Short Term Stocks to Buy

Short term stocks are meant for quick returns. The short term trader generally wants fast returns in a week, month or a few months. So, a different style of stock investing needs to be used for this kind of investments. Short term investments do not just mean buying and exiting from stocks, but it also involves extensive stock research and a knowledge of stop losses at right points.

Choosing the Right Stocks

Look at Stock Structure
While choosing short term stocks to buy, you need to study the individual stock structure quite carefully. The study of technical aspects becomes more important than the fundamentals when you think of short term stock trading. This is because only a positive stock structure can cause the prices to rise. Due to introduction of new software, you get to look at the technical charts of stocks quite instantly. So, go through the charts and study stock price movements before you buy stocks. Stock investing would be a good idea only if you see a reversal pattern forming on daily and weekly charts. This reversal of trend will suggest or indicate an upside or positive break out in a stock. This is the ideal situation to build your longs with stop losses below the buying price.

Check for Rise in Total Volumes
Rising volumes will be the best indicator of growing positions being built in a particular stock. This can help you in taking a decision whether you should enter it at the current market price or not. Volumes mean the total number of shares which are traded on different stock exchanges of the single stock. Historic volume data is available on various stock market websites which you can definitely refer to.

Consider the Prevailing Sentiment on the Sector
Every company is placed in some or the other sector for proper analysis of its performance and growth path. It never happened that the market sentiment for all sectors is positive at all time of the year. Some sectors under perform the broader markets for some time while the sectors performing well may slow down a bit in the days to come. For choosing short term stocks, you should go for those whose market sentiment is positive and conducive for a spurt in stock price since you want immediate gains. A wrong investment will result into your money getting stuck without getting any significant returns. Intraday trading strategies can be invented by considering this factor.

Avoid Overvalued Stocks
Another suggestion when buying short term stocks is to stay away from over valued stocks. This is because the constant rising pattern is bound to break at some point and this will further lead to a steady fall in price. Such fall can bring the stock price to the same levels from where it actually started moving up. So, buying such stocks is of no use. So, you need to identify and choose the ones which have not been noticed yet and have the potential to deliver good returns. This requires stock research and knowledge of current happenings. Devising new stock trading strategies is important for all.

Decide Capital to be Invested
You need to be very clear about the amount of money you wish to invest in short term trading. You should not surpass that capital amount and stock whatever the market conditions are for your own good. You need to have sufficient cash to invest if any opportunity arises in the near future. These tips will help you implement the concept of day trading for a living.

By following these methods you will be able to emerge successful in this fast format of trading. So, hoping that you will implement these suggestions, I would like to sign off here. All the best and do well!

DISCLAIMER: This article is just for reference purposes and does not recommend any stock market transactions.