Editor’s Note: Marc Lichtenfeld has traded both sides of the market – and lived to tell about it.

Starting on a professional trading desk where positions lasted minutes, not months, Marc learned what it takes to profit in fast-moving markets.

But as his career evolved, so did his approach. Today, as Oxford Club’s Chief Income Strategist, Marc focuses on building “Perpetual Dividend Raiser” portfolios designed to compound wealth over years.

That unique perspective – from split-second trades to decade-long holds – gives Marc insights most analysts simply don’t have.

In today’s piece, he’s sharing the framework he uses to help traders find their natural rhythm instead of fighting against it.

Whether you’re drawn to quick scalps or patient accumulation, Marc’s three-question system will help you stop second-guessing and start trading with confidence.

– Ryan Fitzwater, Publisher

In my 20s, I started out on a trading desk where traders rarely held any positions overnight. They were day traders who got in and out of their positions in a matter of hours – and sometimes minutes.

As my career evolved and long-term investing became my focus, I shifted my goal to owning “Perpetual Dividend Raisers” for multiple years.

Now I find stocks that my readers should be able to hold indefinitely as the companies raise their payouts every year.

The Appeal of Quick Trades vs. Patient Investing

But that’s investing. On the trading side, it’s appealing to be in and out quickly.

With some stocks, you have to wait a few weeks for a catalyst or technical pattern to play out. And that’s fine.

There’s nothing wrong with earning double- or triple-digit returns in a few weeks or even months. Most investors would be thrilled with that kind of performance.

However, some traders enjoy the action and don’t want to wait weeks for the payoff. They prefer to be in and out in a matter of days – sometimes within the same day.

The Hidden Benefits of Short-Term Trading

While trading is more speculative, there are some risks with long-term investing that are eliminated with trading. For example, you don’t have to worry about getting overly attached to a stock because you’ve held it for a long time or because you believe in the story surrounding it.

Understanding Different Trading Timeframes

Intermediate-Term Trading

Intermediate-term traders typically own stocks for a few weeks or longer. They’re waiting for a story to play out, such as an earnings report, a drug approval, or a completed chart pattern.

They’ll usually set stops that give the position some room to move. That way, they won’t get shaken out by market noise, but they also won’t suffer too large of a loss if the trade goes against them.

Shorter-Term Trading

Shorter-term traders will hold a stock for a few days or less. They’re usually exploiting strong moves in the market or in the stock itself.

They’ll typically take smaller (but perhaps more frequent) losses in exchange for more frequent trading opportunities and wins.

Three Key Questions to Determine Your Trading Style

When deciding what type of trading style is best for you, ask yourself the following questions…

How much time do I want to commit?

Shorter-term trading – and particularly day trading, when you’re in and out of positions within the same day – usually requires you to stay in front of your computer (or at least on your phone) during the trading day so you can make moves all day long.

Traders who expect to be in trades for a few weeks don’t have to spend as much time tied to their computers.

What’s my tolerance for risk?

Traders who stay in positions for several weeks usually give their positions a wider berth. That way, normal volatility doesn’t force them to sell too soon.

This also means they have to be able to tolerate some moves to the downside.

Shorter-term traders take smaller losses, but they need to be able to pull the trigger and take those losses quickly.

What strategy makes the most sense for me?

Do you like to trade based on earnings reports, volatility, charts, valuation, or news events such as Food and Drug Administration drug approvals? Certain catalysts will lend themselves to shorter- or longer-term trading styles.

If you like to trade the markets based on volatility, your trades will likely be short-term in nature. If you love trading biotech stocks based on upcoming clinical trial catalysts, your trades will have a longer duration.

YOUR ACTION PLAN

If you’re new to trading, start off by asking yourself which style appeals most to you.

If you’re an experienced trader and you’re not achieving the results you want, these questions may help shed some light on whether you’re trading in a way that best suits your personality.

Once you’ve identified your natural trading rhythm, you’ll want specific strategies that match your timeframe and risk tolerance.

Good Investing,

Marc