Let me give you some basics to stock market investment today. I’m going to cover three types of stock investments that are being done on the market:-
Short Term Investment – This kind of investment is mostly done by stock traders who buy stocks from a very short period of time, perhaps a day (intra day) or a couple of days to a few weeks. Short term investors always keep a target price and a stop loss in mind. If any of the price hits, they exit the stock. The basic idea in mind is to get into a stock that is going to give some appreciation in a short time and book profits and shift to another stock. For short term trading, you need to invest a lot of time into the stock market, whole of the week is gone doing this. Most of the people who have a full time earning through the stock market are into this kind of investment.
Medium Term Investment – This kind of investment is done by the investors who want to put their money into the stocks for a few months to a year. They are mostly the working people who don’t have a lot of time in hands to give to the stock market but want to grow their money through investing in stocks. They are majorly looking to enter stocks that is going to give them a good appreciation in the medium term. They mostly never exit any stock in a loss but only after they’ve got some appreciation. Sometimes medium term investment becomes a long term investment if markets fall a lot. The goal of medium term investors is to get any appreciation that is better than bank fixed deposits or any other kind of low return investments.
Long Term Investment – This kind of investment is done by people who believe in buying a stock and forgetting it. These people never enter the bad stocks, they only invest into companies they know or heard about. They believe that the market is going to continue growing in the longer term period and so will their wealth. They only look for opportunities to buy at the correct time and then forget it. They don’t care what returns they’re getting on a day to day basis because they want to exit the stock several years later. They invest from a very long time period and market ups and downs really don’t concern them as they know by the time they check out, market will be back to its highs.