Short Term vs. Long Term Trading
The gloves are off! — Who will win this battle?
The idea of short term trading is pleasing to a lot of people interested in trading. The reason for this is because the idea of making fast money consistently is really appealing.
Why do we like fast consistent money? It may have something to do with most of us being employees for the majority of our lives, receiving consistent monthly income and not having to wait longer to receive wages.
It gives us a sense of security knowing that we will get paid from our job each month and our mortgage/rent and other bills will be taken care of. This is the idea that is brought over to trading because it’s all that some of us know.
Now the problem with this belief is that it is very hard for a lot of people to achieve that goal. Trading short term requires the right psychology and a certain level of focus. It also takes a long time to adjust to be able to take on the psychological aspects of short term trading.
Short term trading also requires more time to be spent in front of the computer. Do you have the time to do that? If so then maybe it’s for you but be prepared for the emotions that come with constantly trading and seeing your account go up and down in short periods of time.
This article is not aimed to scare anyone away from short term trading but to mentally prepare anyone who wants to go down that road. The other aim is to highlight an easier path which many traders overlook, a path which is rarely taken. The path I am talking about is long term trading. Now when I say long term I don’t mean 5+ years, I mean more like 6 months and up to a year or two.
Trading short term from a few minutes to a few days may be profitable to some, but holding onto a good trade could increase your profits multiple times.
Doing short term trading instead of long term trading is like paying the same amount of money for the small apple as the larger one but accepting the smaller apple. Get more for your money and think outside the box.
It can be worrying being in profit and being concerned about leaving all your profits on the table, potentially losing it all. But trend traders need not worry about that because overall you will be very profitable.
When you buy a good trending stock and it goes in your favour, there will be periods where the market will move down before it moves back up. It’s these down periods where everyone gets scared but those periods are there to shake out the fearful traders. When you take your profits quickly you’ll just see the market return back in your favour but you’re no longer in this trade to reap the rewards.
Trend trading is far simpler than shorter term trading and just needs 30 minutes of your time every day. The rest of the day can be spent doing the things you love.
If you’re thinking of quick trading profits then I’ll urge you to look into trend trading. It’s a style of trading that has been around for decades and has created a lot of wealth for traders.
Long term trading is definitely the smart path to take so which path will you be taking?