How Do I Trade Stocks?

Stock trading is a place where the maxim 'Greed is good' will hold true. Given below are some of the more popular stock trading theories:

• Bottom up approach: The investor will identify a company and begin researching its prospects. As he learns more about the company, he will also acquaint himself with other companies in the industry.

• Top down approach: In this approach he will choose an industry which he is comfortable with and begin researching the prospects of the firms in it.

• Cigarette butt approach: This is the technique utilized by the great Warren Buffet. He had the ability to pick stocks that were undervalued by the market for some reason or the other. It is called the cigarette butt approach because these stocks resemble a cigarette butt that has a few puffs left in it.

Now stock trading has become very simple with the advent of online trading. Stocks can be bought or sold at the click of the mouse.