When Is Bigger Actually Better?

I’ve alluded to some of the pros of trading large-cap stocks, but today I want to dive deep into the benefits of exactly why you would want to trade large-cap stocks.

Once we cover the upside of large-caps, I’ll review the disadvantages, and give you a few more tips about how you can trade them confidently.

Let’s get started.
 

Benefits of Trading Large-Cap Stocks
 

Plenty of Analyst Coverage

Because there are a lot of eyes on these industry leaders, they get plenty of attention in the press and from analysts.

Analysts will devote a lot of time and effort to researching stocks like Apple or Amazon. including whether it’s rated buy, hold or sell, and recommendations and suggestions.

You can benefit from their research and opinions, using it in addition to your own research to determine if the trade is worthwhile.

Slow but Steady Growth

What’s your risk tolerance? Not everyone has the stomach for trading small-cap stocks, which tend to be more volatile.

If this sounds like you, larger-cap stocks may be a better alternative. While this isn’t an absolute statement, they tend for the most part to offer more steady and reliable growth.

It can take a longer amount of time, but you’re less likely to experience the emotional ups and downs that can come with a smaller cap stock that may be spiking in either direction in big percentages in sometimes very short time frames.

Lots of Data

Large-cap companies are highly accountable in terms of filing earnings reports, and as such, there’s plenty of company data readily available in the public sphere.

Usually, these are companies that have been around for a while, so you could conceivably have decades worth of financial and technical data to sort through.

This can help you identify long-term trends and stock movement over time. If you see the same pattern repeating itself for years and years in a row, for instance, it’s even more likely that it will continue to repeat.

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