CandleFocus Glossary Editor
A one night stand investment is a high-risk investing strategy geared toward taking maximum advantage of a quick event that can produce market-moving news. This type of investment typically involves a large, extremely speculative bet that a single event will result in a marked increase in the value of a stock or security.
One night stand investments, also known as “swing trades”, often involve purchasing shares of a company right before an important announcement or event. The expectation is that, with the release of the announcement, the company’s share price will soar and produce a significant return for the investor. As such, one night stand investments are often risky and should generally be avoided by novice investors.
For this strategy to be successful, it is important to have an accurate understanding of the underlying fundamentals of the stock or security. This understanding typically bodes well with the usage of technical analysis and prior knowledge of the company’s operations. With the right mix of preparation and risk-taking, however, the one night stand investment strategy can be incredibly rewarding.
Looking at the potential benefits of such a strategy, it is easy to see why some investors are attracted to this type of investment. With the right timing and information, huge profits can be made in a single day or night. These gains, of course, come at the expense of huge risks. If the news or event does not go as expected, the investor may suffer huge losses.
Investors must also be weary of market manipulation. Deals which look too good to be true often are and can indicate insider trading or other illegal activities. Moreover, investors should also be aware of the various regulations imposed by governmental authorities regarding speculative and sharply volatile investments.
Given the level of risk and potential reward, one night stand investments are not for the faint of heart. This strategy should only be employed by experienced investors and those familiar with the risks involved. With proper planning and execution, however, one night stand investments can be a lucrative strategy.
One night stand investments, also known as “swing trades”, often involve purchasing shares of a company right before an important announcement or event. The expectation is that, with the release of the announcement, the company’s share price will soar and produce a significant return for the investor. As such, one night stand investments are often risky and should generally be avoided by novice investors.
For this strategy to be successful, it is important to have an accurate understanding of the underlying fundamentals of the stock or security. This understanding typically bodes well with the usage of technical analysis and prior knowledge of the company’s operations. With the right mix of preparation and risk-taking, however, the one night stand investment strategy can be incredibly rewarding.
Looking at the potential benefits of such a strategy, it is easy to see why some investors are attracted to this type of investment. With the right timing and information, huge profits can be made in a single day or night. These gains, of course, come at the expense of huge risks. If the news or event does not go as expected, the investor may suffer huge losses.
Investors must also be weary of market manipulation. Deals which look too good to be true often are and can indicate insider trading or other illegal activities. Moreover, investors should also be aware of the various regulations imposed by governmental authorities regarding speculative and sharply volatile investments.
Given the level of risk and potential reward, one night stand investments are not for the faint of heart. This strategy should only be employed by experienced investors and those familiar with the risks involved. With proper planning and execution, however, one night stand investments can be a lucrative strategy.