I think every investor goes through a period of time where their investing is, well all over the map.  They are unclear as to which stocks they want but more importantly how long they want to hold them in order to make a profit and avoid a loss.  Although no one can tell you what strategy is right for you and let’s face it they all carry risk of losing money there are three main strategies used when buying and selling stocks.

Day Traders are investors who generally buy and sell the same stock in the same day.  This type of trading is not limited to just buying stocks, they may also buy and sell stock options, currencies, or a whole range of futures.  None of the later three are recommended for the novice trader as they can be extremely volatile, in some cases the investor can lose far more than their initial investment.  Typically day traders may hold a stock for a matter of seconds or minutes, additionally they may buy and sell the same stock several times during the course of a day.  They tend to be out of the market (sell all of their stocks) before the trading day ends to avoid any possible after market gap downs (a situation where a stock may open the next day at a lower point than it closed the previous day).  Day trading requires a significant amount of time on a daily basis.  Generally people who day trade are doing this for a living, spending their entire day at the computer buying and selling stocks.

Swing Traders try to follow the momentum of the stock market when buying stocks.  When markets are in general moving to the upside swing traders will buy stocks that fit whatever criterion they are using to select stocks, selling when this swing in the market has topped or nearing what they have calculated to be the top.  Swing traders will hold stocks a matter of a few days, weeks, or even months depending on the momentum of the stock market.  Although swing traders don’t spend quite as much time focused on the stock markets as they are following the momentum of the market this style of trading still requires a great deal of time spent researching and monitoring the markets.

Buy and Hold Traders also called Long Term Traders are stock market investors who are buying stocks and holding them for a long period of time.  This category most likely constitutes the largest group of people who are buying stocks as it requires the least amount of time spent focused on the stock market.  Yes you can have a life and still be a long term investor.  Typically people who fall into this category purchase a stock based on their calculated criterion and hold it for a longer period of time, this could be months to several years.  Of the three styles of investing this category of trader is the only one who may hold a stock during a down point in the stock market believing that once the down trend is over the stock will rise. 

No matter which style of trader you fall into or feel best matches your stock buying interests they all carry risks to your financial well being.  None should be entered into lightly and all require the investor to spend time researching a stock and understanding the company before making any investing decisions.  Thorough research should be done before buying stocks yourself.

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