Original link: https://blog.forecho.com/short-term-trading-strategy-vs-long-term-trading-strategy.html
introduction
Different investment strategies have different ways of thinking. Any trading strategy will inevitably have gains and losses. A wobbly strategy can keep you from sticking to your investment trading principles.
Today, I will share with you the difference between short-term and long-term trading strategies.
short-term trading strategy
Short-term trading strategy refers to trading in a short period of time according to a certain strategy. mainly divided:
- intraday trading
- swing trading
Advantage
- Profitable time is short
- Repeatable operation
disadvantage
- Missing out on stocks that have major moves in the future (sell flying)
key point
Short-term trading usually requires learning technical analysis, that is, learning to read Japanese candlesticks and so on. Wait patiently for the opportunity to appear, trade stocks before the stock breaks out, and make a profit and leave.
The key to success or failure in short-term trading is stop loss. To understand that any short-term breakthrough may fail, if you do not do a good stop loss, you will only make your losses more than your profits, and you will lose money in the long run.
How to set stop loss point?
First determine your own return to risk ratio, and then set a stop loss point according to your own investment strategy.
- Return = 2 times the risk, call it 2R, if you set yourself a target of 10% average profit on short-term trades, then your average stop loss target should be set at 5%.
- Reward = 3 times the risk, call it 3R, a similar algorithm to 2R. Assuming that you set yourself a target of 10% average profit on short-term trades, your average stop-loss target cannot exceed 4%.
long term trading strategy
Long-term trading is mainly value investment. This type of investment mainly focuses on analyzing the fundamentals of the stock, and then holding the stock for a long time. I think it usually takes at least one year to hold the stock.
Advantage
- huge profit return
disadvantage
- Need to endure the pain of profit-taking in stocks
key point
You can’t guarantee that you will make money by diving into the fundamentals of the stock, so even long-term trading strategies need to learn to stop losses. Stocks are good, but buying timing and price are also important.
At last
Short-term and long-term investment strategies have their own advantages and disadvantages. The ultimate goal is to make money. It is best to find a strategy that suits you. Knowing the advantages and disadvantages of the two strategies, customizing your own strategy before trading, and strictly executing the strategy are the basic requirements of professional investors.
For the same stock, changing investment styles frequently will only keep yourself at an amateur level.
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