Having a very short term strategy like day trading is a great way to make consistent money in the stock market and protect you from wild losses.
Here are a few reasons why having a short term strategy works great.
1.
It puts the power of compound interest on your side.
Albert Einstein once said, "The most powerful force in the universe is compound interest.
" If that's true why aren't more people day trading? Think about it if you could make an average of .
5% a day trading stocks and traded 200 days a year you would have a return of 171%.
171%, most people are trying to get a tenth of that.
No one would be disappointed with a return like that.
2.
You can make money in a bulls market or a bears market.
Every time a bears markets comes around all the long term investors' panic.
They panic because their investments have just been cut in half or worse.
Now if you were a short term trader you wouldn't care.
You can make money just as easily on the downside as you can on the upside.
Remember consistency is the key and as a trader you can get that.
3.
You don't have to worry about the long term.
Most people are okay telling themselves that the stock market is a long term strategy.
But just how long term are we talking about here? If you would have bought the market average 10 years ago you would have lost money.
You would be behind after 10 years.
But if you were trading you could have made money every one of those 10 years.
That's why I love trading.
4.
Finally it is easy to manage your risk if you are a short term trader.
If the stock doesn't do what you want your out.
No ifs, ands, or buts about it.
Whereas if you where a long term investor you are just hoping the stock you buy will not go to $0.
And it will eventually be worth more than you bought it for.