What are the advantages of trading on long term basis in stock market?

Stock market is of highly volatile nature and sometimes it is really difficult to predict market movements in the right direction. Because of this day traders finds it difficult to earn profitable returns as market movements of particular day decides what returns they are likely to earn. For better trade results experts recommendations on day trading tips, mcx tips and more can be used while trading. Long term trading is a secured form of trading as it saves from adverse affects of daily market movements.

Some of the most recognized benefits of long term trading are discussed below :

1. Less impact of price fluctuations

Long term investments are less affected by markets short term volatility.Market is affected by all different factors which keeps on changing, long term investments does not gets affected by these short term instability. Stocks which may have been affected by some factors on short term basis often tends to give better average returns in the long term.

2. Less brokerage and tax

Every time you buy a stock along with stock price other cost like brokerage and tax is also required to be paid. Day traders and short term traders have to pay such costs more frequently as they tend to buy stocks more often. Long term traders buy and then hold their position for long durations and therefore they do not have to pay these costs again and again.

3. Do not have to monitor stocks daily

Day traders needs to pay extra attention to market updates and monitor stocks performance throughout the day which is tedious and time consuming as well. Long term traders do not need to monitor stocks performance daily. This gives you enough time to manage job/profession along with trading.

4. Opportunity to earn high returns

Stocks often outperform over a period of time which gives an opportunity to long term traders to earn more profitable returns. In long term, if investment is done after carefully studying fundamental factors then it is likely to help in earning good returns.

5. Compounding

Compounding means reinvesting your bonus/dividend over a period of time with an aim of earning higher profit. Time is greatest friend of investor and therefore long term investment brings opportunity to take advantage from compounding.

Every individual trader has some trading goals which he is looking to accomplish by trading in market. Both short term and long term trading has its advantages and disadvantages, depending upon trading goals a trader can decide he should trade on long term or short term basis. Financial advisory services provider can be consulted to get useful suggestions on trading tips to perform better in market. Long term investment if planned carefully then definitely it is going to help you in earning good returns. Learn your risk bearing capability and follow a disciplined trading practice to be on the safer side and sustain in market by performing well.

I am a financial analyst. I always like to read and explore more about market.