To make Surefire Profits in Stock Trading the key is to know yourself.
The thing about investing is that your success is going to depend on your emotions and your control over them far more than on your learning and skill.
I will give you the trading tools you need to succeed but your emotions can still sabotage your efforts.
So it's very important for you to find the trading style that best fits for you.
Then you're ready for the big money!
And of course there are endless strategies to choose from. So let's start with an easy question: "Are you a short term or a long term oriented investor?"
Day Trading or Swing Trading... what Stock Trading Strategy appeals to you the most?
The active day trader approaches the game with an entirely different perspective to the swing trader (who holds for 1 week to 3 months) or the buy and hold investor. We won't be covering buy-and-hold here because that's not trading... it's investing.
So what are the advantages of day trading versus intermediate term swing trading?
There are two major characteristics that define a day trader:
1. A day trader never... ever... holds a position overnight. All trades are exited before the close each day... unless you screw up of course and can't get out. But even then you can still sell or hedge in the aftermarket.
2. A day trader is active in the market making two or three or even up the 100 or more trades each day.
What are the advantages of Day trading?
1. No overnight exposure
2. You can take short positions without worrying about borrowing the stock or being responsible for the dividend.
3. You can trade quick market swings both up and down.
4. You reduce your risk.
What are the disadvantages?
1. Day trading takes more work and more focus.
2. You must be watching the market every second or you miss your entry or exit points.
3. It's very stressful to live on the edge all day every day although some people thrive on it.
4. Your transaction costs can often eat up most of your profit on a bad day.
Swing trading on the other hand is somewhat less frenetic although it has its stressful moments too. I'll deal with that in another article.