YOUR PROFIT IS DEPEND ON YOUR TRADING STYLE.

 

        

     LONG TERM TRADING. V/S SHORT TERM TRADING.

the differences between short-term investing and long-term investing and how your goals may affect how long you want to hold your investments and what platform you use a question that i see being asked a lot is how long you're actually supposed to hold your investments for that's a completely personal choice but a lot of times it is going to be influenced by your goals and how actively you want to be managing your investments long-term investing is a method of investing where you typically are going to hold on to your investments for a period longer than a year a lot of times long-term investors are also passive investors meaning that you are not buying and selling a ton within a short period of time long-term investors may choose to invest in stocks that they see going up in value in the long run they may choose to invest in funds or etfs instead but overall long-term investing is more of a set it and forget it method short-term investing is a method of investing where you are typically going to hold on to those investments for a period less than a year short-term investing is a method of investing where you are typically going to hold on to those investments for a period less than a year short-term investors are often also called active traders or active investors meaning that you are going to be buying and selling a lot more often than those long-term investors this could be several times within a year several times within a month or even several times within a day short-term investors are typically trying to profit quickly and don't plan on holding on to their investments essentially they're trying to time the market because this type of short-term trading can be more risky a lot of times these short-term investors will also have a long-term investing portfolio somewhere else maybe they are using that for their retirement or just for other companies that they want to buy into their stock and hold on to long term something that you have to watch out for with these different types of investing is capital gains tax so this is tax whenever you profit from selling a stock or an etf or a fund or any type of asset you pay short-term capital gains if you've owned that asset for less than a year and this is typically going to be taxed at your normal tax rate you pay long-term capital gains tax if you've owned that asset for more than a year and usually this is going to be at a special rate that's a little bit more in your favor than your regular tax rate if you have any questions on this always go to an actual tax professional i am not one i am a random person on the internet but i will leave some links to some articles that the irs has on their website about capital gains tax let's talk about some of the common investing strategies for both of these types of investing both short-term and long-term with long-term investing there are actually a few different strategies but the overall theme of these is going to be buy and hold so long-term investors are planning on holding onto these investments for more than a year sometimes a lot longer than that so with that in mind these are some of the strategies that some long-term investors use the first is value investing so value investing is a strategy where investors are trying to buy a stock for lower than its intrinsic value meaning they want to buy a stock when it is selling for less than it's actually worth many successful investors like warren buffett use value investing as the basis of their investing strategy so value investing is typically going to involve looking at those annual and quarterly reports that companies put out it's going to be looking at those different ratios like p and e ratio debt to equity ratio etc with value investing you're essentially investing off of what you believe to be the true value of the company next we have growth investing so growth investing is a strategy where you are investing in companies that you believe will outperform the overall market this may be due to a company's fundamentals their management their innovation shifting consumer habits or a combination of any of these growth investing and value investing may seem pretty similar but the main difference here is that with value investing those value investors are going after companies that they believe are underpriced whereas growth investors are going after companies where they see a big potential in growth in that company's earnings next we have dividend investing so dividend investing is investing in companies that pay out dividends this is a little amount of money that they pay you for owning their stock a lot of people who do choose to go with dividend investing are looking at to have a regular income from their investments many of these companies are referred to as blue chip stocks blue chip stocks are typically very strong leaders in their industry and a lot of times they are

MOST VALUABLE FACTOR .

if you trading or investing long term or short term always use checked the Broker Regulation and low spread broker . 

 companies that have been around for a long time so think of companies like walmart coca-cola things like that if you're interested in getting started with dividend investing or really with any other type of long-term investing m1 finance is a great option for a platform to use and if you're a total beginner they do have some pre-built portfolios for you to select from and you can go through and look at those so they have some that are built specifically for dividend investors or people who want a mix of stocks and bonds or any variety you can go through and look through all of those expert portfolios that they have put together for you now let's look at some of the different types of short-term investing so again short-term investors are usually looking to buy and sell their stocks or their assets pretty quickly and they're looking to make a bunch of little small profits that will add up to a bigger amount it's important to be aware that this type of trading often comes with additional risk and with additional restrictions so these are a few of the common strategies for short-term investing the first method of short-term trading is scalping scalping is when you are buying and selling very quickly intra-day meaning multiple times within the same trading day a lot of people who trade penny stocks are scalpers and they are buying and selling very quickly sometimes within minutes if you are engaging in this type of active trading and you're not using a commission free brokerage those commissions are going to really eat into your profit if you are buying and selling a bunch of times within the same day next we have day trading which is probably a term that you have heard this is when you are buying and selling multiple times in a day but it isn't quite as fast paced as scalping day trading is typically a very big time commitment and day traders need to be actively watching the market to judge how to make their trades again for this type of trading the goal is going to be to make those small profits that add up to a bigger amount next we have swing trading swing trading is going to be on a slightly longer time frame this is going to be short to kind of medium term investments swing traders will often hold their investments for a few days or even a few weeks or a few months but unfortunately this type of short-term trading unlike day trading is going to expose you to those changes overnight and over weekends this unfortunately means that sometimes the price can gap and the price of the stock that you're looking at could open significantly above or below where you thought it actually would the good thing about this method though is that it does take up less of your time and it may be a way for you to get into short-term trading without as many restrictions or capital requirements in general short-term investing is going to be harder than long-term passive investing but why is this first let's look at the amount of time that it takes short-term investing means being a more active investor so you're going to have to spend more time watching the markets staying up to date and staying informed on those day-to-day changes so that you know what is happening with those prices long-term investing is generally a lot more passive while you do still want to stay up-to-date and informed on your investments you aren't going to be as concerned with those small intraday and day-to-day price changes as you are with the overall big picture of the company overall long-term investing is much less of a day-to-day time commitment and if you use a platform like m1 finance you can actually automate most of that for yourself so that when you get paid you can automatically put money into your account it's automatically invested and you really just don't have to think about it the second reason that short-term investing is harder is just due to the risk of course there's risk involved with any type of investing that you do but a lot of times that risk with short-term trading can be a lot higher i'll leave the link to the sec's full article on the risks of day trading in the description and the third thing that makes short-term investing harder is that there are often minimum capital requirements so if you have a margin account and you are scalping or day trading that is going to come with extra restrictions and extra regulatory requirements executing four or more day trades within a five day period is going to mark you as a pattern day trader this is something that's also referred to as the pdt rule this means that you'll always need to keep a certain amount of capital or a certain amount of money in your account to actually be able to day trade on a margin account and again I will ask you try the best Forex broker and their rules for margin day trading in the description so the bottom line is that depending on your goals you may choose to go with short-term trading you may choose to go with long-term investing but either way even if you are a short-term investor it can be a good idea to consider having a long-term investing portfolio on the side and to do that using a platform like m1 finance is a super simple way to set up those long term investments have it all automated so you don't even have to worry about it.