A few bad days can be instantly erased after a few good hours within the stock market for long term investors. That’s the beauty and simplicity of a long term approach, but the downfall is that profits don’t occur at a high rate. When a decline in overall prices occurs, investors scramble to buy up shares because the stock market has a long history of continuous upward motion. It might take several months or more for this to happen, but prices go up on the average, and have, since the U.S. based stock markets first opened up. However, short term traders are not looking at where stock prices will be ten years from now. They are focused on a few days from now, or even later that same day.
Clearly, the long term investment strategy is of a higher certainty to be profitable, but that does not mean that a short term approach cannot be profitable over the long run as well. A successful short term approach can be stretched out to be a long time success, too, if structured soundly. The trick is to find what works for you. The ups and downs will be more severe, but when done correctly, the ups will be higher than the downs are low, and this means bigger profits.
For most people, this cannot work, simply because they do not have the time or the energy to dedicate themselves to following the markets closely enough to gain the experience and education necessary to do this well. However, with binary options, the ease of entry is much better. There are lower deposit requirements, and you can risk much less at once to still find worthwhile gains. In the stock market, a pattern day trader needs a minimum of $25,000 to operate an account. With a binary options broker, you can employ a similar trading style with as little as $500. It makes it much easier to successfully pursue short term trading, all while giving you a way to slowly immerse yourself within it, gaining experience and knowledge, all while risking an amount that will not be missed in the event that you have a few bad trades to start out with.
This is because you don’t need a high degree of accuracy in order to see profits. They ask you to pick a direction (up or down), a range (within or outside of a set of prices), or whether or not the price will move to a fixed price in a certain amount of time. There can only be one of two outcomes: you are right in your prediction or wrong. If you are right, you are rewarded with a full profit from a determined percentage. If you are wrong, in most cases, you lose all that you risked. Obviously, you will want to be right more often than you are wrong, but the degree by which you are right doesn’t matter. If you pick up, and the price goes up a penny, you are given the same profit rate as if the price had gone up by $100.
Market knowledge is necessary–you have to be much better than random–but you can start with tiny amounts and work your way up while you gain this knowledge. Most brokers allow $25 trades, and you can trade stocks, indices, currency pairs, and commodities on the same platform. It opens up new opportunities than a stock brokerage would be able to, and it allows you to trade on your own terms. It’s perfect for beginning short term traders, but it also can help those with experience figure out alternative ways to increase profit rates, too.