“Purchase and hold” is one of the most common types of stock investment Trading strategies. This is mainly based on the idea that the stock market will give you an assured rate of return in the long run, anyway of price volatility in the short term. The main reason is that the economy will raise over time and most investments will stop up providing you with an excellent return, even if they seem to refuse in value in the small run.
The purchase and hold investment strategy is a passive strategy in which a stock trader purchases stocks and holds them for a long period of time, regardless of small-term price movements or volatility in the market. The make use of of such strategy does not of necessity mean that stock market traders have to hold a stock forever.
If you want to employ the purchase and hold stock strategy, you want to make a decision on which company to purchase and hold and when to release. You should firstly start out by identifying the strongest performing index or sector. Then you have to target the strongest stocks within the own sector. This is a comparatively easy process and you don’t have to worry about the daily volatility in the stock market. However, the key disadvantage of this strategy is that a lot of investors find it hard to know when to sell a stock.