If you take a long-term view of investing, you plan to buy a stock and hold onto it for years until it rises substantially in price. However, the popularity of online trading and the volumes of information and real-time stock quotes available through the Internet are causing more and more amateur investors to participate in day trading or market timing. This is where investors quickly buy and sell stocks hoping for quick profits in stocks that increase dramatically in short periods of time. Most financial experts agree that the best strategy for buying stocks is to look for long-term investments. Day trading, they warn, is hard to do successfully even in the best circumstances and always magnifies the possibility of losing money.
Some stock investors take added risks in the hope of greater returns.
Such strategies include selling short and buying on margin. To sell short, you borrow shares you don't own from your broker, order them sold and pocket the money. Then you wait for the price of the stock to drop. Because you sold the stock for more than you paid to replace them, you have made a profit. The risks of selling short occur when the price of the stock goes up or when the drop in price takes a long time.