When it comes to investing for short-term gains, there are many different options out there for you. Whether you are making an initial purchase in a market where the price is just beginning to rise, or you’re simply trying to pick up a little extra cash when things are going well, investing in a stock in the same market you’re buying now can be a wise move. There are also options for investing in stocks that you can hold for short-term periods of time. When you are thinking about these investments, you will need to know a few things about how short-term investments work in order to ensure that you are making the right one for your needs. Here are some tips to help you invest in the right stocks:

Know Your Market. One of the first things you should know when it comes to short-term investments is that you are most likely not going to get a very high return on the money that you put in. Even if you are prepared to wait years before seeing a substantial profit, it’s still not worth taking the risk of putting your money into a market that you don’t know very well. If you’re investing for the long term, then do as much research as possible before putting any money in the market. If you’re making a short-term investment, then you are most likely doing this because you want to have the funds in a particular time frame.

Know Your Products. Short-term investments should only be made in products that you know something about. There’s no reason to put your money into a company that you have absolutely no knowledge about. Make sure to thoroughly study any company before putting any money in, or else you might end up with a loss if the market takes a turn for the worse. Make sure to invest in companies that have solid futures, as these are much less risky investments.

Choose Your Investments Carefully. When it comes to short-term investments, it’s best to avoid stocks that have highly liquid market values. These include things like technology stocks, penny stocks, and the more popular choices like the Nasdaq. Long term investments on the other hand have a higher intrinsic value because they have been around for many years. These stocks are more likely to appreciate in value over time, so they are a safer bet.

Stay Out of High Volatility Markets. Investors with short terms investments tend to be highly volatile. They can jump up or down in value within seconds, so you should consider them for only when they have hit a plateau. Otherwise you’re gambling with your investment capital and could easily lose it all.

Consider Long Term Investments Before Short Term Investments. Investing in short-term stocks can be great for your bottom line, but you must also consider the risks of the investment itself. Some stocks are extremely volatile and can even plummet by the second. If you don’t protect your capital adequately, you could be out of luck if this occurs. Structured notes are a great short term investment option, as they do not have high levels of volatility.

Choose the Right Trading System. There are a number of different trading systems available today for investing in the stock market. Which one you use will depend on the type of investor you are, as well as your level of experience. For beginners, start with a system that teaches you how to trade stocks through an online platform. This type of trading is much more accessible than traditional trading and can give you some great profits without too much risk.

Diversify. Even with a good system, it’s wise to diversify your portfolio, especially when you are new to penny stock trading. Diversification across asset classes keeps you from losing all of your money in one bad move, which can happen if you’re trading one asset. It’s also smart to think about whether you want to trade shares, bonds, commodities or other common invested assets, because doing so can change the way your portfolio works.