While there are numerous stock trading strategies, when it comes to buying and selling stocks, investors have two main stock trading paths to choose from: short and long-term. Those involved in short-term trading are referred to as traders, while those buying and selling for the long-term are called buy-and-hold investors. Both traders and buy-and-hold investors can be successful, but must follow different strategies in order to achieve success. Below is information about both short and long-term stock trading strategies.
Short-Term Stock Trading Strategies
The world of a short-term trader requires them to keep on top of current and historical stock prices. Their stock trading strategy includes maneuvering between the opening and closing prices and knowing the precise moment to enter or close a stock position. Short-term trading can be very lucrative, but it is also risky.
Traders can enter and exit a stock position over the course of one or a few days. Experienced traders evaluate the technical indicators of a stock and make judgments on whether the stock will be an immediate gain or loss. Short-term traders watch the moving averages, understand investing patterns and know the stock market trends in order to make profitable trades.
Long-Term Stock Trading Strategies
Long-term investors demonstrate more patience than short-term traders. Buy-and-hold investors enter a stock position for the long-term and are not preoccupied with short-term market volatility. These investors outlook on the stocks is rooted in the belief that the stock market will provide a good rate of return over the long-haul.
There are benefits and drawbacks to both short and long-term stock trading strategies. Investors and traders must use different strategies and analyze stocks in various ways. Yet both will need market knowledge and the ability to understand trading strategies to be successful and make the appropriate stock picks.