There are a lot of tips and advice floating around, centered on long-term goals and strategies. They’re more about the “set it and forget it” approach to investment, but what about the alternative, which is short-term investments?
Short-term investments can mean any range of things, from options such as trading penny stocks which may mean investors are only holding them for a day or two, all the way to those options that may be held for a few years.
Regardless of what you invest in, or your general approach and attitude to short-term investment, one thing is certain, and that is, it is almost entirely distinctive from long-term strategies. Below are some tips to help you maximize returns on short-term investments.
Pay Attention to News and Events
When you’re looking at long-term investment opportunities, the advice is quite the opposite here. You’ll hear that you should ignore the news, ignore fleeing trends and just stay the course. On the other hand, when you’re investing in short-term opportunities, it’s the news and current events that are going to dictate many of your decisions. If you want to be a successful short-term trader or investor, make sure you’re willing to put the necessary time into keeping ahead of current events and seeing where there could be events that are going to move the market or impact trades.
Short-term trading tends to require more than just a monetary investment for success. You also need to be able to invest more of your time and attention. You want to be able to watch even the smallest movements and make decisions quickly, so if you feel like you don’t have the time or the desire to do this, you may be better off looking at long-term investments, which do not require much of the investors attention over the course of time.
There is one thing that remains the same across virtually any investment strategy or trading approach, and that’s the importance of diversifying. Be aware that short-term opportunities, including penny stocks, are going to carry a higher level of risk as well. Trying to avoid risk as a short-term trader or investor is essentially useless, so rather than trying to go that direction, make sure you’re aware of the risks, you’re ready for them, and you’re diversifying to minimize their impact.
Do Your Research
Taking advantage of short-term investment opportunities doesn’t mean you don’t also take the time for due diligence. In fact, it’s quite the opposite. It’s important to realize that short-term trading doesn’t mean you can put in no effort and get rich quickly. It’s more of a finely honed skilled than many long-term opportunities, and it requires hard work. Do your research before making a decision to buy or sell any short-term investment, and don’t think you can simply piggyback on the moves of others as your sole means of creating a profit. You can’t wait around to receive a newsletter alerting you of what’s a good buying opportunity. The more proactive you can be in your research, the more successful your short-term trading is likely to be.
Susan Melony is a blogger. She writes about finance, education, and self help.