Short term investing with shares
Do you want to trade in the short term , for example in the form of day trading ? Then read the tips below carefully, to limit losses and the risk you run.
Be prepared to cut your losses
Day traders regularly get into trouble by holding a position for too long . The so-called ‘averaging down’, as it is so nicely called in English. If you are going to invest in the short term, it is important that you are prepared to take any losses . Holding a position for longer can lead to greater losses. The prices do not simply show a reverse trend. Moreover, a position held for too long not only costs money, but also time that you could have used to make another good investment. Also keep in mind that you have to make up for a 50% loss in value with a 100% profit compared to the new value. Therefore limit your loss , so that you need less profit to achieve a positive return.
Keep an eye on the news
If you keep a close eye on the news, this can ensure that you take the right position when investing in the short term or can act on the basis of the news. If you expect a lot of volatility in a certain direction, you can already take a position when the first reports reach the outside world. It is a relatively risky way of trading in the short term, but it does provide considerable returns if you are successful in it.
You can also immediately tap into the news if you see a certain trend on the market . In this case too, it is important to follow the news and be able to act on it immediately. This is generally a slightly less risky strategy, but it does require faster action . The returns you can achieve are also slightly lower, because you enter at the moment that a trend is already visible, as opposed to if you had already taken action during the first news reports.
Risk a maximum of 1% of your capital
When day trading or short-term stock trading, it is wise to never risk more than 1% of your capital in a particular investment or position that you take. Professional investors use even less than 1%. This way, they always have the opportunity to make up for any losses and ensure that they do not get into trouble because of this. Therefore, assume a maximum of 1% in a particular trade. Over time, you can reduce this even further, if you manage to grow your capital and can make multiple investments.
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