Long-term investing happens to be the safest form of investment, but there is nothing wrong with engaging in short-term trading. The market presents many opportunities each and every day, so why wouldn’t we want to take advantage of what it gives us. While short-term trading is risky, it can be lucrative for retail traders. That said, be aware that it is more complicated and has a higher risk than long-term investing. Short-term trading is a high-risk, high-reward strategy that can be just as likely to earn significant gains as it is to incur substantial losses.

Predicting the performance of a stock or ETF over the next one to two months can be difficult. Prospero's short-term signals decrease that difficulty by enabling you to see how institutions and options traders view the stock. Similar to our long-term signals, the short-term signal scores for a stock help you compare it respectively to other stocks, with ratings of 80 and above considered high and 20 and below considered low.

Prospero's Short-Term signals include:

• Net Options Sentiment - Interprets the hidden language of the options market by revealing the valuations large institutions quietly place on stocks and ETFs.
• Net Social Sentiment - distills social media buzz into actionable insights, reflecting the public's perception of stocks and ETFs.
• Dark Pool - sheds light on the opaque world of institutional exchanges and uncovers the significant trades that could sway market prices.
• Short Pressure - provides a strategic overview of the intensity of short-seller activity against a stock's resilience.
• Net Institutional Flow - Track the stock and options activity of institutions based on SEC filings.

For guidance on how to apply these signals, check out the Prospero.ai trading newsletter. Since the inception of its model portfolio on June 4 2023, it is beating the S&P 500 by 26% with a 58% win rate versus the index on nearly 100 positions per month! (As of 10/16/24)

The best possible combination of signals for short-term Bull positions are high Net Social Sentiment, high Net Options Sentiment, high Net Institutional Flow, and low Dark Pool Rating and Short Pressure Rating. But the chances of seeing an actual Unicorn with an actual horn are higher than seeing a stock with this combination.

As an example, stocks with high Net Social Sentiment, Net Options Sentiment, and Net Institutional Flow are a good bet that a stock will go up. However, this is a great example of why it is important to look at risk. All of these numbers could be high one day and fall off a cliff the next from a piece of bad news, a large institutional sale, or a purchase of put options (options bought if you expect the market to go down). The fact that any sudden market shifts could leave you with a fairly large single-day loss is what makes short-term trading so risky.

Prospero doesn’t recommend short-term trading as an investment strategy for most investors. But even if you never become an advanced trader, you can utilize our short-term signals along with our long-term signals to reduce risk and improve timing on your investing strategies. While our short-term signals are a powerful tool that should be a part of any trader's toolkit, keep in mind that even our real-time insights cannot beat a high-frequency trading algorithm. It is always important to remember what you are up against.

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