Why Short Term Trading Works the Best

Short term trading is a much better way to approach the stock market. It gives you so many different advantages.

1. It allows you to Cut your losses

The first thing you want to do is to not lose money. The more you lose the less likely you will be able to make up that loss and actually become profitable. It is very difficult to make it back if you ride a stock all the way to the bottom.

2. It allows you to play on emotions

What moves the stock market is not news announcements, earning, or any fundamental data. What moves the market are people. If you don’t believe me look at earnings announcements, they are so hard to play because half the time you can’t predict what they are going to say and the half that you can predict you can’t predict how people are going to react.

I have seen so many times where earnings were lower then what they were expecting and yet the stock goes up. People move the markets and people run on emotions which cause patterns on the chart to form. Those are the patterns that can be very profitable, because they play on the source.

3. You Know Faster

When you buy a stock and hold it for the long term you might not know if that was a smart idea or a dumb idea for 20 years. How can you possibly learn from the past and become a better investor when you have to wait so long to see your results.

Trading the market however, you know if you are right or wrong right away. This allows you to be constantly learning and constantly improving your skills. So you have the ability to learn more and become a better trader all the time.

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