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Short Term Vs. Long Term Trading

  • #41
  • Jun 13, 2011 7:29am Jun 13, 2011 7:29am
Quoting Chicky
Do you prefer short-term or long-term trading? why?
I prefer to trade long-term with the trend. I like it because it gives me the ability to get caught in a large trend move that I flow with untill it ends and doesn't require too much screen time since I have a full-time job.
Who doesn't like waking up to find your biggest trending pair ran a couple hundred pips overnight and you caught it all of it.
Still.. I'm usually trading intraday, just never with a TP level.


“After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting.” J. Livermore
  • #42
  • Jun 13, 2011 7:45am Jun 13, 2011 7:45am
Quoting Custos
you should read an economic book and find out what happens, if debt gets so high that bondholders don't think they can ever pay it back...
An economics book would tell you that JGB rates should have risen and Japan collapsed years ago yet it continues to set new records in debt to gdp ratios.

Traders have grown old and retired waiting for JGB rates to rise.

US debt is also not a problem unless US politicians make it a problem. Bond holders don't have anything to do with it.
  • #43
  • Jun 13, 2011 7:55am Jun 13, 2011 7:55am
Quoting jzw

US debt is also not a problem unless US politicians make it a problem. Bond holders don't have anything to do with it.
okay, maybe it's easier to understand if we use a person. Now imagine a person taking out credit from a bank to finance their life-style. First they take out 10% of their income then it gets more and more until finally the guy can't pay the interest on the money he took out. Then the bank will first of all cancel him all further credit and secondly take all his stuff to pay at least part of the loan back.

Bond holders in this case are the bank and the US the reckless individual borrowing money for a life-style it can't afford. Yes, it has the opportunity to print money, but that is a temporary solution at best. If they can't make real money by a growing economy then soon the bondholders will demand higher and higher premiums for the increasing risk and then suddenly realize that they never get their money back, then the US has a problem.
  • #44
  • Jun 13, 2011 9:16am Jun 13, 2011 9:16am
Quoting Custos
okay, maybe it's easier to understand if we use a person...
Not if your analogy is incorrect. You can't compare the finances of a sovereign nation with fiat a currency to your or my bank accounts. It is just not the same.

Bond holders do not finance the US Govt and the US Govt does not need people to buy its bonds.

Anyway this all a bit off topic for this thread -

Traders who limit themselves will always miss some opportunities. If you only trade daily charts - your entries are going to be worse and late. If you only day trade you miss out on letting small wins grow into bigger wins.

I tend to the view that the market is only predictable over shorter time frames so prefer to trade short timeframes with the option to keep part of a trade on if I think it has potential.
  • #45
  • Jun 13, 2011 9:53am Jun 13, 2011 9:53am
Quoting jzw
Not if your analogy is incorrect. You can't compare the finances of a sovereign nation with fiat a currency to your or my bank accounts. It is just not the same.

Bond holders do not finance the US Govt and the US Govt does not need people to buy its bonds.

Anyway this all a bit off topic for this thread -

Traders who limit themselves will always miss some opportunities. If you only trade daily charts - your entries are going to be worse and late. If you only day trade you miss out on letting small wins grow into bigger wins.

I tend to the view...
whatever man, I am tired of arguing. You are correct.

If the US is so good that it doesn't even need any bond holders, why bothering with them in the first place. And if it can print it's way out of anything, then why bothering having an economy.

Anyways, I am done with that topic. You can't even give me real arguments, just saying, no you can't compare it, blabla. Like a politician... Anyways, you are correct.
  • #46
  • Jun 13, 2011 9:58am Jun 13, 2011 9:58am
Quoting Chicky
Views on the benefits and strategies of longterm trading will be highly appreciated from those who have successfully switched from short-term to longer term trading.

For the past several months I have been working on this but cannot find a way.

Am I missing something?
im tired of short term trades. But still unable to figure out the market. As of present moment if we take a Buy @ 1.4000 & leave it with T/P 1.4700 (vice versa) its a profitable trade but what would we do if it suddenly move towards 1.3500 or 1.3000 ( Euro/USD) ???
What would we do? Wait for retracement?

While entering this ForexTrading i thought its a global game & no one can manipulate this game. But for past few days i've started feeling that there might seem some manipulation.

i don't have any strategy at present so cannot talk about this much but what i've seen is that if i put a 25,30 or 40 pips S/L in my trade then 1st it closes my trade in loss & then after starts retracing.
Still confused but willing to go with long term in future as i've experienced as much we watch it continuously, that much we become weaker trader. its just a personal experience till date.
Or other option is to when you feel good enough in form then just watch the movement of candles & take your profit with 10-15 trades in a day & get out of it.
Hope
  • #47
  • Edited 5:44am Jun 18, 2011 5:21am | Edited 5:44am
Quoting TheGamer
im tired of short term trades. But still unable to figure out the market. As of present moment if we take a Buy @ 1.4000 & leave it with T/P 1.4700 (vice versa) its a profitable trade but what would we do if it suddenly move towards 1.3500 or 1.3000 ( Euro/USD) ???
What would we do? Wait for retracement?
Me too is tired of short term trades, one reason exploring the arena of longer term trading. But see no logic why longer term “currency” trading could be better

Quoting TheGamer
While entering this ForexTrading i thought its a global game & no one can manipulate this game. But for past few days i've started feeling that there might seem some manipulation.
Same here. I thought one could manipulate individual stocks but not currencies. I was wrong. Sovereign interests trigger interventions. Market makers manipulate during low liquidity and high activity times – one drawback of 24/7 market. This is apart from menace of online trading.


Quoting TheGamer
i don't have any strategy at present so cannot talk about this much but what i've seen is that if i put a 25,30 or 40 pips S/L in my trade then 1st it closes my trade in loss & then after starts retracing.
Still confused but willing to go with long term in future as i've experienced as much we watch it continuously, that much we become weaker trader. its just a personal experience till date.
Or other option is to when you feel good enough in form then just watch the movement of candles & take your profit with 10-15 trades in a day & get out of it....
I know exactly where you'r coming from. To share what I found workable in these market conditions:

I love the market when it goes against fundamentals, knowing its just building potential for a bigger move in favor of overwhelming fundamentals. It normally happens when one less important but unexpected event temporarily takes the market against the basic fundamentals. But waiting until it hits a very strong s/r is the key. Enter when it hits that s/r, take or lose 100/150 pips and out we go.

Pa reading, our pre-defined s/r levels, candle open/close, session open/close and movements etc are some tactics all help in deciding entry and exit point.

I still have to find out how holding a longer-term position in currency market can be wise.

ps - Many times tried Jesse Livermore's method of longer term trading (bigger moves) in currency market, gives mixed results with balance in favor of trader but the issue is drawdown. The moves are so big that one cannot take a reasonable size position without risking too much.
The Thief of Wall Street
  • #48
  • Jul 5, 2011 10:50am Jul 5, 2011 10:50am
Long Term Trading is my favorite because it can make a huge profit for me after I try several trading styles. Every trading style has a strong and weak not a perfect at all. Try to use it for your comfortable and confidence. I choose long term because I lack of discipline, I try to make a trade every time when the market move, then when I try to scalping and short term it always burned my account lol, After I switch to long term, it is easy for me to control myself and make profit, LOVE IT.
  • #49
  • Jul 17, 2011 6:36am Jul 17, 2011 6:36am
Quoting ddon7650
Long Term Trading is my favorite because it can make a huge profit for me after I try several trading styles. Every trading style has a strong and weak not a perfect at all. Try to use it for your comfortable and confidence. I choose long term because I lack of discipline, I try to make a trade every time when the market move, then when I try to scalping and short term it always burned my account lol, After I switch to long term, it is easy for me to control myself and make profit, LOVE IT.
ddon, thanks for sharing your experience.

It will be greatly appreciated if you could help me understand few modalities of long term trading.

Scenario: A trader is focusing on a longer term trade of let's say 1,000 pip move with Risk/Reward ratio of 1:4. Now he/she waits for the confirmation of the move, when pa goes 200 pips in the trader's direction he/she enters the trade with Stop-Loss of 200 pips and Take Profit target of 800 pips.

Question 1. If the trader risks 5% of his account will get a return of 20%. Do you think market moves 1,000 pips frequently enough to provide a reasonable annual return? If not, how much risk is prudent?

Question 2. If the trader goes for better than 1:4 Risk/Reward Ratio, that would require placing Stop Loss closer than 200 pips. Therefore, market volatility may take this stop out and he/she may require more than one attempt to catch the move. Do you think in this situation the trader would still be able to produce better than 1:4 risk reward?

Question 3. After every big move, market ranges a bit and after every swing there is another swing in the opposite direction completing the cycle. If a trader leaves small gains on the table and sits tight for a big gain, these swings may turn against his/her position or even if they don't there would be very few trades in the whole year.

Question 4. If the trader moves Stop Loss locking some profits after every big move, the market volatility or healthy retraces may take him/her out sooner than expected lets say with 150 or 300 pip gain. Logically, that means the trader's Risk/Reward ratio with initial 200 pip Stop Loss was never 1:4.

COMMENTS FROM ANYONE READING THIS WILL BE APPRECIATED. KINDLY REMEMBER THERE ARE NO DUMB COMMENTS, FEEL FREE TO POST YOUR VIEWS.
The Thief of Wall Street
  • #50
  • Jul 17, 2011 6:52am Jul 17, 2011 6:52am
Why restrict yourself to one time frame: with short term trades you can scale out, cut your risk, move to break even, then turn to long time holding period when the opportunity presents itself. Essentially your short term trades can fund risk free long term trades once you have moved to breakeven. Also trading longer term, with wider stops, will let you catch moves that may have otherwise been stopped out on the lower time frames with tighter stops. The two can work together.
  • #51
  • Edited 7:30am Jul 17, 2011 7:09am | Edited 7:30am
Quoting Chicky
COMMENTS FROM ANYONE READING THIS WILL BE APPRECIATED. KINDLY REMEMBER THERE ARE NO DUMB COMMENTS, FEEL FREE TO POST YOUR VIEWS.
Hey Chicky, thought I'd contribute my 2pips.

1: Yes the market does. In the last few months I've caught some 1000+ pip moves which I'm still in with 20-50pip risk involved since anything more proves my analysis incorrect, yet will allow me to reenter if it was a 100 pip shakout. % risk per trade is never more than .5% though. ie; .5%=15%+ r/r. I stopped using predetermined R:R ratios so I'm not too keen on that. Diversification thoughtout the market is neccessary.

2. That is a possibility. Since the market is more likely to move through recent price levels easier, a stop on the other side of a daily candle can be hit, overshoot, then a few days later price can come back through where your stop was and reenter with a better 'R'. It helps to think of counter-trends as discounts/sales for investors.

3. That is a possibility. Limiting risk w/o limiting reward after a trade goes your way would be important.

4. IMO, SL @ BE and forget about it. The sweet spots are where retracements dont go. They do come very close sometimes..
  • #52
  • Jul 17, 2011 8:33am Jul 17, 2011 8:33am
I remember i had a lot of fear at a certain point in the market to be scared togive away profits back in the market so i came up with a money management plan to solve this.

My entries are pretty accurate so what was the problem then fear how i overcame that.

Lets take for example i wanna go short a certain point regarding my analysis i take the short with 0.3 lots i scale out 0.2 lots at the 20 30 pips and let the 0.10 open with stop @ breakeven on this way i got something from the market and cant lose anymore on the position around 71% of those trades according my stats now so far run further then 20 30 pips so they are open with the 0.10 lot i close that last 1 sometimes verry long time away like with the chf pairs i have a lot of them still open.


Not sure if this style will help some people just my 2 cents
  • #53
  • Jul 17, 2011 8:39am Jul 17, 2011 8:39am
Quoting Chicky
ddon, thanks for sharing your experience.

It will be greatly appreciated if you could help me understand few modalities of long term trading.

Scenario: A trader is focusing on a longer term trade of let's say 1,000 pip move with Risk/Reward ratio of 1:4. Now he/she waits for the confirmation of the move, when pa goes 200 pips in the trader's direction he/she enters the trade with Stop-Loss of 200 pips and Take Profit target of 800 pips.

Question 1. If the trader risks 5% of his account will get a return of 20%. Do...

I FEEL LIKE U GUYS ARE HEADING INTO THE WRONG DIRECTION. this is a FACT.

Let the market DECIDE How much PIP he wants to give you and how much should be your risk, there are LEVELS of target 1 2 3 and just the same with SL right?

this questions are not realistic, for example

question 1: its not how u think the market will be but what the CURRENT market is acting, if its quiet and low volatility, does it really matter. too much random factors in play for LONG TERM, u wont know what is going to happen tomorrow or what volatility level it going to change to be. This is why Short term have advantage, just like a thief get in get out. first in first out. like you chicky, your edge as a theif.

question 2: You will hit your SL if its in a 200 pip range or above. You will not hit your SL if u get lucky and market does to your desired direction theres no defenite answer the reason why market is so hard its because its like a damn strategy game with different opponent every time, u cant keep using the same strategy ill make a robot out of it and im SURE u know this one too.


Question 3: this indeed is correct, but where is the question?

Actually after reading question 4, Chicky all your question leads to one universal question where every trader is constantly brushing up their own edge and even i having the same dilemma as you.

personally i reallly think, this is all part of trading and everyone is unique in controlling their SL , stops and TP.

Long term and short term doesnt really exist in the market but in you, its like do u have the time to watch your trade as you react in scalping,

or do u prefer set and forget in higher time frame where lower volatility of spikes? then dont forget about market has its own changing environment or behaviour so what the movement of M1 yesterday might be as strong as the M15 today. as in the range of pips movement.

its all very very subjective the only person that can keep reacting to this bastard is the trader himself.

and WHY CANT WE DO BOTH? short term and long term? ill keep scalping while having a long term position on. scalp when u have the time, get out of long term trade if it goes to your SL. i think its the best and u wont have so much dillema, again MM comes to play.

Overall, Short term u more stress when u scalp, tend to make more mistake and kill your account because of lack of discipline and the spreads, thus only more experienced trader should scalp.

Long term, u set and forget, advantage for the hand itchy traders where u let ur profits run.

Its all about Controlling yourself , if u are so damn good, then short term is so damn rewarding. but if u are constantly f*** up, then long term might be your advantage as u dont cut ur profits short. Trading is really wonderful aint it?


Theres no right answer , fundamentals is a bonus. But if we were to compare LT vs ST, find a balance. i think its the best. and i know every trader will agree. Gone through the overwhelming stress, gone true the frustration of letting profits go while holding trade wishing u've scalped.

So why not do both just to satisfy yourself?
  • #54
  • Jul 17, 2011 9:25am Jul 17, 2011 9:25am
Quoting EdgarNg
I FEEL LIKE U GUYS ARE HEADING INTO THE WRONG DIRECTION. this is a FACT.

Let the market DECIDE How much PIP he wants to give you and how much should be your risk, there are LEVELS of target 1 2 3 and just the same with SL right?

this questions are not realistic, for example

question 1: its not how u think the market will be but what the CURRENT market is acting, if its quiet and low volatility, does it really matter. too much random factors in play for LONG TERM, u wont know what is going to happen tomorrow or what volatility level it going...
Damn! So true.

Why the hell I'm wasting my time exploring unexplorable?? Should focus on what has always worked for me and keep refining it. Maybe that ultimately takes me to longer term trading, like it did to many others.

Thanks.
The Thief of Wall Street
  • #55
  • Jul 17, 2011 9:30am Jul 17, 2011 9:30am
Where is the difference, if you have 8 short term trades ( 30 pips average profit each ) or 1 long term trade with 200 pips of profit ?
  • #56
  • Jul 17, 2011 9:47am Jul 17, 2011 9:47am
Short-term. Intraday, max 2 entries / day. H1 timeframe.

I like it because it gives me a lot of spare time to live my life to the fullest but still always enjoy trading adventures everyday.

Imo stress or not depends on the system used. If you take a loss knowing that you have a good chance to cover it up and make profit in near future you won't be stressed much.

For me, no stress.
The tone of your words reflects the quality and result of your trading ;-)
  • #57
  • Edited 3:05pm Jul 17, 2011 2:52pm | Edited 3:05pm
Quoting Chicky
Damn! So true.

Why the hell I'm wasting my time exploring unexplorable?? Should focus on what has always worked for me and keep refining it. Maybe that ultimately takes me to longer term trading, like it did to many others.

Thanks.

Forex tend to trap us in illusions!


hey thanks for the voucher its my first one haha. i usually just lurk around but great discussion for many others to think about.
  • #58
  • Jul 17, 2011 3:38pm Jul 17, 2011 3:38pm
Short Term! I like to watch paint dry! lol! For the most part, its just part of the hole thrill for me. Im still a newb, so maybe in the future short term might just not do it for me anymore.

Now I prefer short term, but with the system I use, its good on all time frames and I do look for long term trades and will execute a trade if the setup is there, but my focus is on short term.
Damn The Torpedoes, Full Speed Ahead!
  • #59
  • Aug 15, 2011 9:07pm Aug 15, 2011 9:07pm
Hello,

can someone give me their thoughts on the following. I am demoing with mt4 and use hedging. I study the 4h or daily trend and try to get a good entry in the direction of the trend. If the trade is positive then great, i make money. If the trade goes against me then i open an opposite sell or buy order. So now I have two open trades. If one trade goes into profit, i close it and open another trade.
So I usually have a buy/sell order open at the same time. I will also open a 3rd trade in between the buy and sell trades. Now this 3rd trade could either become profitable or else go the opposite way in which case either the buy or sell would go into profit.

If i am long and the trade is going against me then I wll go short. I will close the trade when its in profit and ranging or if its in a long downtrend let it go as far as possible.

Eventually the losing trade will turn around, but I am also continuously adding to my balance. My trading in the direction of the losing trade. Then when it turns around trade in the direction of the rebound.

So I only close winning trades..losing trades stay open...I dont use any stop losses.

Is anyone else here trading like this?
  • #60
  • Aug 15, 2011 9:29pm Aug 15, 2011 9:29pm
Generally with the longer TF's what we get is a clearer sentiment of the market conditions as there are more trades executed in a daily candle as opposed to 1hr candle etc.

I believe however you typically get better signals when you watch the daily charts. The longer the TF the more reliable the signal would be. However, catching good signals on the longer TF's such as the monthly and weekly are usually more rare than the daily charts. Hence the reason many people use these charts as their setup charts for their trades.

Where the longer term TF's are best used however is to give you a general direction of where you should be looking for trades.

Eg. The EUR/AUD is now at a support level(bottom of the chart) on the monthly. We use this information to do one of two things. Look for long opportunities on the shorter TF's or wait another month for the market reaction on it. If we wait and we see a bounce, as has been happening this month, we actively pursue long enteries. If we get a breakout lower. We can start looking for short opportunities.

Having a general idea of direction helps overall in trading as you will realize if you don't see any opportunities in your direction. Simply wait till you get a clear signal.

Hope this makes some sense.
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