How Do I Make Money From Buying Stock?

You can make money from buying stock and selling it. There are other ways to make money from your stocks by selling covered options on them, but these are advanced strategies that require an understanding of how to trade options.

Therefore, let's stick to the simple process of buying a stock and explore multiple ways that you can increase your profits by simply buying and selling shares.

To make a large profit from buying shares, try to buy them when they are undervalued. That is, buying them before everyone has discovered them, otherwise by that time, the huge gains will be long gone.

For example, investors who bought shares of Amazon and Google back when they listed, while everyone thought that the internet was a scam back in the late 1990s and the early 2000s, are sitting on profit measures in 1000s of percent.

There are two other ways to profit from buying stocks:

1. Buy dividend-paying stocks and holding them for multiple years while reinvesting the dividends payments.
2. Follow the cyclical rotations in the stock market by buying out of favor stocks and waiting for them to become popular again; hence, the phrase, buy low, sell high.