Short term trading has become an incredibly hot topic among investors as of late, and for good reason. The reality is that short term trading can be an incredibly profitable endeavor. However, as with any other form of investing, it can also be a bit risky. With that said, today, we’ll go over the pros and cons associated with this short term trading and provide a few tips that will help you become a more successful trader.
Pros & Cons
As with anything else in life, trading comes with its own set of pros and cons. Here are some of the most important pros and cons to take into account when making your decision if short-term trading is for you
- High Returns – Short term trading vehicles tend to come with incredibly high returns. Even day trading vehicles with normal returns will generally yield higher returns than traditional investing methods because returns are realized on a daily basis.
- Exciting Trading Environment – In most investment vehicles, the slow pace can make things rather boring. However, because of the fast pace associated with Short term trading, the process is relatively exciting.
- Compounding Gains – With traditional investment vehicles, gains are realized over a long period of time. However, because Short term leads to daily gains, the amount of money you can make over time as these gains compound is incredibly large.
- High Risk – When Short term trading, you’re essentially making short term predictions with regard to what’s likely to happen in the market. Because long term predictions have a higher probability of being correct, short term trading can be relatively risky.
- Time Investment – Traders need to find new trades each and every day or so. This requires quite a bit of time.
Tips To Help You Become Successful
As mentioned above, Short term trading can be incredibly profitable. However, to make it profitable, it’s important that you trade the right way. Here are a few tips to help you become a successful…..
- Pay Attention To The News – If you’ve invested in any way, chances are that you know the importance of the trading with the news. The bottom line is that the news moves the market. Any time there is positive news released about a publicly traded company or any other asset for that matter, the asset’s value is likely to climb. Adversely, negative news will lead to negative moves. So, by watching the news, chances are that you will be able to pick up on trends that will lead to profits!
- Learn About Technical Analysis – In the world of investing, there are several different types of analysis. However, they all fall into one of two buckets, either technical or fundamental analysis. Technical analysis is the type of analysis that shows what to expect in the short term. Because we are interested in the short term process, it’s a great idea to do your research and learn everything you can about technical analysis and how it can help you become a more successful trader.
- Create A Strong Trading Plan – No matter what you want to do in life, chances are that you will be more successful with a plan. So, before you get started, it’s a good idea to create a trading plan. Your plan should include strategies for expanding profits, loss exposure strategies, stop loss and stop gain limits, and anything else you can come up with that will help to guide your trading process.
As mentioned above, short term trading can be an incredibly profitable process. By doing your research and taking advantage of the tips above, you’ll likely find that the concept of day trading is a great way to make your money grow!