Before we begin any investment activity, we must have determined beforehand what we are really willing to do. The amount we will be investing and the time horizon we will set for earning profits from this activity are two of the most important decisions we will have to make, based on which we will plan our strategies, implement our tactics and determine which tools to use.
At this point we can’t say much about which amount is appropriate for investing, since it is up to our discretion and depends to a large extent on our financial situation, on how attractive we consider that an investment is and on our philosophy in general.
Depending on the profit taking time horizon, traders are divided into two main categories:
• Day Traders and
• Long Term Traders.
Although there are other categories in the middle, we will look at the differences between the two above categories.