If you are a beginner and want to indulge yourself in trading this strategy can be a little painful. This is particular for skilled traders who can hook up themselves all the time to market screen.
Active investment strategy describes investment to an investment fund which involves actively managing the portfolio, through analysis with frequent buying and selling of stocks.
These are performed by professional fund managers who is responsible for all sort of selecting buying and selling of stocks for which he will charge high fees.
This type of trading involves risk factor to a high level and for this reason, fund managers charge more to give better performance.
It’s a short-term trading strategy and may last for months weeks days or even minutes.
They believe in investing in selected stock rather than investing in the whole market. They search for low risk, cheap and high-quality potential stocks.
It involves high risk, high return policy.
Trader following this strategy believes that they can outperform the index by selecting only those securities which have some potential and eliminating others and can even exist at the time of the market crash, booking their profits which are not in the case of passive investment.
It introduces the concept of portfolio management where an investor seeks for potential stocks and make their portfolio.
Investors can perform all type of investment analysis which includes fundamental, technical or behavioral analysis.
Some of the technical features involve price-earnings ratios PEG ratios, including ratio analysis, stock chart analysis and other mathematical measures to determine whether to buy or sell.
Investor here need to commit his time for continuous examination of market movements monitoring the price movements so that they can book short term profits and ensure proper entry-exit timings from the market
Are you the right person? Who should use this?
If you are risk lover, want to generate earning in short period of time then this may work out with you. This requires heavy charges for fund managers, investors those who follow this need to have a notion of buying high and sell higher. One need to be strong in technical analysis and analyze the market properly.
This strategy demands huge dedicated time and trade may take in few minutes.
If you are occupied with your job and not able to give time this is not your cup of tea. You also need to experience yourself in analyzing and taking quick decisions and delay even for a minute can make a huge loss.
Think twice before you switch to this strategy as this make some permanent damage to your trading experience.
- Short term trading which may last up to months.
- Involves risk in the strategy
- Full-time commitment and need all type of analysis
- Frequent buying and selling ensures this strategy may outperform from index and have potential to earn profits even during market crashes
- emphasize on selecting only quality, cheap and potential stocks rather than investing in the whole market
This strategy brings high risk to your hard earned money. The greed to earn fast make people dive using such strategy and greed and fear further make things miserable.
Though it has high potential to help you earn money in few minutes but is only possible when done with knowledge and expertise of using graphs and charts.