Short-term trading or long-term investment
All people who come to the stock exchange have the same desires and different opportunities, therefore the methods of earning money should also be different.
Some people start their journey as a trader with only a hundred dollars in their pocket, while others want to increase their fortune to several million.
Depending on the amount of initial capital, you should choose your main earnings strategy, since otherwise the risks are simply not commensurate.
Currently, all exchange trading can be divided into two parts - trading and investment.
Trading - you constantly open new transactions, monitor trends, and develop strategies.
Investments - at the initial stage, you select the most promising asset, purchase it and then only monitor further price changes.
Agree that the phrase “I invested my money in Google shares by entering into a sale deal” is simply meaningless. That is, any investment is definitely a purchase of assets - gold, securities, real estate, etc.
What to choose?
The answer to this question is as simple as possible, it depends on how much money you have.
Everyone comes to the stock exchange to earn money, and the possibilities of earning money directly depend on capital. Therefore, no matter how attractive it would be to act as an investor by purchasing promising shares with the expectation of dividends and price growth. You are unlikely to be able to earn a lot with this option even if you have an amount of $1000.
It makes sense to plan investments if you have a capital of $10,000 or more; using a small leverage, you can already count on tangible profits as a result of long-term investments.
For example, using a leverage of 1:5 and buying bonds with an annual yield of 4%, you can earn $2,000 in a year.
Or 20% of the initial capital. Agree, not so much, and what can we say when using a smaller amount of the initial deposit. At the same time, trading provides great opportunities for earning money with small deposits, in addition to the fact that it is already possible to use more significant leverage, and transactions in different directions are also available.
You have the opportunity to make money not only from rising, but also from falling prices during crises and market collapses.
And thanks to scalping, you can earn significant money even with a deposit of $100. Yes, the risks are quite high, but the earning potential is also quite real.
What else is important?
In addition to the size of the deposit, the character of the person who comes to the exchange is no less important.
If you have a calm character and are used to thinking for a long time before making a final decision, then investments are more suitable for you. Since the speed of decision-making is not important here, it is enough to carefully select a promising asset before opening a transaction and set up a stop loss that will insure your money. And then all that remains is to wait for the results.
For trading, on the contrary, a quick reaction is important, the ability to instantly analyze the situation and find the right solutions, not be afraid to take risks, and use every opportunity to make money.
With all this, in order not to deprive yourself of all existing opportunities, you can use both options for stock trading.
By investing your principal capital for the long term in a less risky asset, while at the same time using a small part of the funds for short-term trading. Typically this ratio is 1/10, that is, if you have $11,000, we invest $10,000 in buying stocks with low leverage, and use $1,000 for intraday trading . Thus, you will win in any case.