical analysis of market sentiment that moves the stock price. This second scenario is, obviously, more realistic than the first and more in line with our approach of suggesting that traders use strategies with a reasonably low level of risk and reasonably high probability of success.
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