When deciding to trade in the securities market, sooner or later, each person is puzzled by the question: “What strategy to choose?” It is better, of course, that this question comes early, because “late” can already be critical.
The entire large army of proposed and used trading strategies can be divided into three large groups: short-term, medium-term and long-term investment.
Short-term strategy is nothing more than day trading. Price changes within a trading day become a source of profit. With the development of online trading opportunities, this strategy is becoming increasingly popular. The main trouble that awaits investors when choosing short-term investments is the need to constantly monitor exchange rate fluctuations. Throughout the stock exchange day, you have to stay connected to your computer to keep abreast of current changes.
This inconvenience can be more than offset by high returns. However, getting more profit from day trading is not a 100% fact, but only an assumption. However, with multiple unsuccessful operations, the losses will be much higher than with any other strategy.
A medium-term investment strategy involves investing in securities for a period of several months to a year. This approach does not require a constant presence in the market, it is enough to monitor the behavior of stocks during the day, analyze the behavior of a financial instrument, and get acquainted with important economic news. A calm approach allows you to identify upcoming changes and the causes of fluctuations as accurately as possible. For those private investors who can’t afford to spend the entire working day monitoring the state of the market, the medium-term strategy is ideal. The ability to use weekly or monthly trends is a very attractive tool for building your trading strategy. The profitability of medium-term investment depends only on the correct approach to the operations performed: by promptly responding to depreciations and increases in rates, you can easily outperform the index.
Long experience of trading on the stock exchange allows us to state that it is the medium-term investment strategy that is the most attractive in terms of the ratio of risks and profitability. COREDO offers its clients the official registration of a license for trading securities in Europe.
Purchasing shares for several years is called a long-term investment strategy. The main advantage of this approach is the ability to enter almost at any time. For example, investors who bought shares in 1998 at far from the best prices made excellent returns by selling those same shares 10 years later. The main disadvantage is too long waiting for a significant profit.
The only risk characteristic of a long-term strategy is an incorrect assessment of the investment attractiveness of issuers. In addition, political, macroeconomic and many other factors can destroy all prospects.
