Long term traders adopt a buy and hold strategy, which means buying an asset and holding onto that assest for a number of years until increases the value.
FTSE 100 or Dow Jones has average yearly increase in value between 5% – 10% and this proves to be a good long term strategy for many investors.
There is, off course, a risk with this strategy, especially on bear markets, that can see major indices of 20% corrections in a short space of time. This is where using dread betting can be even more worthwhile as a hedging tool to migrate against the risk of the long term investments losing value.
Long term investors can go short to the value of their physical holdings, meaning that any loss in in the value in their portfolio can be countered by profit an their short sell trade.
Main features of long term traders:
- they adopt a buy and hold strategy
- they utilize spread betting as hedging tool against losses to investments
- typically they put money into the markets as opposed to sitting in the bank account earning minimal interest