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Why is short-term trading considered to be a bad idea?

Discussion in 'Investing' started by StockJock-e, Apr 4, 2016.

  1. Gray Wolf

    Gray Wolf Well-Known Member

    Apr 3, 2016
    Likes Received:
    I don't think another conspiracy theorist is going to change my perception of long term vs short term. I'll give you a D- for effort though.
  2. Onepoint272

    Onepoint272 2019 Stockaholics Contest Winner

    Apr 26, 2016
    Likes Received:
    I'm not clear how one's perception; one's ability to see, hear, or otherwise become aware of something through the senses could be changed by a conspiracy theorist. Sorry, I'm a bit of a tea partier when it comes to the proper use of words.

    The Hatter opened his eyes very wide on hearing this; but all he said was, “Why is a raven like a writing-desk?”
    “Come, we shall have some fun now!” thought Alice. “I’m glad they’ve begun asking riddles. — I believe I can guess that,” she added aloud.
    “Do you mean that you think you can find out the answer to it?” said the March Hare.
    “Exactly so,” said Alice.
    “Then you should say what you mean,” the March Hare went on.
    “I do,” Alice hastily replied; “at least–at least I mean what I say–that’s the same thing, you know.”
    “Not the same thing a bit!” said the Hatter. “You might just as well say that ‘I see what I eat’ is the same thing as ‘I eat what I see’!”
    “You might just as well say,” added the March Hare, “that ‘I like what I get’ is the same thing as ‘I get what I like’!”
    “You might just as well say,” added the Dormouse, who seemed to be talking in his sleep, “that ‘I breathe when I sleep’ is the same thing as ‘I sleep when I breathe’!”

  3. Rock Sexton

    Rock Sexton Meat Popsicle

    Apr 6, 2016
    Likes Received:
    Yolo's advice to that poster is pure hindsight talking. Nobody knows 100% that they could have left the money in something like an index fund avoiding the rigors of trading until AFTER THE FACT.

    One has to consider the time value of their money when placing it in markets. For the OP, when they're placing all of the $1,000 in one trade - the longer they're in the trade the less opportunity they have to take other trades and the increase of risk rises as well - the latter of which could theoretically wipe him out.

    My personal opinion is that you can have two kinds of accounts, either long term swing or short term trading and you should never co-mingle the money between them. For the small guy like the OP, short term compound trading while building the account up IMO is the wiser direction. I say that with a caveat because you have to be an awfully disciplined trader with such a small port size and in the beginning your win rate will need to be high.

    I would never suggest day trading with such low capital though.

    A recent example comes to mind when talking about this situation. I'm currently managing my parents IRA and for the last two years or so my father has been pestering me about buying into RAD (RiteAid) on nothing but pure speculation from stuff he swore he read online. I absolutely refused and basically told him to STFU and let me continue trading the account the way I know best - which strictly adheres to my method. With compound gains I had the account up 13% last year and here in 2017 it's up 39.5%.

    Had my father been in control - most, if not all of the account would have been bludgeoned as the speculation behind RAD being acquired went sour. The stock has plummeted all the way from the 9's down to 1.79.
    #23 Rock Sexton, Oct 14, 2017
    Last edited: Oct 14, 2017
    Onepoint272, T0rm3nted and Jrich like this.
  4. Herbisoo_17

    Herbisoo_17 New Member

    Dec 12, 2018
    Likes Received:
    He-he! That’s right term for my dad. He invests a lot in stocks and also opt for Risk Profiling at times. I don’t understand him at times. He is brave and takes all pressure at once and sometimes he is scared to invest like this. Have to learn this from him though. This is a helpful post for people like me.
  5. ifmc institute

    ifmc institute New Member

    Jan 3, 2019
    Likes Received:
    Short-term trading can be very lucrative, but it can also be risky. A short-term trade can last for as little as a few minutes to as long as several days. To succeed at this strategy, traders must understand the risks and rewards of each trade. They must not only know how to spot good short-term opportunities, but also how to protect themselves.

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