You should learn options.
When used correctly, trading options along with stock will reduce your stock-only risk. Or, if used incorrectly, they can increase your risk.
The main difference between stock and options ...
Stock -- these represent ownership of a company and you can buy it or sell it, and it can last forever. It's value will go up and down as the value of the company goes up or down. You can choose to own it forever unless the company decides to buy it all back.
Options, Calls and Puts -- these are promises to buy or sell stock for a specific price and within a specific time interval. Therefore, they have a finite life ... they all expire at a defined rate and you get to choose the date of their death.
I frequently sell Call Options against shares of Stock I already own. That gives me income while I own the stock (whether the stock goes up or down). I choose to do that virtually every week. The owner of the Call options I sold has the right to take the underlying shares from me anytime he wants (but he will not do that unless the stock is trading above the strike price of the option, or he can {and wants to} capture a stock dividend). There's also a thing called a Put option. Call and Put options are a sort of inverse of each other, and that might confuse a beginner. I'll sell Put options when I don't own the underlying shares, and when I don't mind being forced to buy the underlying shares.
An example: Look at MU over the past several months -- I posted a chart on the iHub MU site. It's been going up and down within a declining channel. I've owned the shares the whole time. If I didn't frequently sell Call options on those shares every week, I would have a substantial loss on the shares. But because I've been selling Calls every week, my total position is roughly flat because I've received the additional income from selling the Calls. I yearn for the period when it has a sustained inclining trend -- I'll still sell MU Calls but I'll price them high enough so that the shares are not assigned away from me, so at that point I'll make more than if I only owned the shares and did not sell the Call Options.
So, for AMD: I owned the shares and also sold Calls all the time I owned those shares, but I decided AMD rose so high (and so fast) that it needs time to consolidate, so I sold the shares a few days ago (and will not sell Calls when I don't own shares for a really good reason that you do not know yet since you don't understand Options). Now I'm selling AMD Puts. If AMD does not drop below the strike price of my Puts on expiration day then those sales generate pure income. If AMD does trade below the strike of my Puts at options expiration, then the broker will put those shares to me (meaning I'll own them) at the strike price of the Puts (even if the shares are trading below that strike price).
(I hope I didn't make a mistake in there somewhere -- sometimes I have brain farts.)
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