Short-Term Trading vs. Long-Term Investing

There’s this intense debate between traders and investors, with the lather ones considering themselves somehow more special. The reality is that strengths and weaknesses can be found on either side and today we want to show you that, so you will be able to decide whether it will be good for you to embrace short-term trading, or become a small Warren Buffett and take the path of long-term investing.

Trading in the short-term

Although most of the experts say short-term trading is only for beginners, the reality is completely different. Many professionals choose to adopt this approach, mainly because we live in a period of economic uncertainty. Buy-and-hold strategies are overrated right now and the best thing to do is to try and generate returns on smaller market moves.

The downside of this is that in the short-run the market can be choppy and you will get a lot of false trading signals. As a result, you’ll need a tested rule-based strategy and act upon it by filtering the signals you get. Just because it’s short-term trading it does not mean you have to enter the market each day.

You should also consider that you will need good trading conditions and the best infrastructure, like the trade.com multi platforms.

Choosing long-term investing

It is true that in order to make investments in the long run, you’ll have to commit more capital. Returns are generally smaller, which means it will be hard to make a living out of long-term investments if you don’t have a lot of money.

As opposed to short-term trading, in this case, you will be able to avoid the “noise of the market” and invest based on your long-term vision. Knowing how to build a balanced portfolio across different assets is essential in order to avoid being hit hard by a single bad investment.

If you are at the beginning and you want to learn more on the subject, Tony Robbins’ book “Money Master the Game” would be a great start. There you will find how Ray Dalio, a famous US investor and the creator of the biggest hedge fund on the planet, creates a balanced portfolio.

You’ll need more advanced knowledge at a macroeconomic level, not just information on technical analysis and market sentiment. That is why most of the people start with short-term trading and as they progress, they gradually move a longer-term approach on the market.