• Investors rely on innumerable strategies to participate in the stock market. Each successful trader relies on a combination of experience, risk tolerance and instincts to create the method that works best for her, and rarely will you find two market participants that make decisions in exactly the same way. Nonetheless, there are general methods of investing that structure the individual techniques of successful investors.
  
  

Value Investing

• The world's most successful investor, Warren Buffett, is also the poster child for the stock market method known as "value investing." Companies issue stocks, and the prices of those stocks change over time, as do the successes of the companies. However, the price of a stock does not always correlate to the actual health of the company. Value investing is a method of evaluating corporations' financial health and determining the theoretical value of their stock based on corporate debt, earnings and many other factors. A value investor will then buy shares of stock if the company is financially strong and its stock's value is lagging behind what it should be worth. In simplistic terms, value investing is the process of finding great bargains, or stocks that trade at a discount to their actual value. A value investor will often purchase stocks when they fall so low that everyone else is selling them, such as during or after market crashes. This was the case when Buffett invested deeply in Goldman Sachs during September 2008 after its share price fell dramatically.
  
  

Momentum Investing

• Momentum investors seek stocks that are caught up in a dramatic trend. These are not usually inexpensive shares, as the demand and interest has already inflated their price, thus giving them momentum. In this method, you purchase a hot stock that is already expensive because you think it will become even more expensive. Momentum investors do not usually hold onto stocks for as long as investors using other methods, because the momentum eventually fades when the trend ends.
  
  

Swing Trading

• Swing trading is a broad field of stock market methods that generally rely on chart analysis to inform temporary trades that may last just days or weeks. Technically, a swing trade is made when a stock "pivots" during a trend. No stock moves solely in one direction without a temporary reversal. If a stock pulls back during an up trend, a swing trader may purchase shares as it "swings" back up and moves higher again. Likewise, a swing trader may "short" stock, or sell shares she does not already own, so she can profit from a down trend by purchasing them back later at lower prices. The swing trader may liquidate her holdings before the stock again pivots for a temporary reversal in the trend, rather than riding out the full trend, as in momentum investing.
  
  

Day Trading

• Day trading is fast-paced method for participating in the stock market. It is the most unique method among stock market techniques as it relies on nearly split-second execution of trades that may last only minutes or hours. Day traders develop highly personal and complex strategies to evaluate stock fluctuations during a single day. It is a very risky way to trade stocks. For this reason, government regulations prohibit day trading in any brokerage account of less than $25,000 in value in an effort to protect novices from the considerable potential to lose large sums of capital.