Luis Aureliano

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

Pros

• 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.

Cons

• 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.

Final Thoughts

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!

Author: Conor Doherty

If you have a pension or investment ISA, it is likely that you have shares in a company.

Shares are portions of a company owned by investors when a business lists or goes public on the stock market.

The price of a share is set by the value of the company and the amount of stock available, this goes up and down depending on confidence and performance of the business.

Once you have a share in a company, you then become a shareholder, which in some cases means you can have a say on its decisions depending how much stock you own.

More adventurous investors can trade in price movements through spread betting or contracts for difference.

.

Why invest in shares?

The main reason for buying shares is to make money from the company growing or from the dividends or payments that investors receive from annual profits.

Another benefit of dividends is that investors can reinvest them and boost their returns without having to commit any new money.

If a share price rises, your investment value will increase, but it will also fall if the price drops.

A share is different to a savings account or bond as there is no guarantee of the return you will get and you could lose money if a company does badly or collapses.

.

How much does share dealing cost?

The amount you pay for a share is determined by its price, the risk, and the broker or platform you are using.

Platforms can charge as little as £2.50 per trade but some will have annual account fees.

There is also Stamp Duty of 0.5 per cent to pay on share purchases.

Shares prices can sometimes fall below 1p, which sounds cheap but can be a warning sign that a company is doing badly.

.

What makes prices change?

Share prices are dictated by confidence and profits. If investors think a company is doing well or is set to improve, you will happily put money in, pushing the price up.

But it will go down if confidence is low.

Company shares can also be dragged up or down by the rest of the stock market or the sector they work in

The key is to time your investment right so you don’t put money in at the wrong time and try to spot decent shares before others while the price is low.

Cheap shares can be a buying opportunity, but you need to be sure the price won’t fall further.

This is why it is important to research companies before investing.

.

How do you value a company?

It is hard to predict the future, but there are pieces of company information that will indicate its financial health.

Its most recent profits will show how well a company is doing. Also, check the balance sheet for its assets and liabilities as this shows how much money is coming in and out and how much debt there is.

Another method is to compare a company’s share price with its competitors and assess how valuable it is.

This can be done using the price-to-earnings ratio, which compares the share price with the amount of profits it makes per share.

For example, a company with a P/E of five is valued lower than one with 20. This may mean it has poor prospects or that it is being overlooked.

.

How to choose a stockbroker?

You can trade shares or Forex through a broker or trading platform. Prices vary depending on how often you want to trade and the type of account you want as well as the assets you want to access.

Some will let you just do it yourself, while others will provide guidance and discretionary portfolios for an extra charge.

You can check the permissions of your broker and platform on the Financial Conduct Authority website.

Shares are not for everyone and you have to be prepared for good and bad times.

You won’t necessarily get rich straight away, but you will get the best out of your portfolio by making well-informed decisions and keeping your dealing costs down.

It has been 3.5 years since I started this blog. I did not expect I can come so far and my blog can last for so long. Many readers wrote me email asking me why am I setting up this website sharing all those knowledge and information to help other peoples? Huh! I am not that great and I did not expect things happen as what it is today. My original intention in setting up https://mystocksinvesting.com was to use it as my archive or library of stock market information, education articles or video, my stocks analysis for potential trades and current trades. Setting up information in the internet allow me to retrieve my information easily everywhere in the world as long as there is internet access, instead of bringing my computer everywhere to look at the stock chart.

Since I am doing for myself, it is no harm to share with others who are keen to learn about stock market. Stock market teaches me to be humble. It is important to be humble in the stock market because the market will decide how much profit she wants to give you and how much losses she wants to take away from you. The more I share the more I learn because it forces me to analyse the stock market in a more structured manner and enforce discipline in my trades.

There is no short cut and there is no free lunch in this learning journey. I always remind myself to workjhard, practice hard, stay humble and stay open minded to learn new knowledge and strategies. There is no right or wrong in the stock market and this is very different from what school taught us (e.g. 1+1 must be equal to 2, H₂ + O₂ must be 2H₂O). As long as we have a flexible mindset, we still can make money from the stock market if we are wrong.

2013 will be an interesting year to me because one thing leads to another thing which I do not expect initially. I will be partnering a Financial Education consulting company to provide a Public Workshop to share my experience as part time trader who have a full time job. I do not know how things will turn out in future and how it affects my full time job, but I just need to do my best. No if, No But, Take Action & JUST DO IT! 

You can make money from the stock market

regardless of the market direction (bull or bear)

if you have good financial knowledge in stock market, 

understand Chart patterns

and candlestick patterns.

Don’t worry about the Bear Market because you still can make money if you know how to short the stocks in a bear market!

Lastly, thanks everyone for the support and wish everyone a Happy & Prosperous 2013 New Year.

Stay Healthy and Trade & Invest Safely!

With Best Wishes,

Marubozu

Jan 1, 2013