How to Win a Stock Market Game
Becky Smith was the January winner in Stockpickr's Wall Street Pros vs. Main Street Joes stock game. A $1,000 prize is awarded to the game's top percentage winner every month, in addition to weekly prizes. The opinions expressed are those of the author and do not represent the views of TheStreet or its management.
NEW YORK (Stockpickr) -- My name is Becky Smith, I am a housewife, and I trade stocks. I did not go to college and have never studied finance or economics. I became interested in stock trading about 11 years ago. The first six to seven years were a little rough, but I've learned from my experiences.
I have learned that to be a stock trader, you need to have a good understanding of the markets, their trends and how the markets and individual stocks react to news. You need to know what things to take into consideration (P/E, float, volume, chart) before trading a stock. It takes confidence in your research. You need to have the time to follow the financial news and your stock trades.
I enjoy playing online contests and the competition it provides. Before 2007, I had never shorted a stock. I practiced my shorting strategies in a previous eight-week contest called Beat the Street, sponsored by TheStreet in 2007. I won.Related: How I Turned $250K Into $364K in One Month To win one of these contests, you need to take chances, bet on small-cap companies and bet big. Take profits when you have them. Don't be greedy. I start my day out by tuning into CNBC. I want to know what news is affecting the markets and what economic reports are being released and when. I watch the premarket trading, looking for low-priced stocks that are making a large-percentage move to the upside, looking for something to short. I take notes. When I find something premarket, I can take some time to read the news that has caused the price increase and decide if I believe the jump in price is justified. If I'm interested, some of the things that I check after I've read the news are the outstanding share count, the float, the average volume of shares traded in a day and the percentage of shares that have been shorted. The smaller the float, the more unpredictably the stock will trade, and I tend to avoid stocks with very low floats. If there is a high percentage of shorts once the price starts falling, it will not stay down long because shorts will start covering and drive the price back up.
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