Three Short Term Investing Methods

by on February 14, 2014

If you want to earn money investing, but are very impatient, then investing for the short term could be for you.  Short term investing is not only a way to speculate with your money, but if done with lower dollar amounts can actually be a hobby of some sort.  Here are three ways you can win or lose your money quickly.

Day Trading

Day Trading has been popular for years, but was so popular during the 1990s that people started quitting their day jobs to day trade the stock market.  Back when the market rose almost every day it might have been a little easier, but in a normal market day trading is not easy.  Day traders typically focus on a few stocks or a market index.  They research and study how the stock typically trades on a daily basis and then they use their knowledge to buy and sell the stock quickly during the parts of the day when it moves.  Typically, a day trader does not hold any stocks at the end of the day.  In other words, all their buying and selling is done during the same day, often within a few minutes of each other.  The key is to not hold risk (stocks) after the market is closed because then they lose control.  If you’re interested in learning how to day trade, I suggest you read a book about it and then do your research on the best method that makes sense to you.

Binary Options

Binary options are a relatively new form of investing where you purchase an option to receive either money or an underlying security if a certain condition happens.  For example, you could purchase a binary option that pays you $100 if the asset the binary option is tracking is above a given point.  When the option expires, which is usually in a matter of minutes or hours, if the underlying asset is above the strike price, then you receive the money.  If it isn’t, you lose the money you invested to buy it.

Binary options are typically very short term and offer an all or nothing return.  They are traded through online trading platforms that specialize in binary options, but are also gaining tractions on some of the major exchanges.  Binary options are traded on a select number of individual stocks, on foreign currency rates, and on stock indexes.

Proprietary Trading Programs

I’m sure you’ve heard the commercials advertising a trading system that will make you rich.  These are typically proprietary trading programs/platforms that try to use an advanced computer-driven technique to identify stocks that are going to move rapidly.  The programs allow you to get in and out of stocks quickly, and they try to predict when you should do so.  It is unproven whether these programs work or not, but like any tool, much of your success will likely be determined by how well you use the tool.  If you’re interested in learning more about these programs, I suggest you do a lot of research.  And always use a free trial program to test out for yourself whether the tool would have made you money (before you actually invest your real money).

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