Many retired folks that manage their own portfolio buy stocks because they believe they will go up and up and up. So they sit on a dozen stocks, and might buy one or two as funds allow. They might sell the odd stock because it doesn’t grow fast enough. This type of trader will very rarely short a stock. It is all about “stocks go up”. In 2018 most of this sort of trading worked really well.
If you picked strong companies you would probably have gotten 10% return. Great. Nothing wrong with that approach. One challenge is the thought of the market crashing down. Then all their stocks will fall together and reducing the capital substantially. Of course, the thinking is that that’s ok, they will recover. And sure enough, over time the do and you are back to where you were. If they had stops however, they would have been out of the trades earlier thus saving some capital. But I think the thinking is that then I don’t own any stocks! Then thee is the issue of trading commissions. Which can rack up if you trade often. But all that said, I am all for the Buy and Hold strategy. It has worked for years, and will work forever.
However, for me that approach is like watching grass grow, There are some of us retirees that want a little more action, more trades and enjoy the thrill of it. I love trading. It is a passion. For the Buy&Hold crowd it is more of a remote sideline. Once in a while they look at their portfolio and do what they do and forget it. I envy that, I can’t do that. I need to be involved.
So the term “Day Trading” is overused. I am more of a “Week Trader”. The typical professional day trader will make dozens if not more trades a day and rarely be in any trades at the end of the day. They will sit and watch the charts and news screens and make quick decisions, trade and try to scrape profits in a very short time. Sometimes as short as minutes. Sometimes hours. But 90% of all trades will be closed by the end of day. That is NOT what I want to do. Way to stressful.
I am sort of in the middle. I like to research and do my analysis, pick a few daily possibilities and trade them in the morning. I will decide in advance what would be a likely profit level and set my limit and stops accordingly. 2:1 is ideal. I am NOT looking to buy into the big gain or short the long down trend. All I want is a slice of the increase or drop in price. And move on. In my trades, this could be anywhere from 3-4 hours to a couple of days. I will look to be out of all trades by Friday end of day. Because all sorts of things could happen over the weekend.
BTW – I trade CFDs and with Avatrade there is no commissions on stocks – just a reasonable spread with a great leverage.
So I guess it is a combination of B&H and day trading. Week Trading.