The Best Way to Trade the Stock Market With Less Than $500

 

If you have ever traded the stock market, you know that it is really hard to make a consistent profit, and there is a perfectly good explanation for this.

Indeed, in order to make a profit trading stocks not only you need to be sure that the price is going to move in a given direction, but also, you must be right about the magnitude of such movement, because if you go long on a stock which is trading at $5 and it goes up to $5.05 you will not even have enough to pay for the commissions if you are trading with $500 account.

One of the problems is that in order to make a profit not only you must be right about where the price is going, but also about how far is it going, and the fact of the matter is that determining the direction of the price within a particular time frame is relatively easy, but assessing accurately how far is it going to go is really the hardest part of the equation.

Add the fact that each time you enter and exit a trade you have to pay a commission of around $7 to even $15 per trade, and you are already $14-$30 down on a trade the minute you place it.

If you are trading with $500, and you make a good trade (meaning that you successfully predicted the price movement as well as its magnitude) you might have gotten lucky and snapped a 10% increase in the price of the stock within a few days, which would be a really great trade.

In this scenario you would have earned $50, but before you can cash in you have to deduct the commissions you had to pay, which would have been around $14-$30, meaning that your actual profit ended up around $36-$20 which is about 4%-7% return on that particular trade.

However, it is unlikely that you will always snap 10% gains on a particular stock, because what will usually happen -even if you are very accurate predicting the market movements- is that you will make a good share of mistakes, and even when you are right, the stock will not always move as much as you would have expected in the direction you had planned.

Therefore, in order increase your chances of being profitable and growing your account, the best way to trade the stock market is through binary options. Why?

Well, because binary options allow you to trade in smaller sizes without having to worry about commissions, you can achieve returns around 70%-80% on each trade, and in order to do so you only need to be right about the direction of the price, regardless of the magnitude of the movement.

Indeed, when you trade binary options (also called "all or nothing options") the payout for each call or put option is fixed, meaning that unlike traditional options, your profit will always be 70%-80 of the invested amount regardless of how many points in the money you are, as long as you are in the money even if it is by $0.001.

On the other hand, binary options offer the advantage that they can be traded hourly, meaning that you can buy contracts that expire within 60 minutes thus allowing you to realize 70%-80% profits fast (something simply impossible to achieve trading stocks in the traditional fashion).

This certainly makes it easier to make a profit trading the stock market, because on one hand, all you need to do is determine the direction of the price movement, and on the other hand, you can get a far higher return on your investment without having to risk 100% of your account.

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