Long Term Investing Vs Short Term Trading
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?
Investing into the long term is simply the process of finding stocks that are strong and are likely to stay in business for the long term, then investing into them. Because these stocks are fundamentally strong they are relatively safe and will likely grow over the long term.
Trading stocks in the short term is actually a completely different strategy. Instead of holding onto stocks for the long term short term traders tend to use things such as chart patterns and technical indicators to attempt to catch the short term movements of stocks and hopefully make a larger profit then if they were to simply buy and hold the stock.
Which strategy is best? There are defiantly advantages and disadvantages to each method. The best strategy for you really depends on you and where you are at.
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 the time and effort into short term trading it can be a great adventure.
However if you just want something that you can invest money into with a good indication that over the long term you will make money than buying and holding stocks could work out better for you. The advantages of long term investing is that it is really passive and has a proven track record to work.
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.
Article Source: FxTradingStock.com
About the Author
For some Tips for Stock Traders or more about stocks visit Shaun's site that helps people learn stock trading
by: Shaun Rosenberg
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Word Count: 426
Date: Fri, 4 Jun 2010
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