Can Regular Trading be as Good as a Long Term Investment?
When you hear about long term investment, you might think of “Rakesh Jhunjhunwala”. He is considered the best investor in India.
But the success did not come in a day. He entered the Stock market in 1985 and has been consistently trading since.
Regular and consistent trading is the best way to build your long-term wealth. The money earned from regular trading can be used for long term investment.
What is Stock trading?
Stock trading is buying and selling stocks for a short-term period, and the moto of stock trading is to profit from the daily fluctuation of the stock price.
Stock trading can be best practised on shares with higher liquidity and less volatility. So select the best blue-chip stocks and start trading.
Stock Trading Strategies
Several stock trading strategies will help a trader maintain a steady income for the long term.
Leverage Buying
When you start trading, you will encounter several opportunities to make money, but a lack of instant capital will hold you back.
Leverage buying will allow you to utilise the opportunity. You can contact your broker and buy the stock by paying a fraction of the purchase price.
Select Less Volatile Stocks
Volatility is the riskiness of the stock. When you plan to engage yourself in regular, systematic trading, you should opt for less volatile stocks.
The prediction of price movement can be made better on such stakes.
Buy Futures
Futures derive their value from the underlying stock. The movement in the Future price is directly related to the activity in the underlying stock’s cost.
But the price of the Future is a fraction of the underlying instrument’s price. So, you can enjoy the price movement without paying fully for the underlying asset.
Avoid Penny Stocks
Penny stocks have lower market capitalisation and mostly trade below INR 10. They are very risky and illiquid.
If you buy the share, then the chances are high that your capital will be stuck, and you will not be able to get out of your position in a short period.
So, try to avoid penny stocks in intraday trading.
Confluence Trading
Intraday trading is primarily dependent on chart signals. Try to mix two or three indicators to reach your final decision. Don’t base your strategy on a single indicator.
Use Limit Orders
Most traders incur losses due to reluctance to use “Limit Orders”. Always use “Limit Orders” when you are going for trading.
It will not only help you to limit your losses but also preserve your capital.
Conclusion
Consistent trading over a long period has proved to be a constant source of earning for many investors. The most crucial thing in trading is discipline.
Always use Stop-Loss, don’t buy penny stocks, don’t be greedy, and don’t put all your eggs in one basket; keep these lessons in mind, and you’re golden.