Market Briefs Newsletter

Subscribe to our FREE finance & business newsletter to get financial news you can finally use.

Thanks for signing up to Market Briefs! Please check your email to confirm your subscription. If you don't see the email in an hour, check your spam and promotions folder. 

Be sure to read our Privacy Policy & Terms of Use.

  • Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
Minority Mindset

Minority Mindset

Defy all odds.

  • Home
  • About
  • Blog
    • WEALTH
    • REAL ESTATE
    • CRYPTO
    • STOCKS
  • PRODUCTS
  • MONEY 101
  • GUAC TALK
Advertiser Disclosure

Our promise to you.

Minority Mindset, LLC is an independent, advertising-supported publisher. We are not an investment advisor. Always do your own due diligence and never blindly listen to a random article on the internet. We do our best to provide financial education with our free videos, articles, tools, and other self-help content. But these are for informational purposes only, they’re not investment advice.

Minority Mindset does not and cannot guarantee the accuracy or applicability of any information regarding your individual circumstances. The examples we provide are hypothetical and we encourage you to get advice from a qualified professional regarding specific investment, tax, legal, and financial issues. Previous market performance does not guarantee future performance.

We want everyone to be able to make educated financial decisions. We do not feature every company or financial product available. However, we’re proud of the financial education and guidance that we provide at no charge.

We’re paid by our brand partners and advertisers. This may influence which products we mention, review, and where they appear on our site. But it does not affect our recommendations or advice.

See more from Investing

Beginner’s Quick Reference Guide To Understanding Stock Market Trading

February 15, 2021 by Minority Mindset Team

minority mindset logo
Minority Mindset Team February 15, 2021

M1 Finance Short-Term Day/Swing Trading VERSUS Medium to Long-Term Investing 100% 11

Disclaimer

We only endorse products that we truly believe in. Some of the links below may earn us some extra guac at no additional cost to you. Please pass the chips & thank you for feeding our habit.

If you’re new to stock investing and trading, understanding the difference between short, medium, and long-term investments is the first step toward getting started.

This article helps you discover what type of stock activity may be best-suited to your goals.

Whether you’re looking to actively trade in the hopes of cashing out on a “big win” or looking to build wealth through long-term investing, we’ll help point you in the direction that aligns with your objectives.

PlatformPromotionsLink
Get a cash bonus of $30-$500 when you deposit $1,000+ in the first two weeks.Invest Today
Get one free stock priced up to $225 when you link a bank account.Invest Today
Get two free stocks when you deposit $5 within 30 days.Invest Today
Start investing with as little as $1.Invest Today

There are three ways to invest in the stock market: short term, medium term, or long term. 

Short-to-medium Term Stock Market Investing

Active stock traders are people who attempt to profit by trading and selling stocks. Active stock trading is not a passive investment, as it requires time to make trades.

There are two types of active stock trading representing two distinct trading strategies: day trading and swing trading.

Day Trading

Day trading is a short-term investment strategy that involves buying and selling several securities within the same day. 

Day traders do not hold stocks overnight.

Day trading usually revolves around technical analysis and charting systems.

Day trading typically involves more profit than swing trading, but its time and financial requirements are more demanding.

Most day traders invest 15 – 40 hours per week into stock activity, even when using automated systems, because researching, buying, and selling stocks is time-consuming. 

This makes it challenging, if not impossible, to hold down a job or run a business while day trading.

Additionally, U.S. law requires day traders to maintain a $25,000 account balance at all times.

Swing Trading

Swing trading is a medium-term investment strategy that involves buying and selling securities over weeks or months.

Swing trading includes buying and selling around short-term swings in the market.

For the most part, this approach doesn’t experience dramatic losses or gains as quickly as day trading, but investors can still experience massive wins and losses.

Swing trading is challenging but isn’t as demanding of your time as day trading, so it allows you to participate without giving up your day job.

While there is no legal minimum account balance required for swing trading, investors need to deposit funds in advance of purchase and should generally plan to keep at least $5,000 – $10,000 in their trading account.

Short-to-medium Term, Active Investing For People Who Love Trading

Day trading and swing trading require more time and investment than long-term stock market investing. The short and medium-term investment strategies require understanding and skill to earn profits.

Active trading is not a long-term wealth strategy since it doesn’t provide a passive income.

So why do people do it?

Active trading can be a fun and competitive challenge, especially for people who enjoy learning about the stock market and don’t mind taking risks.

While the idea of high payoffs can be tempting, potential day or swing traders should be aware that it takes time and learning to break even as a day or swing trader. Many people practice for years (“paper trading”) before spending actual money on stock trading.

Interested in swing trading? 

M1 Finance is an excellent place for beginners who want to buy, sell, and hold stocks for the medium- or long-term. You can buy and hold for days and weeks, as swing traders do, or create a long-term investment portfolio that builds wealth over time.

Join M1 Finance today to get started trading or investing in stocks!

Long-Term Stock Market Investing

Stock market investing is a long-term strategy whose end goal is to build wealth, often for retirement. 

Long-term investors typically purchase index funds and hold on to them for decades, although some take a different approach, selling when there are dramatic changes in the market.

Start investing in the stock market today! Open a commission-free account with M1 Finance now

Long-term investors often use a non-emotional “buy and hold” strategy, holding on to their investments and often reinvesting their dividends for decades before withdrawing any profits.

This lowers the risk and increases the chances that their assets will earn profits over time.

While this investment strategy isn’t as exciting as active trading, it is an excellent choice for people who want to build wealth over time.

Investing in safer, more diversified stock choices can provide a passive income that grows significantly throughout the years.

Long term investing requires no time investment after you set up your account and develop your portfolio. This time savings is a significant advantage for anyone who runs a business, holds a job, or simply doesn’t want to spend their time actively trading stocks.

Anyone can get started with long-term stock market investing, and the younger you are when you get started, the more wealth you’re likely to build over time.

For example, a 20-year old who invests about $360 per month and receives an average return rate can retire a millionaire. Waiting until your forties to begin investing means you’d need to invest about $2,000 per month to achieve the same results.

Long-term investing chartSource: Business Insider

Getting started with long-term stock market investing is simple and doesn’t require much money. 

For example, you can open an account with M1 Finance for only $100 and never have to pay any fees. 

M1 Finance is an excellent place for beginners to get started with stock investing. 

Its visual approach to stock investing includes allowing you to build your own “pie” of investments or choosing a professionally-built pie based on your investing goals.

Open a commission-free account at M1 Finance today.

Aligning Stock Market Trading And Investing With Your Financial Goals

There are several ways to invest in the stock market, and you should choose the strategy that aligns with your financial goals.

Any type of investment is a risk, whether it’s real estate, business, or stocks, but certain types of stock purchases carry more risk than others.

Short- and medium-term trading require more time, investment, and risk than long-term investing, but may be a good match for people who love the stock market and enjoy a challenge.

Long-term investing provides a lower-risk alternative for people who want to build wealth over time. 

It doesn’t require a great deal of time or effort to get started with stock market investing and is an excellent way to work toward developing a passive income stream for your future.

M1 Finance makes it easy for beginners to start investing. Open a commission-free brokerage account today

Understanding the Stock Market: The Benefits of Consistency

Above all else, the number one thing that you can do to understand the stock market and to make the most of your investments is to invest consistently. That means putting all the money you can afford into good investments and letting them ride. When you have more funds, dump them in and keep on doing so over the long haul. Rather than trying to determine when to engage in quick stock trading or other medium-term investment strategies, it's often best to ride the waves and only sell when you've made a significant return — or you need the money.

What you shouldn't do

Simply put, long-term stock trading strategies stipulates that you should buy in when you have the funds and sell when you need them. Try your best to avoid timing the market or to get ahead of certain dates with your investments — you're more likely to jeopardize your investment money than to hit on a winner with that kind of approach, and it'll also shield you against making decisions based on emotions rather than sound financial advice.

Even the experts can fall victim to trading too much, as well as the decrease in the performance of a portfolio, if they lean too heavily on timing and trying to beat the market. After all, stocks mostly go up given a long enough time frame, which is why you hear of those “if you only bought stock X decades ago you'd have a fortune today” stories that are common in investor circles.

Understanding the Stock Market With Consistent Investing

For the most part, consistent investing is one of the best ways that you can increase your understanding of the stock market. Forget about what the market is doing on a daily or weekly basis — you can actually make money by investing in good companies and letting your investments ride. And with the proliferation of convenient mutual funds and ETFs, you don't even have to narrow down your investments to specific companies at all.

In fact, several funds and ETFs mirror the larger U.S. stock market, or you can also double-down in a certain sector via convenient funds that take a lot of the guesswork out of it. Instead of worrying about whether a company will still exist over the long haul, you can invest in an overall industry that you think will overperform, allowing you to reduce your risk while also increasing what you can potentially make on your investments.

Make a Plan and Stick To It

If you're looking for a guide to stock trading for beginners, one of the most beneficial pieces of advice is to create a plan and to stick to it. Since the plan is made before you have any money in the market, you'll be able to better ride out those fluctuations that could force you to sell low and buy high, which is the exact opposite of what you should be doing with your investments.

While you may not ever learn how to understand stocks and why certain stocks go up while others trade sideways or even go down, you can always refer back to your plan and increase your understanding of the stock market by taking the emotions out of your trading decisions. Then the only thing you have to do periodically is to rebalance your portfolio based on your desired risk allocation — indeed, you may want to sell investments that have outperformed so that you can lock in those gains and minimize your exposure to a future dip or sideways trading.

Keep Reading:

  • Should You Consider Socially Responsible Investing?
  • Top New Year’s Resolutions That Can Change Your Financial Future
  • How Stock Investing Works – A Getting-Started Guide for Beginners
minority mindset logo

Written by Minority Mindset Team.

The Minority Mindset has nothing to do with the way you look, your ethnicity, or your skin color. It’s a mindset. #RethinkRich

Primary Sidebar

Advertiser Disclosure

Our promise to you.

Minority Mindset, LLC is an independent, advertising-supported publisher. We are not an investment advisor. Always do your own due diligence and never blindly listen to a random article on the internet. We do our best to provide financial education with our free videos, articles, tools, and other self-help content. But these are for informational purposes only, they’re not investment advice.

Minority Mindset does not and cannot guarantee the accuracy or applicability of any information regarding your individual circumstances. The examples we provide are hypothetical and we encourage you to get advice from a qualified professional regarding specific investment, tax, legal, and financial issues. Previous market performance does not guarantee future performance.

We want everyone to be able to make educated financial decisions. We do not feature every company or financial product available. However, we’re proud of the financial education and guidance that we provide at no charge.

We’re paid by our brand partners and advertisers. This may influence which products we mention, review, and where they appear on our site. But it does not affect our recommendations or advice.

More From Investing

  • How Does The Gemini Hot Wallet Compare - 2022 Wallet Review
  • Is Investing In The Stock Market Worth It?
  • Is SoFi Legit? Using SoFi To Invest
  • What Age Should You Start Investing In Real Estate?

Get Your FREE Guide To The Stock Market

& our daily newsletter

Thanks for signing up for our financial education emails! Check your email to confirm your subscription. If you don't see the email in an hour, check your spam and promotions folder.

Be sure to read our Privacy Policy & Terms of Use.

Featured Investing Posts

Gemini Hot Wallet Review

How Does The Gemini Hot Wallet Compare - 2022 Wallet Review

Is Investing in the Stock Market Worth It?

Is Investing In The Stock Market Worth It?

Is SoFi Legit? Using SoFi To Invest

What Age Should You Start Investing In Real Estate

What Age Should You Start Investing In Real Estate?

The Latest On Investing

REITs VS Real Estate Mutual Funds

REITs VS Real Estate Mutual Funds - Which Is Better?

Stock Market Investing Accounts

Best Stock Market Investing Accounts for 2022

Kraken Crypto Review 2022 - Why You Should Use Kraken

Binance Review

Binance.US Review 2022: A Trusted, Beginner-Friendly Option?

M1 Finance Review

The Ultimate M1 Finance Review - Great For Experienced Investors

RealtyMogul Review

RealtyMogul Review (2022) - How It Works, Fees And More

Robinhood Review

Robinhood Review - How To Use Robinhood In 2022

The Ultimate Fundrise Review 2022

How To Invest In Bitcoin with $100

How To Invest $100 In Bitcoin Today

Webull Alternatives

Webull Alternatives To Consider - Top Investing Apps In 2022

Footer

Keep Hustlin’

Company

  • About Us
  • Store

Help

  • Contact Us
  • Advertise
  • YouTube

Legal

  • Privacy Policy
  • GDPR Opt-Out
  • Comment Policy
  • Terms of Use

Follow us on:

Disclaimer: The information on this site is of a general nature only. It does not take your specific needs or circumstances into consideration. You should look at your own personal situation and requirements, and seek independent professional advice, before making any financial decisions. Our content is provided for informational purposes only, and no content that is provided or included in our products or services is intended for trading or investing purposes. We will not be liable for the accuracy, usefulness, or availability of any information transmitted and/or made available by way of our products or services, and shall not be responsible or liable for any trading and/or investment decisions made by you based on any such information. For a further understanding of this Disclaimer and use of our site, please see the information contained in our Terms of Use and Advertising Disclaimer.

Minority Mindset may earn a portion of sales from products that are purchased or recommended through our site as part of our Affiliate Partnership with retailers and brands.

Minority Mindset has partnered with CardRatings for our coverage of credit card products. Minority Mindset and CardRatings may receive a commission from card issuers.

© 2022 Minority Mindset, LLC. All Rights Reserved.