One of the most effective ways to increase your investment success is to look at the big picture; in other words, you should think about the long term. Unfortunately, a significant portion of the general public spends a considerable amount of time investing in a stock and then selling it after only holding the stock for a short period. Several investors choose to sell stocks after only a few weeks of ownership, and some even sell stocks on the same day they purchase them. Gabe Plotkin is a firm believer that short-term stock trades, mainly very short-term stock trades (for example, holding on to a stock for a few hours or a few days), are hazardous, similar to betting. The fact is that participating in this type of trading is not a long-term investment in your future at all; in fact, there are numerous disadvantages to being a short-term trader to consider.
Increased Trading Expenses
Many people appear to be unaware that every time they buy or sell a share online through fxcess online trading company, they are required to pay a fee to the trading company. Not to minimize the fact that online trading has significantly reduced the costs associated with purchasing and selling stock, but it should be recognized that the numerous charge fees will add up over time. In particular, if you buy and sell stocks frequently, as those involved in short-term stock trading often do, you should be aware of this.
Another factor that can affect your bottom line is the bid-ask spread, which is the difference between the quantity you pay for a stock and the amount you can sell when the stock is available for sale. Because of the increase in the bid-ask spread and commissions, you may find yourself spending more money than you are earning when short-term trading.
Returns on Investment are negligible.
To be clear, I am not implying that you cannot get lucky and make a significant profit on any particular stock that you buy or sell. However, it has been established that investors who hold onto their stocks for the long term have a better chance of making a profit in the stock market than those who do not. As a result of your constant buying and selling of stocks, you end up spending a significant amount of time away from the stock market. If you do not participate in short-term stock trading, you may lose out on some of the profits of traders who do not participate in short-term stock trading.
