Online trading is a diverse system which allows you to buy and sell a range of products at your leisure. There are several markets to choose from, each of which comes with pros and cons, which can adapt the way you choose to trade, as well as the timescale you decide to trade within.
Whilst one trader might wish to turn a quick profit by investing in volatile markets, with fast-changing prices (imagine the stock exchange on pretty much any movie), others might prefer to hedge their bets and invest in something a bit more secure over a longer period of time.
So, which is the wiser decision, short-term or long-term trading? This really comes down to what you’re hoping to achieve, the money you have available, and when you need a result by…
Long-term trading options usually include portfolio investments. These are sometimes overseen by a portfolio investments manager, who will buy and sell on your behalf, spreading your money over a range of different products and services. The outcome is that, all being well, you should receive a profit over a designated length of time, with less risk of losing your capital because it’s not completely absorbed into one investment.
Long-term investments are ideal for college savings funds, for example, as you can sometimes continue to add money to them over time, which is particularly useful if you’re not in a hurry to cash in. However, managers can differ and some might build higher-risk folios with a better chance of higher payouts (but also of higher losses). It’s worth talking to a manager about their approach before investing.
Short-term investment options tend to be a bit more varied. Whilst you can pay someone to invest on your behalf, the quick-paced action of buying and selling is what lures some traders into short-term trades. The power is in your hands, which means you have to keep a keen eye on what’s happening, making sure you buy and sell at the most appropriate times possible.
Short-term trading might help you to earn a quick buck, but it can also be riskier. Investing in a potentially volatile, single product, could lead to massive gains but it’s also possible that you could lose all of your investment, or more. It can require more of your attention, and plenty of confidence to make the right decisions. However, there are also features on some trading websites which allow you to follow the actions of other traders, and therefore you can benefit from their informed decisions.
Of course, you can always split your money, combining short and long-term trade options to gain the best of both worlds. It’s important, however, to remember that you can lose money trading online, and therefore we recommend seeking advice online before making any investment. For more tips on the differences between markets, how to improve your chances of turning a profit, and how to seek trading advice, we have several more articles to explore. Good luck!