Short Term Trading
After the market had its meltdown, I was honestly afraid to look at the statement from broker. My wife and I had been putting a little away each month for our kids’ college. We both worked and the portfolio we had created with the help of our broker was the result of five years of savings. For this reason, I left the envelope that enclosed my statement unopened on the desk in my office for several weeks. When I finally did get around to opening it, my worst suspicions were realized—our portfolio had been nearly cut in half. I was so upset that I immediately called my broker and closed our account.
In the coming months as the markets stabilized, I started to think about investing again. But, for obvious reasons, I was more than a bit apprehensive. That’s when a friend of mine told me about short term trading. He said short term trading could be risky, but now was the perfect time for it. When markets are severely depressed, certain stocks get oversold. He told me that oftentimes quality stocks that are still reporting solid earning get dragged down simply because they are in the same sector or industry as stocks that are under pressure.
While I was still a little hesitant, I had confidence in my friend. Five years ago he quit his job to trade stocks full time, and he’s done very well for himself. In the middle of an economic crisis, the guy just put a huge addition on his house and put in a swimming pool.
When I ask him how he did it, he tells me he owes it all to short term trading. Later I discovered that my friend actually only follows one stock. He watches this single stock all day long to see how it trades. According to him, he can then see patterns in how the stock sold. Then he buys and sells the stock based on these movements. I was shocked when he told me he sometimes bought and sold this same stock dozens of times a day. Apparently, short term trading is all about making lots of little profits many times a day. But when the closing bell rings, those little profits really add up.
After our conversation, I decided to give short term trading a try. No, I didn’t quit my job and become a day trader—my wife would have killed me. But I did watch a few stocks very closely for about an hour or so every day. When I began seeing what I thought we patterns, I made a couple of small trades. In a few months I had made a several thousand dollars short term trading, which I immediately transferred to the kids’ college fund. I don’t know if we’ll recoup the money we lost in the market collapse any time soon, but with short term trading, at least we have a chance.
