Many of the trading and financial strategies that we have spoken of before have been done with long term investment in mind. What this means is that most mainstream forms of investing are done with the expectations that the buyer will not sell for years to come and thus will not reap the rewards of their labor less fruit. This is not to say that such short-term strategies do not exist; there are those who spend their waking lives trying to beat the market. Some even dedicate their entire careers to it and are able to pocket a decent enough income. The question is: when comparing it to the long term, is it worth the risk?
Short-term Trading, or Daytime Trading as it is called in financial parlance, is essentially buying and then selling the same stock or security all in the same day. If you put a stock at $300 a pop, you sell it when it reaches a worth that somewhere over that original buy price and pocket the profit, with a slight deduction when taxes are taken into consideration. This is, of course, usually done with many times that capital, but beginners must start somewhere.
Though many have made their fortunes with only a $10,000 initial investment, these examples are few and far between. For every get-rich-quick story, there are at least ten stories about people losing all their money and even owing some. Recently, a 20-year-old Robinhood trader found himself with a negative balance of $730,000, leading him to commit suicide. His brokerage had given him leverage to make significant investments in the forex market, but the market played against him. While an extreme case, it counterbalances many of the more positive stories.
Long term trading, while susceptible to its up and flows, is a much more secure form of investment whose return can average at least an average of 8% over its lifetime. You may not become the next Warren Buffet, but you won’t drown in debt either.
