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Tag: Personal finance

  • Worst Financial Mistakes to avoid in life

    Worst Financial Mistakes to avoid in life

    Some formal financial planning can help avoid a lot of mistakes.One sure thing about life is that it presents you with plenty of opportunities to make mistakes. Now, there are mistakes and there are Mistakes. Making a bad choice at lunch just means you have a meal you don’t enjoy or maybe a jittery stomach for a few days. Financial mistakes, on the other hand, can have a great impact that lasts for years. There are as many mistakes as there are couples, but some are more common than others and there are some Worst Financial Mistakes that one must avoid in life.

    Worst Financial Mistakes to avoid in life

    We make financial mistakes or decisions which can be leading to a financial mistake in life from our high school life step out time. So here by taking into account of the top financial mistakes which are regarded as worst mistake by financial experts to the common financial mistakes that is encountered by most are going to be highlighted .

    1. Never stepped to College to Save Money

    Swear me guys its the first mistake you are doing if you are not having a potential to be independent . I mean we know some great inspirations who never stepped into college and are not even high school completed people but are on top of the world. You can follow them but make sure you are going to be your own boss else the money you save by not going to college is a lifetime loss for you.

    It will be a loss because if you are not a graduate your average starting salary will be very less and getting into a good job becomes tough. You have to avoid this Worst Financial Mistakes is  your life for sure as the consequences of this will be sometimes not just financial but also personal.

    2. Too much Time lag in Paying off student loan

    One common financial mistake that can happen when you are a student is delaying your student loan . You can make it slow but not too slow in the process . One economic analysis of this can be a person who just got into a job is likely to spend much on comforts than paying off student loan . You can relate this action with life cycle theory of consumption in economics where the consumption will be relatively higher than saving in the starting stage and at the retirement age. So it is a financial mistake that a student can do by not paying off the student loan at the early . If you are going to do this Worst Financial Mistakes then you have to move many years with your high interest student loan.

    Read Also : Survive high interest student loans – Amazing Tips

    3. Too quick Student Loan Pay off 

    Now after reading the second mistake i pointed out here you may think what is the right decision about student loan . Simple neither pay too fast nor delay it too much . Give student loan the necessary importance only. Some financial advisers opine that a saving is must from the initial stage else meeting out an unforeseen event will be tough .

    4. Not Having a co-signer on student loan

    Being independent shouldn’t mean you should ignore the little dependency that can avoid unwise financial mistake. When you make your parents a co-signer for student loan you have lot of benefits in this process according to many financial experts .

    5. Over Spending 

    You shouldn’t go for bills that will burn your ass for a month . So you should spend only on what is necessary not a lavish spending to demonstrate others . Unwise decision of overspending is another top financial mistake  almost all end up doing in at least some point of your life.

    6. Making use of the Maximum Limit of Credit Card

    We have to think whenever taking credit , we may have a great limit given on our credit credit . But you will be doing a worst credit card mistake by using maximum limit as you are the one who have to bear the interest and pay it off . So do use only the credit facility which you really require .

    Read Also : Credit Card Debt Myths – Top 8

    7.  Living a life by means of Credit

    Some common mistake is do live beyond your means and people do it by making credit and it just pile up with interest rate . This is going to dwell you into a great financial burden in life which you can’t survive when you can’t live life by your means as all will be for settling credits. It is life ruining Worst Financial Mistakes that one do in their life for sure.

    8. No Health Insurance 

    Health is wealth , we all know that but hardly we understand its depth . Even if you are averagely well settled still a disease can drain your money because we can’t be miser in spending for our good health and recovery . So if you fall sick and doesn’t own a good health insurance you have to meet all the bills from your savings or by any means . Its a risky financial mistake one do it in life . You are risking both your money health and wealth in the same time by ignoring the importance of a health insurance.

    9. No life insurance 

    Your life is precious and those who mean to you as life is still more precious . So the best financial decision is not to make your loved ones to lose hope after your life . If there are people who depend on your income then taking an insurance is best thing you can do. As life has no guarantees and warranties but Insurance companies gives some guarantees and warranties to you. If you have no insurance then its a worst financial mistake you do by risking your dear ones also.

    10. No retirement Plan 

    After your kid’s are being settled in life is the time most couples think about a saving for a retirement plan but financial experts says that its a bad financial decision to take in life as you should start thinking about your retirement plan at even from 20s if possible at least by 30s you must have one retirement plan this will help you to get additional benefits .

    11. No investment 

    Saving alone can’t be an ideal financial management way . Ideal money has no use in your future so you have to avoid that financial mistake in your life . Think about early investment plans according to your needs so you can get good benefits from your savings . But investment should be done after a good research and don’t delay your investment it be again a  Worst Financial Mistakes because the market changes every time which crucially affects all sort of investment plans.

    Read Also : Short term Investment Plans – Pros & Cons

    12. No diversification on investment 

    Worst financial mistakes most of them do in life is investing everything into one source. What happens when you do this is that suppose if its going to be loss you will suffer a great loss but in the case your diversify your investments then there is likely balancing between your profit and loss . Diversification is a method to avoid and reduce the risk so you have to do it wisely.

    Read Also : Investment on Stocks and Shares -Pros and Cons

    Read Also : Mutual Fund A Complete Guideline – All You should Know

    13. Following traditional investment psychology

    There are few people who go behind investment plans like black sheep like their parents did but the time and market is on a great move. So come out of that else it will a Worst Financial Mistakes that you will be doing in this generation.If you can’t identify yourself one then go for a financial adviser who will help you with right investment procedure.

    14. Not having a market knowledge

    You want to invest and you are going to invest tomorrow . This will be seriously pulling your leg as you are doing a Worst Financial Mistakes without any idea about the market condition whether it is a profitable time of investment and what can be the predictable market condition at the time you nee back your investment and return . You must be aware of the market condition and then only take your decisions.

    15. Not covering your backside

    So, what’s your plan for emergencies? If the first thing that comes to mind is borrowing from mom and dad, you have a problem. Having a supply of ready cash for unanticipated expenses does wonders for your peace of mind. If you can’t manage that, have an “emergencies only” credit card or line of credit. Talk to your financial adviser for some blunt truth about your insurance situation. If you don’t have enough coverage, an accident or illness could leave you or your significant other destitute.

    16. Not Saving enough

    Lack of savings is another result of falling to the Worst Financial Mistakes. Most couples want to retire some day, without their lifestyle taking a big hit. If you don’t know how much money you’ll need for that to happen, talk to a professional. The answer might be a real shock to you, so be sure you’re sitting down. Putting aside enough money to retire comfortably, pay for your kids’ education and deal with life’s emergencies along the way is a major task. The sooner you get a reality check and put a plan in place, the better you’ll do.

    17. Late settlement of credit card bills

    When you take credit card debt you must be very careful about the pros and cons of credit cards . When you do not settle your credit card debt then your interest rate will even increase to 30% when you delay it much.

    Also this will affect your credit score you must have a healthy credit score to get loans easily. So try to avoid doing such a worst financial mistake in life.

    18. Taking Risk beyond your capacity

    Whenever you take a financial risk make sure that it is something that is under your control and even if it goes wrong its at you level of affording . Many people lose the control of life by taking financial risks that is beyond their limit to meet which is a Worst Financial Mistakes. 

    19.Not Paying Taxes on time

    Paying tax is really a benefit to you in all ways but keeping a tax debt is really a Worst Financial Mistakes one do and it will be inflating so the risk you take by making tax debt is really serious than you could ever imagine . And by not paying tax you are not able to find the fruitful benefits you get as a tax payer also.

    20.Lack of a good budget plan

    Whether it’s a country or a company or a family everything can be met out only with a healthy budget plan. So a very good financial budget that covers a savings and a source to meet any other sudden expenses must be essential . If you don’t have a good budget plan then its a worst financial management way you are doing .

    21. No additional Income opportunities

    As we hear the news of alarming rate of job cut down in different industry . You cannot rely upon one job and its income to run a smooth financial situations in life . You must always have additional income opportunities to support your finances at any time.

    22.Trying Too Hard

    For some couples, the shoe is on the other foot. Perhaps your parents drilled fiscal responsibility into you, or you grew up poor and swore your life would be different. Although it’s a laudable ambition, beware of trying too hard. If every penny of your income is accounted for and allocated, you probably haven’t built enough “give” into your budget. Remember, life is short. Salt away as much cash as you need to, but keep out a few dollars for fun. It will help keep your stress levels down, and you’ll enjoy your life more.

    23. Carrying Too Much Debt

    Some debt is necessary in life. For example, your mortgage makes it possible to live in your home while you pay it off. However, a great deal of consumer debt is unnecessary. If you’re carrying credit card balances from month to month or paying stiff financing charges on your latest purchases, it’s time to take a hard look at your spending. Consumer interest rates can suck you dry over the years, sapping countless dollars from your long-term goals. Set yourself a goal of eliminating unnecessary, high-interest debt by a specific date, and then make it happen. One day, your 401(k) will thank you.

    24. Not Planning

    This is one of the most important financial mistakes people make, and it’s often the root of many others. If you have no clear plan or direction for your finances, even a high income won’t necessarily mean a secure future. Talk to your sweetie and hammer out some financial goals. Settle on a strategy for saving, paying the bills and still having a few dollars to call your own. Talk to a professional planner, ideally a fee-only adviser who doesn’t sell individual products. Expert knowledge can maximize even a modest income, reducing your tax burden and improving the return on your investments.

    25. Spending too much on Home and car 

    When buying a home first think about the space you really need and give some space for your desire . But don’t go for making large square feet homes for a small family size to show off people .Have a look on the ideal checklist of buying first home to make it smooth process. Because your home loan is to be paid back with interest and same in the case of car that new models arise every month so trying to afford the best each time will end up as worst financial mistake of life

    These are the common Worst Financial Mistakes that people do in life which should be avoided for a good financial stability in life.

     

     

     

     

     

  • Short term Investment Plans – Pros & Cons

    Short term Investment Plans – Pros & Cons

    The frenzy to accumulate as much as possible starts from ants and ends with humans. We live a life building ground for our next step. Finance planning has taken major portion of your brain’s activity, not to mention the stress lines on your forehead and premature grey along your hairline. There are two types of Investment -Short term and long term. Standing at the fork of these roads, we ponder over the lengthy mundane policy guidelines looking for a helpline, a simple sentence which conveys a simpler idea for smart and safe investment.To do a smart investment here we discuss on the Pros and cons of Short term Investment Plans.

    Smart financing is trending, and lack of patience and trust drives people to save somewhere safe and solid. Savings are done by investing your cash in some form that would yield returns/additional benefits- monetary or otherwise. There are different forms of investments, but the ones that all of us are clearly interested and working towards is how to reap what you sow in very less time. It means everyone is interested in short term investment plans.

    What is Short term investment Plans?

    In a not so professional-banker-style, it is to simply put away your resources or assets, which we will very cleverly refer to as capital ,to good use (by not spending it), for a span of few years (typically 1-3 years or less, in fact, it starts from 3 months onwards). It is not an investment until you get back more than what you have put in. So, that sums up our definition for a short term investment. Preserving your assets to ensure its safety and gain additional benefits on return.

    Still if it is not clear here it is in most simple words. Here is a more polished short investment definition .

    short-term-investment-plans

    Short Term Investments as the name itself will define it that it is short term ie) mostly investments made for short period of time. It is part of certain account of the present assets of some company’s current balance sheet usually.Short term investment plans are made for avoiding risk in the capital and it is mostly aimed to get converted to cash within an year.

    • It meets 2 requirements where first and foremost thing the asset which we have kept as short term investment should be easily convertible to cash .

    Example:  Stock price of a company will be attracted by investors to have a share of it.

    • Second requirement is that asset should be easily sold or convert to cash within a period of 3 to 12 months.

    What makes short term investment plans so attractive?

    Primarily, I would say, Need. The necessity to use the money in near future drives this kind of investment. Why is it so desirable?

    • The benefits of short term investment plans are that, firstly, you can break open your piggy bank sooner than later. The tenure for which the investment is made is short, ensuring low risk and faster access to your assets.benefits-of-short-term-investment
    • Secondly, the possibility of losing your investment is low. Short term investments generally are low risk investments given the time period and security (most of the available schemes). The idea behind investments of these kinds are to retain your assets more than multiply.­­

    Top Short Term Investment Plans

    So given that there are lots of investment schemes available, how do we choose the best? And what are the available choices. Here is the list of best short term investments with their pros and cons involved in each of them.

    Fixed Deposit

    If you have a problem with withholding cash and you want to get away from it without getting rid of it, fixed deposit is one such good short term investment plans.

    • A guaranteed investment :

    No risk involved. The return of your investment is certain.

    • No temptation:

    Idea of fixed deposit is to keep funds from being used for a stipulated period. Most banks do not encourage premature withdrawal (usually charged with a fee). This ensures the safety of the investment from self’s squanders.

    fixed-deposits

    • Flexibility of schemes:

    Money can be invested from 1 month or for 5 years depending on the investor’s convenience.

    • Fixed rate of interest:

    Fixed deposit ensures your cash remains safe but what it does not offer is

    • Higher returns :

    The returns at the end of tenure may/may not be higher than that of a savings account but it is not significantly high.

    • Low risk:

    May not be as fruitful as perhaps an investment in stock market or gold.

    • Not much of a tax benefit.

    So fixed deposit is a guaranteed Short term Investment Plans .

    Short term debt funds

     These schemes are basically mutual funds similar to FD in terms of the interest. MIP (monthly income plan), liquid funds, stocks and shares all come under debt funds.

    The advantage of short term debt funds over FD is tax benefits. This means the returns at the end of your stipulated period is more than what you receive from an FD.

    Gold Investment

    A typical investment in India where purchasing gold is considered a status quo and an investment. The idea behind assets in form of Gold is because of its high value in times of need. Considered to have highest resale value and continuous increase in price, this is one of the most preferred form of investment.

    Read Also : Gold purity and hallmark -Buyer’s Guide to choose the Pure Gold Jewellery

    Having said that, ornamental gold is not as much an investment as one expects.

    gold-investment

    • Taxes and Taxes:

    On purchase, additional bracket in your bill comprises of VAT, wastage, sales tax, making charges, which amount to a significant sum in the total bill. This is not considered during an exchange/resell. That is, the value of your gold is minus the amount you spent on previously mentioned categories.

    • Good for only updating to latest designs:

    The value of resale gold is not entirely taken. There is a 6-7% decline in the rate of resale gold and cashing it instead of exchange further reduces its value to about 10%

    • Storage:

    Physical storage of gold is not possible due to fear of burglary. In case these are preserved in bank lockers, a stipulated amount goes into maintaining them.

    • Wastage & Impurity:

    Extensive design requires extensive impurity. Mixing of other metals with gold for tensile strength is not an uncommon knowledge but the impurity matters when it is tested for sale. The amount of gold wasted (gold dust) for making these intricate designs are unaccounted for yet paid for. So end up paying for Gold more than it is worth.

    • Tax reduction:

    Investment in gold does not waiver your taxes as compared to other investment schemes that influence/reduce your Taxes. Lesser ITR, I say!

    • Unpredictable:

    The demand in gold has taken a massive dip many a times in past few years. This can happen in the future too. Unless you are buying gold, such conditions may not be favorable if you are trying to sell them.

    But, as mentioned, in case of dire needs, Gold can always be sold, mortgaged or exchanged at any point of time, making it a suitable investment.

    Savings Account

    Yet another common form of investment is savings account. The idea is simple and safe, every drop makes an ocean; a very famous dialog in our household every time I splurge on something.

    • Readymade withdrawal (ATM) and deposit of cash.
    • Account book becomes an additional identity proof
    • Quick transfer of money to other account.
    • Internet transactions.
    • Benefits on reaching prescribed goals set by particular bank.

    But what you may not get on a savings account is listed as follows.

    • Low interest rates:

    The growth of your investment is almost negligible.

    Each bank has a limit on the amount of customer’s deposit. If your savings exceed their limit, their insurance may not cover the rest of the amount.

    • And yes, the most obvious reason being, you will want to spend them. Given the easy access, it won’t be a tough job to do either.
    • Some banks have minimum balance maintenance. If the deposit/investment falls below their threshold, penalties are charged against the account holder, usually a certain amount.

     Recurring Deposit

    If you want to make a monthly saving but with better interest rates, recurring deposit is one of the ideal schemes available.

    • Deposit amount starts from as low as 500 upward
    • Fixed monthly investments.
    • Flexible duration: from 7 days to years as desired.
    • It has fixed rate of interest which is slightly better than savings account.

    Recurring deposits means periodic deposits. What may pose as constraints in recurring deposit are:

    • Punctual deposition: Money has to be deposited to your recurring account on time without fail, defaulting can cause penalty
    • Premature withdrawals are possible but some banks charge a fee.
    • No tax benefit.
    • Once fixed on the deposit money, it cannot be changed.
    • Low interest rates.

    Monthly Income Schemes

    Again counted to be a secured form of investing your assets for a short (optional) period. Monthly incomes schemes are offered by banks as well as post offices. MIS in post office is preferred over banks because of the following advantages:

    • Interest rate is good compared to fixed, recurring or saving account. Typically it is 8.5%.
    • Maturity period is for 5 years. So your investment stays safe for the period of time, growing.
    • A pre-closure facility is available after a year of opening the account but before 3 years.
    • It provides a monthly interest that can be credited to your account.
    • This interest in turn can be used as a source for recurring deposit or used for daily purpose.
    • These deposits are exempt from wealth tax.
    • The MIS can be opened by a single individual or 2-3 people together or for a minor through a guardian.

    All this makes it ideal short term investment plans for many .

    Given the interest rates are higher compared to other kind of deposits we have discussed so far, these deposits also come with some common limitations like

    • No tax benefit
    • Deduction of 1% if the account is closed prematurely after 3 years.
    • Limit in investment- 4.5 lakhs per individual and 9 lakhs for joint account.
    • Non-Indian resident is not allowed this investment scheme.
    • Minors have a deposit limit of only 3 lakhs

    The MIS schemes offered by banks and private financiers have longer maturity periods and is more a question of security of your investment.

    Recurring Deposit

    PPF is another vital short term investment diligently followed by the working class people. The benefits reaped from PPF are as follows:

    • No eligibility for opening the account. Opening a Public Provident Fund is a simple process and there are pre-requisites to be met for the same.
    • The savings cannot be withdrawn and has specific time period for which it has to be maintained- ensures the investment remains unspent.recurring-deposit
    • Good rate of interest. An interest rate of 8.7% is applicable per annum on PPF.
    • Tax exemption. This is one of the major reasons why PPF is more popular investment option. The annual investment to PPF and the interest earned out of are all exempted from your income tax.
    • Any amount can be deposited to your account. There is no fixed amount.
    • A loan or pre mature withdrawal from your PPF is possible.
    • It is also exempted from debt, liability and wealth tax.
    • A sure form of investment, the amount deposited remains safe.
    • This account, like MIS, can be opened for minors too.

    If you look for tax exemption on investment then this is the best Short term Investment Plans for those who want tax exemption.

    Though the benefits reaped are high, PPF investments come with clauses like –

    • Money cannot be withdrawn from the account until 7th year of opening your PPF account.
    • Joint accounts are not possible.
    • NRI (Nonresident of India) cannot have a PPF account.
    • Maximum investment cannot exceed 1.5 lakhs.
    • Investments can be made only 12 times in a fiscal year, much like a recurring account.
    • Most companies (public and private sector) make mandatory providential fund savings, which is no different from PPF. They even have a VPF (voluntary providential fund) open for employees who wish to make additional contribution to their savings.

    These are not just some of the short term investment schemes available but also most preferred ones in India. The goal behind a short term investment is to save the capital rather than multiply it. More than looking at the cons of a scheme, the nature of the scheme that would suit one’s needs should be analyzed. Read through the policy and guidelines, analyze different schemes available and the benefits, opt the one that suits the best.

    Draw a financial roadmap

    Form an idea as to how to much to invest, and for how long to invest. Consider your immediate and future needs and decide on the term of investment and then pick your ideal Short term Investment Plans.

    financial-roadmap

    Read through current affairs: Be aware of the shift in market, in terms of value of gold, stocks and shares, their growth.

    Analyze Risk: How much to invest is the question.

    From the different schemes available, consider the amount of money you are ready to invest and the kind of investment you are ready make based on the risk involved and the returns.

    Cash at hand: Always make a plan B. No matter how low risk it is, having a backup is good as far as money is concerned. Invest your money in different schemes and ensure there is always some emergency funds at hand for unpredictable circumstances.

    Financial Advisor : They can do the ground work for you and help you make a smart investment. Their insights on not just investment, but taxation and tax efficiency helps make a better financial plan.

    Now let us understand the short term investment plans with their risk level , here is the investment risk level analysis chart –

    Chart explaining the risk level of different types of short term investments with tenure of investment
    Investment type and risk level chart

    Having read the whole article, do not make a decision. Instead, collect the knowledge acquired and talk to a financial advisor. They do not have a degree in finance for no reason.End of the day, ensure you do not get into any shady business, caught up in the need for investment.So go through it well and find your best Short term Investment Plans.

  • Swing Trading Vs Position Trading – Pros and Cons

    Swing Trading Vs Position Trading – Pros and Cons

    Here we will discuss on a most interested trading concept comparison – Swing trading vs. Position trading . You may be aware that there are different trading styles . Here we are picking up comparison of just two different styles of trading . That is a comparison between Swing Trading Vs Position trading .

    What is trade ?

    Before we begin with the cross comparison between Swing Trading Vs Position Trading , let us take a look at the basic concepts like –

    What is trade

    Trade is nothing but simply an act of exchange of commodities and services in return for money .

    Trader Vs Investor

    Here let us begin the discuss by pointing out the key differences between trader and investor . Also this would be well understood by understanding Trading Vs Investment .

    Investing Vs Trading both differs even though it sounds similar . Trader and Investor participates in financial market but their approach and goals varies.

    Trader looks for profit frequently in every month but an investor is happy with the annual return of same percentage.

    Aim of both investment and trading , is to gain profit but the profit creation approaches of a trader and an investor really varies.

    Trading is a frequent exchange process , i mean selling and buying happens so frequently but investment is a period of time process to get profit .

    Several people who become interested in trading are firstly introduced to the financial markets through the process of investing. The main purpose of investing is to build wealth slowly over a period of time. This is generally accomplished through a buy-and-hold approach for e.g.: investing on stock or mutual fund etc and monitoring the price to fluctuate over the investment period of time.

    Trading profits are achieved basically through:

    • Buying low and selling high
    • Short period process and the time duration of trading is based on the style of trading .

    Trading Styles – Trader’s Style 

    There are mainly four different trading styles that exist but if we look deeply we can find basically Trader’s style is counted to five .

    So there are totally 5 trading styles .

    • Position Trading
    • Swing Trading
    • Day Trading
    • Scalp Trading
    • High frequency Trading

    Trading Style Time Frame Holding Period
    Position Trading Long Term Months to Years
    Swing Trading Short Term Days to Weeks
    Scalp Trading  Shortest Term (Very short)  Seconds – Minutes
    Day Trading Short Term Day only

    The chart explains the Holding time period and time frame of each trading style in a way how each trading style differs. One should know about the pros cons of each trading style to choose the Ideal trading style that suits you .

    Read Also : Investment on Stocks and Shares -Pros and Cons

    Read Also : Short term Investment Plans – Pros & Cons

    Read Also : Online trading beginner’s guide to online investment

    Read Also : Forex trading beginner’s Guide to Earn without Loss in Forex

    Here we will take the comparison of two primary trading styles – Swing Trading Vs Position Trading

    Swing Trading Vs Position Trading – Pros and Cons

    On the comparison of two primary trading styles – Swing Trading Vs Position Trading , first let’s understand what is position trading and swing trading .

    Position Trading

    Before we compare Position Trading Vs Swing trading , let us understand what are these trading styles individually.

    So , What is Position Trading ?

    Based on stock trends , position trading focus upon the intermediate trends .Position trading is an approach in which the trader either buys or sells contracts and holds them for an extended period of time. Position trading is also known as ‘trend trading‘. Positions can be open for a few days, a few weeks, and a few months or longer than that at times. They are also held during periods of minor retracement with the expectation that they will eventually continue trending in the desired direction.

    Position trading is generally long term , but the investors always keep a close look the price chart and fluctuations regularly . The fall in price over short period is generally ignored. Position traders are known to be investors with a combination of fundamental and technical analysis .

    Now let’s take a look at the pros of Position trading before comparing Swing Trading Vs Position Trading.

    Read Also : Mutual Fund A Complete Guideline – All You should Know

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    Position Trading Pros 

    • Position trading is the easiest to learn also it is estimated that up to 25% of position traders learn to become profitable easily.
    • Position trading is less stressful as compared to swing trading.
    • It is Easier to become successful even if you have less start up capital.
    • It is easier to predict the market as follow and observe the market trend on regular basis.

    Position trading is the most profitable type and also less time consuming than the other trading.

    Position trading Cons

    • As positions can be highly leveraged and trades remain open for extended periods of time it gets difficult to get in regular benefits of interest.
    • There is a build in risk associated with position trading as there can be a major fluctuations over night in the market.
    • In position trading Money can be tied up for an extended period of time that can stop entering into new positions as they arise.
    • Because of the duration of time involved in position trading, traders can experience major decline in an investment with the belief that it will turn around and start trending back soon in the needed direction.
    • Psychologically this can have a very harmful effect.

    Swing Trading

    Swing trading is a short-term plan used by various traders so as to buy and sell stocks whose technical analysis that indicates different trends like an upward or downward trend in the near future which last usually one day to two weeks.

    Swing traders are never bothered about the long term value or fluctuations of a stock . They always look for the near term of the stock and closely watch whether a stock can rise or fall using technical analysis.  

    Swing Trading Pros 

    • It doesn’t have to be a full time job and it is for long term with long time duration. Any person with enough capital for investment and accurate knowledge can try swing trading.
    • One can sit back and relax as he/she doesn’t have to keep their eyes on it as swing trading doesn’t require continues monitoring or observation.
    • Trades takes time to work out in that situation it is best to keep a trade open for a few days or weeks so that it results in higher profits than trading in and out of the same security several times in a day

    Swing Trading Cons

    • It is unpredictable as No wonder how much alert you be in the day time but markets can make a quick move overnight while you’re sleeping hence the market is closed. If in case such a moves overnight is against your trade, it can be a mean arousal after you check your position the next morning.
    • You hold up your capital for longer duration with swing trading as compared to day trading.

    Both the trading style are good and bad in their own ways . On a comparison of Position Trading Vs Swing trading,  one cannot directly advocate that this style of trading is the best .

    Because the final decision of every trader is influenced by certain trading factors like – risk tolerance , time , personality ,experience in trading , size of account etc.

    So you can let us know which is your preferred style of trading – Swing Trading Vs Position Trading or something else !!!