Personal finance point #2: the perils of short-term trading for high profit

by JimmyPage 5 Replies latest jw friends

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  JimmyPage

  The perils of following an approach that advocates short-term trading with the allure of high profits are numerous:

  You're going to rack up enormous brokerage commissions.

  On occasions where your short-term trades produce a profit, you pay high ordinary income tax rates rather than the far lower capital gains rate for investments held more than 12 months.

  You're not going to make big profits- quite the reverse. If you stick with this approach, you'll underperform the market averages.

  You're going to make yourself a nervous wreck. This type of trading is gambling, not investing. Get sucked up in it, and you'll lose more than money- you may also lose the love and respect of your family and friends.
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  oompa

  not if you trade on scott trade....i left the big commisions a long time ago.......but is is addictive.......and is just like gambling......hope you did not experience it all jimmy............oompa
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  LockedChaos

  Jimmy
  Spot on
  
  Been investing for over 25 years
  Most holdings are 18 months old
  
  Some longer
  
  If I get a nice gain (15%)
  I'll take profits
  
  Day Trading Will Kill You
  Options Trading Will Kill You
  This is for pros
  NOT for retail investors
  
  Be diversified
  Panic is not a strategy
  Discipline Trumps Conviction
  DO YOUR RESEARCH
  Buy Good Companies
  Look for nice yields as a hedge
  (make sure they are consistent payers)
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  The Lone Ranger

  Good Advice Lockedchaos
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  The-Borg

  You're going to rack up enormous brokerage commissions.

  Not if your broker is Interactive Brokers, extremely low comissions. Trading is a skill.
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  Warlock

  Your trading style should depend on your own tolerance for risk, not someone else's.

  There is room for both short and long term trading. I do both.

  As for options, those can be used very effectively for long term profits.

  Out of the money calls purchased 6-12 months out can make you some decent money.

  Warlock