Short-Term Investing Strategies

By Justin Weinger

Are you the type of person who prefers short time horizons on your investments? If so, you have plenty of choices when it comes to part-time or full-time strategies in the markets. During the past two decades, the number of people pursuing short-term profits in the securities exchanges has increased significantly. One reason this style of profit seeking has enjoyed such a surge is related to online brokerage platforms. Gone are the days when you had to phone a broker to place an order. In the digital era, buying or selling a share of corporate stock is as simple as opening an account and making your picks.

Plus, computerized exchanges and high-speed websites allow for quick profit taking, deal making, and account settlement. Anyone with a basic knowledge of the markets can use any of the following techniques to aim for short-term trading profits. Whether your favorite timeframe is a week, a day, an hour, or a minute, there's something for you.

Day Trading

Believe it or not, there are shorter term trading techniques than day trading, but the one-day time span is an ideal choice for millions who choose to earn their living in this exciting industry. If you want to learn how to start now, review an online guide that explains all the key concepts for beginners. People who choose this profession enjoy the fast action, the chance to specialize in just a few companies, and the fact that they close all trades before the closing bell each day.

Tips for Beginning Day Traders

If you're just starting your journey into day trading, check out the video here to learn several practical strategies that can help you avoid some of the most common pitfalls in the business. The most successful day traders start out slowly, spending perhaps just an hour or so at a time plying their craft. Additionally, newcomers can take advantage of simulators in which they can buy and sell within a fictitious account to practice the art of placing different kinds of orders quickly and accurately.

Playing the Gaps

Gap traders are a special bunch. Many trade for just a few minutes per day, and only do so during the half hour or so after the opening bell. The reason is simple. If you look at a typical daily stock chart of an average company, you'll notice that buyers and sellers often jostle around for a while before settling on a starting price for the day. Thus, there's often a price gap during that early 30-minute time span. If you can guess the direction of the gap, you stand to earn a hefty profit in a very short amount of time. Guess wrong, and you can lose just as much. Regardless, gap players have been around for more than a half century and many people are attracted to the quick action and high profit potential.

Scalping

Scalpers are like day traders with much shorter timeframes. They tend to take large positions and earn profits and very small price moves. Some who operate this way only do a few trades per session, while others stick around for hours if the action is hot and they're making lots of accurate predictions.