To decide what type of strategy your going to use, decide how much time and effort you will commit to trading.
Day trading involves making trades that last for seconds or minutes, taking advantage of short-term fluctuations in an asset's price. With day trading, all positions are opened and closed within the same day.
Long-term investing, on the other hand, consists of making trades that stay open for months, and often years. These are buy-and-hold trades, rather than quick, buy-and-sell-trades. The decision-making process for a day trade can be quite different from a long-term investment with different skills and, in some cases, personality traits required for each. There is also a middle ground between investing and day trading called swing trading, which is when trades last for a few days to a few months.
Day trading for quick profits would have to deal more with technical indicators and/or graphs. You can look at a graph and literally calculate how much a stock swings. You would have to buy a stock on a bad day and then sell on a good day.
How do we know if its a bad day? This is where you will have to look at the company of your choice and look at the waves it creates on a daily basis. I would download any stock app that has alerts of when prices go up and down and articles about potential news that created the fluctuation. One of my favorites is Seeking Alpha, but there many great apps out there that are very user friendly.
With trading you have to remember that stocks go up and down based on market speculation, its not actually what a company is worth, its how much investors think a company is worth. I have seen many swings when a company makes the news (whether good or bad); when companies release their quarterly earnings report (positive or negative), mergers between companies, and viral news on social media. Recent example of taking advantage of market conditions was Popeyes. It all started in early August when Popeyes partnered with Sweet Dixie Kitchen, a Southern California restaurant that famously got busted selling the chain’s chicken during brunch, on an exclusive early launch of the new sandwich. The following week, this new dish — which is made with a fried chicken filet, sour pickles, and mayo on a brioche bun — was available at stores nationwide, and almost immediately fast-food fans started expressing their enthusiasm for the sandwich on Twitter. Popeyes in stock market is listed under Restaurant Brands International Inc. because of the merger. Stocks on August 1st were at $72.78, by August 30th the price had risen to $78.45.
The price then started to decline and continued to decline for the rest of this year. In this instance if I was a day trader I would have seen the news about the merger and purchased at $72.78, I would have then traded a couple of days later and made a small percentage. Day traders would have to set many alerts on price fluctuations and make multiple trades a day to build a large pool of assets.
A long term trader would have purchased the stock in 2014 when Tim Hortons merged with Burger King to create Restaurant Brands International Inc. They would have purchased the stock around $35.41 and by now (5 years later) would have noticed they have doubled their earnings. That same long term trader probably would have purchased more at $72.78 because of Popeyes merger, and will wait until the stock price goes well above that again.
The day trader in this instance would have researched the news on whats trending, long term trader would have researched Restaurant Brands International Inc. and their market strategy for 5 year growth.
So think about how you want to approach this and continue to learn, you have to realize that there is always a risk. If you do not research enough you could lose, so if you do not feel confident in making a trade, keep researching.
