📊 Why Is The Stock Market So Difficult To Predict? 📊
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Let’s assume stock prices have been rising for several years. Investors realize that a correction will come and stock prices will tumble. What we don’t understand is what will trigger the selloff or exactly when it will occur. Therefore, some investors will sit on the sidelines holding cash, waiting for the opportune time to get in. Those who are willing to assume the risk may jump in because the return on cash is so low and it hurts to earn zero while watching stocks move higher. This begs a couple of key questions. If you’re on the sidelines, how will you know when to get in? If you’re already in, how will you know when it’s time to get out? If the stock market was predictable, these questions could easily be answered. However, it is not. There are actually three issues an investor should consider. The first is understanding the point at which stock prices are fairly valued. The second issue is the event that will cause a downturn. The final issue is understanding the human decision-making process.
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📉 @Stock_indian 📈
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Let’s assume stock prices have been rising for several years. Investors realize that a correction will come and stock prices will tumble. What we don’t understand is what will trigger the selloff or exactly when it will occur. Therefore, some investors will sit on the sidelines holding cash, waiting for the opportune time to get in. Those who are willing to assume the risk may jump in because the return on cash is so low and it hurts to earn zero while watching stocks move higher. This begs a couple of key questions. If you’re on the sidelines, how will you know when to get in? If you’re already in, how will you know when it’s time to get out? If the stock market was predictable, these questions could easily be answered. However, it is not. There are actually three issues an investor should consider. The first is understanding the point at which stock prices are fairly valued. The second issue is the event that will cause a downturn. The final issue is understanding the human decision-making process.
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📉 @Stock_indian 📈
📊 Stock Valuation 📊
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The actual price of a stock is determined by market activity. When making the decision to buy or sell, the investor will often compare a stock’s actual price to its fair value. For example, if a stock is trading at $30 per share and its fair value is $35, it may be worth purchasing. Conversely, if it trades at $30 but its fair value is $25, the stock would be considered overvalued and the investor would be wise to avoid it. What is a stock’s fair value and how do you calculate it? Ideally, it would be based on some standardized formula. However, there are many ways to derive this figure. One method is to combine the value of a company’s assets on its balance sheet, minus depreciation and liabilities. Another is to determine its intrinsic value, which is the net present value of a company’s future earnings. We have briefly discussed two methods. There are a number of others. Because the methods yield a slightly different result, it’s sometimes difficult to know if a stock is overvalued, undervalued, or fairly valued. And even if it is overvalued, that doesn’t mean investors will suddenly sell and the price will fall. Actually, a stock can remain overvalued for quite some time. This is also why it can be problematic to make buy/sell decisions based on where the price of the stock is in relation to some moving average.
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📉 @Stock_indian 📈
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The actual price of a stock is determined by market activity. When making the decision to buy or sell, the investor will often compare a stock’s actual price to its fair value. For example, if a stock is trading at $30 per share and its fair value is $35, it may be worth purchasing. Conversely, if it trades at $30 but its fair value is $25, the stock would be considered overvalued and the investor would be wise to avoid it. What is a stock’s fair value and how do you calculate it? Ideally, it would be based on some standardized formula. However, there are many ways to derive this figure. One method is to combine the value of a company’s assets on its balance sheet, minus depreciation and liabilities. Another is to determine its intrinsic value, which is the net present value of a company’s future earnings. We have briefly discussed two methods. There are a number of others. Because the methods yield a slightly different result, it’s sometimes difficult to know if a stock is overvalued, undervalued, or fairly valued. And even if it is overvalued, that doesn’t mean investors will suddenly sell and the price will fall. Actually, a stock can remain overvalued for quite some time. This is also why it can be problematic to make buy/sell decisions based on where the price of the stock is in relation to some moving average.
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📉 @Stock_indian 📈
📊 When Is The Best Time To Buy & Sell? 📊
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The two most important decisions an investor will make are when to buy and when to sell. The best time to buy is when others are pessimistic. The best time to sell is when others are actively optimistic. When buying, remember that the prospect of a high return is greater if you buy after its price has fallen rather than after it has risen. But caution should be exercised. For example, after the stock of fictitious Company X declined by 30%, 40% or more, the first question to ask is why. Why did the stock fall as it did? Did other stocks in the same industry experience a decline? If so, was it as severe? Did the entire stock market fall? If the broader market or other stocks in the same industry/sector performed relatively well, there may be a problem specific to Company X. It’s best to adopt a buy/sell discipline and adhere to it. Benjamin Graham, the father of value investing, once said, “The buyer of common stocks must assure himself that he is not making his purchase at a time when the general market level is a definitely high one, as judged by established standards of common-stock values.” His reference was to what we discussed as fair value under the section Stock Valuation above.
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📉 @Stock_indian 📈
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The two most important decisions an investor will make are when to buy and when to sell. The best time to buy is when others are pessimistic. The best time to sell is when others are actively optimistic. When buying, remember that the prospect of a high return is greater if you buy after its price has fallen rather than after it has risen. But caution should be exercised. For example, after the stock of fictitious Company X declined by 30%, 40% or more, the first question to ask is why. Why did the stock fall as it did? Did other stocks in the same industry experience a decline? If so, was it as severe? Did the entire stock market fall? If the broader market or other stocks in the same industry/sector performed relatively well, there may be a problem specific to Company X. It’s best to adopt a buy/sell discipline and adhere to it. Benjamin Graham, the father of value investing, once said, “The buyer of common stocks must assure himself that he is not making his purchase at a time when the general market level is a definitely high one, as judged by established standards of common-stock values.” His reference was to what we discussed as fair value under the section Stock Valuation above.
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📉 @Stock_indian 📈
📊 Bull Markets Vs Bear Markets
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Neither is an animal you’d want to run into on a hike, but the market has picked the bear as the true symbol of fear: A bear market means stock prices are falling — thresholds vary, but generally to the tune of 20% or more — across several of the indexes referenced earlier.
Bull markets are followed by bear markets, and vice versa, with both often signaling the start of larger economic patterns. In other words, a bull market typically means investors are confident, which indicates economic growth. A bear market shows investors are pulling back, indicating the economy may do so as well.
The good news is that the average bull market far outlasts the average bear market, which is why over the long term you can grow your money by investing in stocks.
The S&P 500, which holds around 500 of the largest stocks in the U.S., has historically returned an average of around 7% annually, when you factor in reinvested dividends and adjust for inflation. That means if you invested $1,000 30 years ago, you could have around $7,600 today.
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📉 @Stock_indian 📈
📊
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Neither is an animal you’d want to run into on a hike, but the market has picked the bear as the true symbol of fear: A bear market means stock prices are falling — thresholds vary, but generally to the tune of 20% or more — across several of the indexes referenced earlier.
Bull markets are followed by bear markets, and vice versa, with both often signaling the start of larger economic patterns. In other words, a bull market typically means investors are confident, which indicates economic growth. A bear market shows investors are pulling back, indicating the economy may do so as well.
The good news is that the average bull market far outlasts the average bear market, which is why over the long term you can grow your money by investing in stocks.
The S&P 500, which holds around 500 of the largest stocks in the U.S., has historically returned an average of around 7% annually, when you factor in reinvested dividends and adjust for inflation. That means if you invested $1,000 30 years ago, you could have around $7,600 today.
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📉 @Stock_indian 📈
📊 How The Economy Affects The Stock Market ? 📊
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There are many factors that affect how the stock market is doing, and whether it’s moving up or down: the political climate, social factors, interest rates, trends and shifts in what investors prefer.
So how does the economy affect the stock market?
If the general population feels as if the economy will soon be taking a turn for the worse, they tend to sell stock because bonds and treasuries offer a safer return. On the flip side, when people are feeling confident and optimistic about the economy, they tend to buy stock, taking more risk for greater reward.
From a high-level approach, when people feel good about the economy, they tend to buy more stock. When things are happening in the world make them feel unsure, they will be more conservative, and might gravitate toward lower-risk investments such as bonds and Treasury bills.
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📉 @Stock_indian 📈
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There are many factors that affect how the stock market is doing, and whether it’s moving up or down: the political climate, social factors, interest rates, trends and shifts in what investors prefer.
So how does the economy affect the stock market?
If the general population feels as if the economy will soon be taking a turn for the worse, they tend to sell stock because bonds and treasuries offer a safer return. On the flip side, when people are feeling confident and optimistic about the economy, they tend to buy stock, taking more risk for greater reward.
From a high-level approach, when people feel good about the economy, they tend to buy more stock. When things are happening in the world make them feel unsure, they will be more conservative, and might gravitate toward lower-risk investments such as bonds and Treasury bills.
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📉 @Stock_indian 📈
📊 Different Types of Stocks 📊
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There are two main types of stocks:
1⃣ Common Stock
2⃣ Preferred Stock
Common Stock
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Common stock is, well, common. When people talk about stocks in general they are most likely referring to this type. In fact, the majority of stock issued is in this form. We basically went over features of common stock in the last section. Common shares represent ownership in a company and a claim (dividends) on a portion of profits. Investors get one vote per share to elect the board members, who oversee the major decisions made by management.
Over the long term, common stock, by means of capital growth, yields higher returns than almost every other investment. This higher return comes at a cost since common stocks entail the most risk. If a company goes bankrupt and liquidates, the common shareholders will not receive money until the creditors, bondholders, and preferred shareholders are paid.
Preferred Stock
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Preferred stock represents some degree of ownership in a company but usually doesn't come with the same voting rights. (This may vary depending on the company.) With preferred shares investors are usually guaranteed a fixed dividend forever. This is different than common stock, which has variable dividends that are never guaranteed. Another advantage is that in the event of liquidation preferred shareholders are paid off before the common shareholder (but still after debt holders). Preferred stock may also be callable, meaning that the company has the option to purchase the shares from shareholders at anytime for any reason (usually for a premium).
Some people consider preferred stock to be more like debt than equity. A good way to think of these kinds of shares is to see them as being in between bonds and common shares.
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📉 @Stock_indian 📈
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There are two main types of stocks:
1⃣ Common Stock
2⃣ Preferred Stock
Common Stock
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Common stock is, well, common. When people talk about stocks in general they are most likely referring to this type. In fact, the majority of stock issued is in this form. We basically went over features of common stock in the last section. Common shares represent ownership in a company and a claim (dividends) on a portion of profits. Investors get one vote per share to elect the board members, who oversee the major decisions made by management.
Over the long term, common stock, by means of capital growth, yields higher returns than almost every other investment. This higher return comes at a cost since common stocks entail the most risk. If a company goes bankrupt and liquidates, the common shareholders will not receive money until the creditors, bondholders, and preferred shareholders are paid.
Preferred Stock
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Preferred stock represents some degree of ownership in a company but usually doesn't come with the same voting rights. (This may vary depending on the company.) With preferred shares investors are usually guaranteed a fixed dividend forever. This is different than common stock, which has variable dividends that are never guaranteed. Another advantage is that in the event of liquidation preferred shareholders are paid off before the common shareholder (but still after debt holders). Preferred stock may also be callable, meaning that the company has the option to purchase the shares from shareholders at anytime for any reason (usually for a premium).
Some people consider preferred stock to be more like debt than equity. A good way to think of these kinds of shares is to see them as being in between bonds and common shares.
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📉 @Stock_indian 📈
📊 What Is A Stockbroker? 📊
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A stockbroker is a professional who executes buy and sell orders for stocks and other securities on behalf of clients. A stockbroker may also be known as a registered representative, investment adviser or simply, broker. Stockbrokers are usually associated with a brokerage firm and handle transactions for retail and institutional customers alike. Stockbrokers often receive commissions for their services, but individual compensation can vary greatly depending on where they are employed. Brokerage firms and broker-dealers are also sometimes referred to as stockbrokers themselves. The most commonly referenced stockbroker firms are discount brokers.
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📉 @Stock_indian 📈
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A stockbroker is a professional who executes buy and sell orders for stocks and other securities on behalf of clients. A stockbroker may also be known as a registered representative, investment adviser or simply, broker. Stockbrokers are usually associated with a brokerage firm and handle transactions for retail and institutional customers alike. Stockbrokers often receive commissions for their services, but individual compensation can vary greatly depending on where they are employed. Brokerage firms and broker-dealers are also sometimes referred to as stockbrokers themselves. The most commonly referenced stockbroker firms are discount brokers.
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📉 @Stock_indian 📈
📊 Understanding The Role Of A Stockbroker 📊
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Stockbrokers research how companies are doing financially so that they can advise clients as to whether or not they should invest in a particular company. Stockbrokers work for individuals or companies and with other financial dealers. They need to be able to handle stressful situations and have strong communication skills.
➡️ Duties & Tasks Of A Stockbroker
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🔴Buys, trades and sells orders based on research.
🔴Daily studies and interprets data from a variety of resources to determine how a company is doing financially.
🔴Maintains strong communication with clients regarding transactions and potential investment opportunities.
🔴Manages peoples shares and makes financial decisions on their behalf.
🔴Meets with clients to find out specifically their investment interest.
🔴Promotes services to attract new customers.
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📉 @Stock_indian 📈
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Stockbrokers research how companies are doing financially so that they can advise clients as to whether or not they should invest in a particular company. Stockbrokers work for individuals or companies and with other financial dealers. They need to be able to handle stressful situations and have strong communication skills.
➡️ Duties & Tasks Of A Stockbroker
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🔴Buys, trades and sells orders based on research.
🔴Daily studies and interprets data from a variety of resources to determine how a company is doing financially.
🔴Maintains strong communication with clients regarding transactions and potential investment opportunities.
🔴Manages peoples shares and makes financial decisions on their behalf.
🔴Meets with clients to find out specifically their investment interest.
🔴Promotes services to attract new customers.
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📉 @Stock_indian 📈
📊 Benefits of Long Term Investment 📊
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Reduces Transaction Fees (Cost)
Every time you invest, there is a transaction fee incurred. If you invest for a long-term and avoid repeated investments, you save multiple fees.
Tax Benefits (Tax)
Long-term investments are taxed at rates lower than your income tax bracket.
Stability (⚖)
Long-term investments exhibit lower volatility compared to short-term investments.
Best Saving Option (🧰)
Long-term investments serve as a good savings option for post-retirement, future home, or college, education, etc.
Compounding (📈)
Long-term investments grow at a compound rate of interest. Hence, the gain in this type of interest is substantial.
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📉 @Stock_indian 📈
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Reduces Transaction Fees (Cost)
Every time you invest, there is a transaction fee incurred. If you invest for a long-term and avoid repeated investments, you save multiple fees.
Tax Benefits (Tax)
Long-term investments are taxed at rates lower than your income tax bracket.
Stability (⚖)
Long-term investments exhibit lower volatility compared to short-term investments.
Best Saving Option (🧰)
Long-term investments serve as a good savings option for post-retirement, future home, or college, education, etc.
Compounding (📈)
Long-term investments grow at a compound rate of interest. Hence, the gain in this type of interest is substantial.
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📉 @Stock_indian 📈
📊 Benefits of Short Term Investment 📊
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🔴 Short-term investing offers flexibility to the investor as they do not need to wait for the security to mature in order to get cash. On the other hand, long-term investments can be liquidated by selling in the secondary market, but the investor earns lower profits.
🔴 Investors can make substantial profits in a very short amount of time.
🔴 It is less risky as money invested per transaction is substantially lower.
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📉 @Stock_indian 📈
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🔴 Short-term investing offers flexibility to the investor as they do not need to wait for the security to mature in order to get cash. On the other hand, long-term investments can be liquidated by selling in the secondary market, but the investor earns lower profits.
🔴 Investors can make substantial profits in a very short amount of time.
🔴 It is less risky as money invested per transaction is substantially lower.
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📉 @Stock_indian 📈
📊 What Is Day Trading ? 📊
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Day trading usually refers to the practice of purchasing and selling a security within a single trading day. While it can occur in any marketplace, it is most common in the foreign exchange (forex) and stock markets. Day traders are typically well-educated and well-funded. They use high amounts of leverage and short-term trading strategies to capitalize on small price movements that occur in highly liquid stocks or currencies. Day traders are attuned to events that cause short-term market moves. Trading based on the news is a popular technique. Scheduled announcements such as economic statistics, corporate earnings, or interest rates are subject to market expectations and market psychology. Markets react when those expectations are not met or are exceeded–usually with sudden, significant moves–which can greatly benefit day traders.
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📉 @Stock_indian 📈
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Day trading usually refers to the practice of purchasing and selling a security within a single trading day. While it can occur in any marketplace, it is most common in the foreign exchange (forex) and stock markets. Day traders are typically well-educated and well-funded. They use high amounts of leverage and short-term trading strategies to capitalize on small price movements that occur in highly liquid stocks or currencies. Day traders are attuned to events that cause short-term market moves. Trading based on the news is a popular technique. Scheduled announcements such as economic statistics, corporate earnings, or interest rates are subject to market expectations and market psychology. Markets react when those expectations are not met or are exceeded–usually with sudden, significant moves–which can greatly benefit day traders.
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📉 @Stock_indian 📈
📊 Day Trading Strategies 📊
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Day traders use numerous intraday strategies. These strategies include:
🛑 Scalping: This strategy attempts to make numerous small profits on small prices changes throughout the day.
🛑 Range trading: This strategy primarily uses support and resistance levels to determine buy and sell decisions.
🛑 News-based trading: This strategy typically seizes trading opportunities from the heightened volatility around news events.
🛑 High-frequency trading (HFT): These strategies use sophisticated algorithms to exploit small or short-term market inefficiencies.
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📉 @Stock_indian 📈
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Day traders use numerous intraday strategies. These strategies include:
🛑 Scalping: This strategy attempts to make numerous small profits on small prices changes throughout the day.
🛑 Range trading: This strategy primarily uses support and resistance levels to determine buy and sell decisions.
🛑 News-based trading: This strategy typically seizes trading opportunities from the heightened volatility around news events.
🛑 High-frequency trading (HFT): These strategies use sophisticated algorithms to exploit small or short-term market inefficiencies.
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📉 @Stock_indian 📈
📊 What Is Swing Trading? 📊
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Swing trading is a style of trading that attempts to capture short- to medium-term gains in a stock (or any financial instrument) over a period of a few days to several weeks. Swing traders primarily use technical analysis to look for trading opportunities. These traders may utilize fundamental analysis in addition to analyzing price trends and patterns.
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📉 @Stock_indian 📈
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Swing trading is a style of trading that attempts to capture short- to medium-term gains in a stock (or any financial instrument) over a period of a few days to several weeks. Swing traders primarily use technical analysis to look for trading opportunities. These traders may utilize fundamental analysis in addition to analyzing price trends and patterns.
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📉 @Stock_indian 📈
📊 Advantages of Swing Trading 📊
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🔴 It allows you to take advantage of the natural ebb and flow of markets. Financial markets never go in one direction forever, and by being able to take advantage of that, you can increase your returns as you in theory are going to be making money when the market rises over the next few days, and then make some when the market pulls back, as it will certainly do sooner or later.
🔴 By being in and out of the markets, you can identify more opportunities. If you look at any financial chart, you can see that there is almost always a definite long-term trend, but the market might not always be at a support or resistance area. By being in and out of the market in a matter of a few days, (typically) you can collect profits, and identify other markets that are setting up for other trades. This allows you to spread the risk around, and ties up a lot less capital instead of constantly having to come up with margin for new positions as you find new trades. By closing your first position, you will not have to deposit more money in your account to cover the second one.
🔴 Stop losses are typically smaller than longer term trades. The stop losses on a swing trade might be 100 pips based upon a 4 hour chart, while a stop loss on a weekly chart that is based upon the overall trend might have to be 400 pips. This allows for you to place larger sized positions instead of extremely low leveraged ones via the longer-term trends.
🔴 You have clear boundaries. The swing trader is a more technical based trader, and as such will normally have a specific area that they deem as being a sign the trade is working against them. Because of this, you know exactly when the trade isn’t working and can limit the damage a bad trade can do. Longer-term traders normally have to give a wide berth for the markets as they wait for them to “go with the fundamentals”.
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📉 @Stock_indian 📈
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🔴 It allows you to take advantage of the natural ebb and flow of markets. Financial markets never go in one direction forever, and by being able to take advantage of that, you can increase your returns as you in theory are going to be making money when the market rises over the next few days, and then make some when the market pulls back, as it will certainly do sooner or later.
🔴 By being in and out of the markets, you can identify more opportunities. If you look at any financial chart, you can see that there is almost always a definite long-term trend, but the market might not always be at a support or resistance area. By being in and out of the market in a matter of a few days, (typically) you can collect profits, and identify other markets that are setting up for other trades. This allows you to spread the risk around, and ties up a lot less capital instead of constantly having to come up with margin for new positions as you find new trades. By closing your first position, you will not have to deposit more money in your account to cover the second one.
🔴 Stop losses are typically smaller than longer term trades. The stop losses on a swing trade might be 100 pips based upon a 4 hour chart, while a stop loss on a weekly chart that is based upon the overall trend might have to be 400 pips. This allows for you to place larger sized positions instead of extremely low leveraged ones via the longer-term trends.
🔴 You have clear boundaries. The swing trader is a more technical based trader, and as such will normally have a specific area that they deem as being a sign the trade is working against them. Because of this, you know exactly when the trade isn’t working and can limit the damage a bad trade can do. Longer-term traders normally have to give a wide berth for the markets as they wait for them to “go with the fundamentals”.
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📉 @Stock_indian 📈
📊 Disadvantages of Swing Trading 📊
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🔴 You can get whipsawed often. Just because the market shows support or resistance at a specific area, doesn’t mean they will be respecting it today. Also, anytime you place a trade, you are risking money. Because of this, as a swing trader, you are risking it more often. Odds are you will have losses from time to time, no matter how good you are.
🔴 You have to be well-versed in technical analysis. While not necessarily a “disadvantage”, it means extra work. Almost anyone can tell the trend on a chart that is going from the lower left to the upper right over time, but someone trying to swing trade that chart needs to identify entry and exit points. This is something technical analysis can do, but you need to learn it first. This takes time.
🔴 It takes a different mindset than long term trading, and more nerves. While it isn’t necessarily scalping, the swing trader does run the risk of being “spooked out of the markets” as pullbacks in these smaller ranges appear to be more violent than to someone looking at a weekly chart. This is a psychological issue, and one that most traders will eventually have to deal with during their career.
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📉 @Stock_indian 📈
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🔴 You can get whipsawed often. Just because the market shows support or resistance at a specific area, doesn’t mean they will be respecting it today. Also, anytime you place a trade, you are risking money. Because of this, as a swing trader, you are risking it more often. Odds are you will have losses from time to time, no matter how good you are.
🔴 You have to be well-versed in technical analysis. While not necessarily a “disadvantage”, it means extra work. Almost anyone can tell the trend on a chart that is going from the lower left to the upper right over time, but someone trying to swing trade that chart needs to identify entry and exit points. This is something technical analysis can do, but you need to learn it first. This takes time.
🔴 It takes a different mindset than long term trading, and more nerves. While it isn’t necessarily scalping, the swing trader does run the risk of being “spooked out of the markets” as pullbacks in these smaller ranges appear to be more violent than to someone looking at a weekly chart. This is a psychological issue, and one that most traders will eventually have to deal with during their career.
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📉 @Stock_indian 📈
📊 What Is Position Trading? 📊
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Position trading is a strategy where traders and investors aspire to capitalise on strong pricing trends through entering and remaining present in a market for an extensive term. A position trade is a commitment of both time and money, with the intention of realising a sizable gain from the sustained growth of an open position's value.
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📉 @Stock_indian 📈
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Position trading is a strategy where traders and investors aspire to capitalise on strong pricing trends through entering and remaining present in a market for an extensive term. A position trade is a commitment of both time and money, with the intention of realising a sizable gain from the sustained growth of an open position's value.
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📉 @Stock_indian 📈
📊 Advantages Of Position Trading 📊
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The advantages of position trading include the following:
🔵 The negative factors have a minimum degree of influence – if a trader buys, for example, on the weekly chart, he won’t be shocked about the daily price fluctuations. The position trader feels less stressed compared to the day trader.
🔵 The ability to “squeeze out” the maximum of a trend – position traders do not have to regularly open and close positions, thereby losing on spreads.
🔵 High profits – position trading allows you to trade with high leverage, as the probability of a mistake is much smaller than in conventional trading.
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📉 @Stock_indian 📈
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The advantages of position trading include the following:
🔵 The negative factors have a minimum degree of influence – if a trader buys, for example, on the weekly chart, he won’t be shocked about the daily price fluctuations. The position trader feels less stressed compared to the day trader.
🔵 The ability to “squeeze out” the maximum of a trend – position traders do not have to regularly open and close positions, thereby losing on spreads.
🔵 High profits – position trading allows you to trade with high leverage, as the probability of a mistake is much smaller than in conventional trading.
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📉 @Stock_indian 📈
📊 Disadvantages Of Position Trading 📊
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The disadvantages of position trading include the following:
🔵 The need for a high deposit – Position trading with the minimum amount of funds is simply irrelevant. It is likely that the strong price fluctuations will lose everything.
🔵 Swap – The swap is a commission paid to the broker for the transfer of the trade to the next day. If the position is open for a long period, the swaps can accumulate a large amount.
🔵 Risk – The risk is much lower when compared to day-trading or swing trading, but if a mistake is made, it will likely be fatal. If a trader goes against the trend, he will lose not only his deposit, but also the time in which he could generate a profit – don’t forget, we are speaking about months.
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📉 @Stock_indian 📈
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The disadvantages of position trading include the following:
🔵 The need for a high deposit – Position trading with the minimum amount of funds is simply irrelevant. It is likely that the strong price fluctuations will lose everything.
🔵 Swap – The swap is a commission paid to the broker for the transfer of the trade to the next day. If the position is open for a long period, the swaps can accumulate a large amount.
🔵 Risk – The risk is much lower when compared to day-trading or swing trading, but if a mistake is made, it will likely be fatal. If a trader goes against the trend, he will lose not only his deposit, but also the time in which he could generate a profit – don’t forget, we are speaking about months.
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📉 @Stock_indian 📈