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Active Investing

19/03/2010 by admin

Active investinginvestinginvesting is a strategy of buying and selling products in rapid succession in order to take advantage of temporary market conditions. Though the process can be highly profitable, it can also be highly risky. While many investors take a long-term approach to buying, this is not the case with activeactiveactive investinginvestinginvesting.Active investors combine fundamental and technical analysis, moving in and out of the market in accordance with the phases of the business cycle.

The major differences between active investing and trading are:

  • A longer time frame;
  • Increased emphasis on value;
  • Risk diversification; and
  • Stop-losses set with higher loss limits, because of the emphasis on value and diversification.

Active investing emphasizes fundamental stock values, comparing earnings prospects to the current market price.here is no firm rule as to when something becomes an active investment. Generally speaking, holding onto a security or investment for days or weeks, rather than months or years, can make it an active investment, but the definition is relative. Oftentimes, active investing will require making several trades a day, especially in the commodities or foreign exchange markets. These are highly fluid, and change very quickly, depending on conditions.
Active investing is highly involved. Unlike passive investors, who invest in a stock when they believe in its potential for long-term appreciation, active investors will typically look at the price movements of their stocks many times a day. Typically, active investors are seeking short-term profits.

Filed Under: General Tagged With: active investing, investing in shared, stock trading, STOCKS, trading

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