Investing in stock for a short term has been very valuable for most of people to gain profits relatively at a short time. It's just about time. Based on my personal experience, trading in short time could be possibly very profitable if you are smart enough to find stocks with high ROI with at least 10% a year.
In this article, I will show you my ultimate guide on how to invest in stock for a short term, including my technique scanning pennies stocks and other important stuff.
First things first, let's take a look at definition of the short term investment. If we define short investment, that means we are investing our money in an increasing value of financial instrument less than one year.
Actually, people who are invest their money in a short term are not supposed to be called investor, but a trader. A stock trader gains profits from the fluctuation of stock price in stock exchange. A trader could come from any background of studies, should not be always a professional or expert at stock trading. As long as they have skills at trading stock, that's more than enough to bank up money from the market.
Referring to style on how to practice trading, we classify styles of stock traders, which are day traders, swing traders, market makers, scalpers, momentum traders, trader on the news, and arbitrageur.
Day Traders, traders who are doing buy-sell on a certain stock during the same day.
Swing Traders, this is a type of trader who seeks profit within 1 - 4 working days.
Market Makers, a broker who makes buy-sell on a certain stock at the same time, seeking profit from the margin.
Scalpers, a trader who seeks chances from fluctuation of stock price in order to open a position and close it at a very short time.
Momentum traders, a trader who only opens their position at the right time on a stock with a consistent trend (bullish or bearish). When there is a reversal signal of stock they are holding, they will close or sell before the momentum changes.
Traders on the news release, a trader who always relies on fundamental analysis from news. They don't care about using technical analysis because they believe the effect of the news is very strong towards a certain stock related to the news. Type of news that could be very effective, such as about interest rate decision (FOMC rate decision), GDP, retail sales, durable goods, inflation (consumer price index), unemployed (non-farm payrolls), industrial production, business sentiment surveys, consumer confidence surveys, trade balance, and manufacturing sector surveys.
Arbitrageur, a trader who gains profits doing arbitrage from two stock exchanges. The idea behind this, that an asset has different value in every market. Arbitrage is not only applicable in stock market but also in forex, commodities, future, mutual fund, and even CFD.
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