Financial Markets For The Rest Of Us
An Easy Guide To Money, Bonds, Futures, Stocks, Options, And Mutual Funds
With most of us, long-term investing is the way to go. Not only will the above two facts be on our side, but also we would have less stress constantly worrying about the stock. To be sure, a long-term strategy works best when applied to value stocks. These stocks are safer than others and pay dividends, which are guaranteed return on your investment.
So should you abandon all strategies in favor of the long-term? The answer is a definite maybe and it all depends on your character. Most long-term investors buy a good stock and let the time factor do its magic. Other investors get in and out of stocks like they drink water, always chasing that winner that seems so elusive. The most extreme case of this is daytrading.
Daytrading, a recent trading style galvanized by computers and the Internet, has become very popular among the very short-term traders. These are a group of individuals who have completely abandoned their regular day jobs and spend their time behind a computer terminal making multiple trades on a daily basis. They mostly are chart followers and momentum traders who may hold a stock for as little as 10 seconds before selling it and buying another stock. Many of them pay large fees to get trained in daytrading and are advised to begin with a $50,000 or $100,000 of initial capital. Realizing that daytraders are a lucrative bunch (considering the large collective commissions they pay on their frequent trades) many daytrading companies have sprung up that offer training as well as offices with sophisticated equipment and tools for daytraders to take advantage of. One of the popular services used by daytraders is the level II quotes. While ordinary investors can look at the general ask/bid quotes (level I) offered through their trading companies, many daytraders use the level II quotes service through which they can get a more detailed view of all the activity surrounding a particular stock. …
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