If you are new to the stock market, you should choose to use trading strategies over the shooting in the barrel method. Strategies have been proven to outperform barrel shoot significantly. There are several basic strategies to start with that will help you determine how to protect your investments by advising what stocks to buy and when to sell. Once you have mastered the basics, you can learn more about the hundreds of advanced strategies.

You can lower your risks through hedging. There is always a risk that the price of a stock will drop, but you can purchase a put option. This allows you to sell the stock at a set price within a particular period of time. Then, if the stock does fall, the value of your put option will rise and you can offset your losses.

The most expensive hedging strategy is buying put options against individual stocks. This is often not the best option; if you already have a diverse portfolio, you may fare better if you buy a put option on the stock market, or to sell financial futures. In both cases, you are protected if the overall market prices drop.

This strategy was used by many during the 1990s bull market. The strategy works by choosing the ten stocks out of the 30 in the Dow Jones Industrial Average that have the highest dividend yields and lowest price-to-earnings ratio. All the companies on the Dow Index have long histories of reliable performance, so the ten lowest components would therefore have the greatest growth potential in the short-term. The new Pigs of the Dow strategy is an offshoot of the Dogs of the Dow. The Pigs strategy works by selecting the five Dow stocks with the worst performance over the past year. The idea is that the Pigs will rebound and perform better than the rest of the Dow components.

Buying stocks with money that is borrowed, usually from a broker, is called buying on margin. Because you have a lower original investment on the amount of stock you purchase, you'll get more of a return when you buy on margin than if you bought the stock outright. On the other hand, if the price of the stock decreases, your losses will increase, which makes margin buying considerably riskier. The investor should have a stop-loss order in place, in the event of a market reversal. This will limit potential losses when buying stock on margin. Ten percent of total account value is the limit that should be placed on the amount of margin.

One of the best ways to grow your investment securely and effectively is to use cost averaging. The idea behind dollar cost averaging is to purchase a set dollar amount of stock or mutual funds on a set schedule. For example, you can purchase $100 of a particular mutual fund every month. The idea behind this is that you will be making purchases in both rising and falling markets. As the price rises you will be able to buy fewer shares and as the price falls you will be able to buy more shares.