Stock trading and long term investing are two very different approaches in the stock market. Each has its advantages and disadvantages. So, what are they and how do they work?
Long term investing is a simply strategy. The idea behind it is to get into stocks that are fundamentally strong and then simply hold onto them over the long term. As time goes by these investments are unlikely to go to 0 and in fact they are likely to keep appreciating as the companies behind them continue to grow.
Short term trading on the other hand is a little different. The idea behind short term trading is not to buy and hold stocks for the long term, but rather to catch the short term ups and downs. As a result most traders put more meaning to technical indicators and chart patterns then fundamental analysis.
So, now that you know a little bit about what each one of these strategies holds, which one seems better for you? This kind of depends on who you are and what your goals out of the market are.
Trading stocks in the short term does have a lot more potential then buying and holding. If you can make short term gains relatively consistent over the long term then you can do pretty well for yourself. However it does take a lot of work and there are no guarantees that you will make any money. It is like starting a business most people will fail their first time around, but those who can keep getting back up and learning from their mistakes will likely do well eventually.
If you are willing to put all of the time and energy into short term trading the rewards can be pretty nice.
However if you just want something that is considered to be safe yet does have some potential then you can take a look at long term investing. The main advantages of long term investing are that it is passive and it is a relatively secure way of making a decent return over the span of a couple decades.
It basically comes down to this. If your goal is to just invest your money into something that will most likely give you a decent return over the long term and not have to worry about it then buying a few ETFs or building a diversified portfolio of stocks can work out pretty well. But if you want to put more effort into your investments in hopes of getting more from it then short term trading can work out pretty nicely.
Long term investing is a simply strategy. The idea behind it is to get into stocks that are fundamentally strong and then simply hold onto them over the long term. As time goes by these investments are unlikely to go to 0 and in fact they are likely to keep appreciating as the companies behind them continue to grow.
Short term trading on the other hand is a little different. The idea behind short term trading is not to buy and hold stocks for the long term, but rather to catch the short term ups and downs. As a result most traders put more meaning to technical indicators and chart patterns then fundamental analysis.
So, now that you know a little bit about what each one of these strategies holds, which one seems better for you? This kind of depends on who you are and what your goals out of the market are.
Trading stocks in the short term does have a lot more potential then buying and holding. If you can make short term gains relatively consistent over the long term then you can do pretty well for yourself. However it does take a lot of work and there are no guarantees that you will make any money. It is like starting a business most people will fail their first time around, but those who can keep getting back up and learning from their mistakes will likely do well eventually.
If you are willing to put all of the time and energy into short term trading the rewards can be pretty nice.
However if you just want something that is considered to be safe yet does have some potential then you can take a look at long term investing. The main advantages of long term investing are that it is passive and it is a relatively secure way of making a decent return over the span of a couple decades.
It basically comes down to this. If your goal is to just invest your money into something that will most likely give you a decent return over the long term and not have to worry about it then buying a few ETFs or building a diversified portfolio of stocks can work out pretty well. But if you want to put more effort into your investments in hopes of getting more from it then short term trading can work out pretty nicely.
About the Author:
For some Tips for New Stock Traders or more about stocks visit Shaun's site about investing into stocks
No comments:
Post a Comment