The process of setting investing goals is a good method of organizing and directing your investments. Investing for a secure retirement will entail long term investing, paying attention to the price to earnings ratio as well as stock price in value stock investing. Investing shorter term to help buy a home may mean a more leveraged approach using options trading, investing in the futures markets, and learning about technical analysis tools such as Candlestick chart analysis. Diversifying a stock portfolio will reduce investment risk and allow an investor to pursue short, medium, and long term investing goals.
Goals for investing will be how much money you will need and when. Buying a car or making enough for a down payment on a house may be a short term, one to three year, goal. Making enough money in the stock market, commodities trading, or the futures markets to send you children to college could take anywhere from three years to fifteen. Stock market investment to assure yourself an early and comfortable retirement can require many years, depending upon how much investment risk you are willing to accept.
Short term trading can fit nicely into short term investment goals. Trading is something that you can do every day and something that you can do when you have the time. Either way you will need to learn and understand technical analysis tools such as Candlestick charting. Letting the market tell you what the market will do can take guesswork out of buying stocks, selling shares, options trading, and other trading or investments.
Medium term investing goals such as college for your children will require a different mix. Traders can continue buying calls and buying puts in an attempt to leverage investment capital. However, the trader will also want some equities that give a steady return on investment and reduce long term stock market risk.
Investing for the long term will involve longer term stock market trading strategies. The trader will continue to use stock market technical analysis tools and Candlestick trading tactics to take advantage of stock market trends. He or she will engage in more fundamental analysis of stocks too. The longer term approach will allow the trader to put on his investor hat and engage in stock picking of promising penny stocks, underpriced equities with strong balance sheets and companies with good products in the pipeline.