While trading people keep in mind the strategy through which earning profit become sure for them. This situation put them into dilemma of the holding time for any stock. So it is very important to have information that which one is suitable for an individual short term or long term trading. Here we will discuss about the benefits and limitations of both. We don’t want to favor any form but to choose the best fitted and money generating way for a trader.
There are some parameters on which we can compare both ways of trading
Find your Niche : We all knew that market is extremely volatile and thus it is very important to know that which sector or a particular company or commodity deliver success in few days or after long time. There are few segments where a person got sure profit in long term, and there are some parts where everyday you find so much movement that you can earn a good profit even in single day and after that u can continue it. Thus finding the suited sector for each type of strategy is a good decision.
Risk Bearing Capacity : There are some traders who are free to take risks and stay confident even in worse situation but there are people who are not able to face the loss and quit easily. If you want to earn good profit with less risk then short term trading have less risk and if it was there one can exit easily without loosing so much amount. On the other hand, Long term have medium and high level risk because you have to pay the brokerage continuously and if it is very volatile in starting and then become stable and you skip the right time then the extent of profit become less in comparison to other time of exit.
Convenience of the Trader : If you are investing your hard earned money in the stock market then it must be purely your decision to choose the segment as well as the way to trade. People not having so much time to watch the market just go for holding the stocks in the bulk. But there are people spend good time in the analysis or having the financial experts from any consultancy firm go for short term to get instant profit so that they can do business in more than one segment within same amount of time (as in long term) so that they can took the profit of high volatile market.
Money Invested : With long period there is a limitation that the money you invested blocked for a time period which is not in the case of short time. Thus if a trader don’t want to put the money or requires the money can choose less time and can use the invested money as well as the earned profit at other place. Thus it is up to you how you want to manage the fund invested.
Whether you choose Less Time or Long Period to trade it is very important to take right decision for the greatest profit and this can be done with good knowledge and financial expertise. You can also hire the specialist in minimal amount and try the combination of both ways of trading for more and more earnings.