Mutual Fund Investing

If you are new to the markets, it is imperative that you work hard to educate yourself before risking any money.  The lure for people to invest in the markets is usually started by learning of others successes rather than failures.  Many people will tend to overstate the profits they have made while at the same time understate the losses they have taken.  It is very common to not want to relive a painful moment when speaking to others about your investment decisions.  So before you decide to take the plunge, you will have to figure out what exactly it is that you are tying to accomplish

In order to start down your path, you will need to recognize the three methods to get involved with the markets:   short term (minutes to days), swing trade (days to weeks) and long term investing (weeks to years).  Just identifying which one is appropriate for you can seem easy, but in reality it is probably one of the most important decisions you will make.  You have to match up the trading style with your personality and your level of risk

Short term trading is also know as day trading and can strictly be intra-day only or it can entail holding positions overnight as well.  This is probably the riskiest type of trading for most people and requires the most amount of time.  For those who have a full time job when the markets are open, this type of trading is not appropriate other than in rare circumstances.   While some people do day trading manually, others prefer the help of a day trading robot to automate things.

Swing trading is much more manageable than trying to learn day trading for most people, but still requires constant monitoring during the day.  With swing trading the amount of time and concentration required is far less than with day trading, but it will still require you to monitor your positions each evening, and if something is close to a price target or stop area, monitor during the day as well.  The goal of swing trading is to capture a much larger move than with day trading, often targeting a 5%, 10% or even higher move in price.  Because you are holding for bigger gains and a longer period of time to reach those gains, the amount of actual trading activity is far less than with day trading.  Anyone looking to swing trade should keep in mind that its far less risky than day trading, but still entails betting on the short term direction in the price of a stock.

Long term investing is what most people are familiar with – buy and hold.  The main thing that has diffentiated over the last ten or so years is the economic climate, which makes it a riskier proposition to just buy something and forget about it.  Countless people have made this mistake only to have stocks with significant gains turn into a major loss.  One thing every investor must do is to have a cut off point even on a long term position where they are out no matter what.