There are two schools of thought in investing: one is technical analysis, based on charting historical data; the second is fundamental analysis, which looks at how investment decisions are made by people in their everyday lives. In order to succeed at either method, you need to understand the difference between being a day trader, who purchases and sells securities instantaneously, and being a technical investor, who are looking for trends in the market. Day traders may make money in the short term, but over the long haul they may not see the same returns. Technical investors, on the other hand, will usually make money year round, if not consistently.
In stock trading, day traders and technical analysis are often confused. Technical analysis looks at the history of prices, looking for a pattern or trend, like the green flag on the left chart above, indicating that a stock is overbought or oversold. Technical investors look for a stock trading system, like the Doubling Stocks system, that uses a time-tested, mathematical algorithms to identify the best trading times. They use these methods, coupled with their own research, to create a daily strategy that is always working towards one goal: earning them money!
So how can day traders and technical analysts compete with each other? Both have their advantages and disadvantages. For example, while day traders can be wildly successful because of the short-term price fluctuations, they are not concerned with long-term investment plans, like those of fundamental analysts. They simply want to make money as quickly as possible, regardless of the state of the stock market. Day traders may invest hundreds of thousands of dollars each week, depending on their luck, while investors with longer-term investing goals typically invest just a few hundred dollars per week.
Day trading also allows investors to work with a smaller trading team, if they choose. You need to remember that the vast majority of online brokerages do not allow you to open a trading account for less than a thousand dollars. If you are willing to spend more money on your trading, it is still unlikely that you will earn anything close to what you would if you were to open a trading account with a full-service broker. However, you can trade many stocks using a brokerage, since you will still be working with a professional who has made a living trading stocks for many years.
Another advantage that online brokers have over full service brokers is that they usually allow traders to trade on a short period. This means that short selling is a very popular strategy for short term investments. Short selling is the practice of selling a stock that is currently trading below market value in order to make a profit on the sale. The idea behind short selling is that when a stock is bought below market value, you can buy it back later for a higher price. Although short selling trades require a great deal of skill, there are ways for beginners to master this method without losing much money.
Online stock trading provides new traders and experienced ones with an easy way to manage their portfolio. By accessing an online trading account, traders can check up on their investments at any time, from anywhere in the world. It is also possible to manage multiple investments at once, since many brokerage firms offer their clients a managed portfolio where different stocks are grouped together based on their performance. These managed portfolios are designed to maximize returns, but they also allow traders to more easily choose which stocks to invest in based on their own research.