Long Term Investing or Short Term Trading

LONG-TERM INVESTING OR SHORT-TERM TRADING

We have briefly covered ways to trade stocks and certain methods to trade leaders of stocks in certain sectors. Investing carries less stress, fewer day- to-day decisions, and less risk than trading does; and with that come fewer rewards. Just as we all have different personalities, there are that many opinions on how to trade the markets.

Some of the keys to successful trading are:

·       Diversification. This not only applies to markets, such as a wide as sortment of stocks in a portfolio, but also to trading different strategies and various investment instruments.

·       Risk Management. Profitable trading also comes from skills acquired from practicing discipline, patience, and risk management techniques that preserve your capital.

·       Behavior or Emotions. Successful trading means removing the most destructive element, negative emotional feelings that plague investors when trading: fear, greed, and anxiety. Finding the right mixture of investment products and trading styles can teach you to feel secure when trading.

The methods we cover in this book can be applied to the topic of selecting stock and spread trading, as we just covered, and to long term position trading, as in the style of trading for which Warren Buffett is famous.