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Sledge

Long Term Vs Medium Vs. Scalping Trading

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Just wanted to post this for anyone new to trading. You may read this today and think "yeah yeah.. blah blah blah" I think it will stick in your head and maybe someday you'll come back to it

 

I found this while looking at information on Long Term, Medium Term and Short Term Trading camps, as I am making transitions from a once scalper to a longer term (now focused on Daily) so I can relate to this and speak from experience. I was a good scalper- but it was mentally exhausting.

The following I cannot take a cent of credit (Credit to NewstraderFX on forexfactory) I tend to learn well with analogies, so this may spark something in someone elses head:

 

Very few traders are long term and there are some very good reasons why. Longer term trading requires a very good knowledge of fundamentals and economics. It takes time to digest all this and most traders probably find it very boring and difficult to follow but, what really makes this type of trading so difficult is that in order to stay in these trades you'll need to be able to ride out the inevitable ups and downs that occur as a trend progresses. There's much less "action" here because longer term trends don't get set up every day (or even every week). These kinds of trades don't appeal to the gamblers.

 

All this being said, I really believe the long term trader has a much better chance of being profitable. I'll explain this by setting up a few bets on the NY Yankees.

 

Everyone knows the Yankees are a very good team. Does that mean they'll win the world series every year? No, but here's my long term bet:

 

I'm gonna bet that the Yankees are gonna win more games then they'll lose this year. That's it. I only have one bet the whole season. Boring, really. What's worse is that they've lost 7 out of their last 8 and they're below .500 for the year so far. I'm losing pips and I gotta stay in and ride it out. Not easy.

 

Here's the Yankee bet that's like trading those short term blips and bleeps:

 

I'm gonna bet the Yankees score in this inning. Hey, they scored in the 2 previous innings. Alex Rodriguez is coming up, the short term MA of runs scored by the Yankees has crossed over the long term MA of runs given up by the opposing pitcher...

 

There's a lot more fun in betting this way. You're gonna have 8-9 bets/day for 162 days. Plenty of action, as long as your money holds out.

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I'm quite surprised that you found scalping so mentally draining.

 

Isn't it easier to cope with mentally than swing or long term trading? Since fluctuations in equity are much larger, and due to the longer time period? Or is it simply because of the fact that you must be glued to your screen 24-7?

 

I haven't really tried scalping so I guess I'm a relative newbie in that regard :S

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Mr. Slege:

Unless you are already wealthy, which you probably are. Most of us would have to get a 9-5 job or another type of business if we are going to trade long-term. I can't imaging making withdrawal for expenses every month if I am going through a period of drawdowns unless I started out with a big pile of cash. It is not called trading any more, it is more like portfolio mangement.

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Mr. Slege:

Unless you are already wealthy, which you probably are. Most of us would have to get a 9-5 job or another type of business if we are going to trade long-term. I can't imaging making withdrawal for expenses every month if I am going through a period of drawdowns unless I started out with a big pile of cash. It is not called trading any more, it is more like portfolio mangement.

 

OAC-

Actually I transitioned to a longer term trader BECAUSE I have a day job. I started small and would trade like mad scalping any pips I could get my hands on between 5 PM and 8:00 AM- sadly I did have to sleep so I couldn't grab most of the good moves. I was at work when a lot of the goodies came to pass and away from my platform. The longer term allows me to be able to assess the situation from a further out perspective. At noon I can get home, move my stops etc. At EOD, I can do the same.

 

Now I'm not concerned with evry 3, or 5 or 20 pip "glitch" I know the long term trend is up, I find my entry and stick with it, if the market provides me 20 pips, I take it, if it provides me with 130 pips, I take it. I am still working on having the stones to find a bottom or top, get into my position and ride it for a week. I have yet to overcome that part of it. Very hard to do. But I do bank money on a daily basis. Looks like it is weakening- bank $ and look for a pullback for another entry etc.

Sledge

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the secret to making it in this game is to find your sweet spot. some guys can scalp and think long term is boring, some are long term and see scalping as gambling, and then there are the swing traders who think everyone else is nutts.

 

i have been trading with the same bunch of guys for almost 10 years now. We all started out trading differently, but have all slowly migrated to the same style. We are all long term day traders. we may be in a trade a matter of minutes or months, it just all depends.

 

i guess what i am trying to say is that your trading zone should be whatever you are comfortable with. true, it does take a bigger bank roll to trade long term. IMO short-term trading should be used to generate income and long term to generate wealth. the style should be based on the ultimate goal.

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the secret to making it in this game is to find your sweet spot. some guys can scalp and think long term is boring, some are long term and see scalping as gambling, and then there are the swing traders who think everyone else is nutts.

 

i have been trading with the same bunch of guys for almost 10 years now. We all started out trading differently, but have all slowly migrated to the same style. We are all long term day traders. we may be in a trade a matter of minutes or months, it just all depends.

 

i guess what i am trying to say is that your trading zone should be whatever you are comfortable with. true, it does take a bigger bank roll to trade long term. IMO short-term trading should be used to generate income and long term to generate wealth. the style should be based on the ultimate goal.

 

Very well put. Welcome aboard bootstrap!

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OAC-

Actually I transitioned to a longer term trader BECAUSE I have a day job. I started small and would trade like mad scalping any pips I could get my hands on between 5 PM and 8:00 AM- sadly I did have to sleep so I couldn't grab most of the good moves. I was at work when a lot of the goodies came to pass and away from my platform. The longer term allows me to be able to assess the situation from a further out perspective. At noon I can get home, move my stops etc. At EOD, I can do the same.

 

Now I'm not concerned with evry 3, or 5 or 20 pip "glitch" I know the long term trend is up, I find my entry and stick with it, if the market provides me 20 pips, I take it, if it provides me with 130 pips, I take it. I am still working on having the stones to find a bottom or top, get into my position and ride it for a week. I have yet to overcome that part of it. Very hard to do. But I do bank money on a daily basis. Looks like it is weakening- bank $ and look for a pullback for another entry etc.

Sledge

 

I hear you bud. I too got to admit that I love the position trading. I still do attack the short sells intra-day maybe 1 day in a month to satisfy my enjoyment of short-term trading, but that's about it.

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I hear you bud. I too got to admit that I love the position trading. I still do attack the short sells intra-day maybe 1 day in a month to satisfy my enjoyment of short-term trading, but that's about it.

 

Being able to take quick 20 or 30 pip scalps just for fun or quick cash is always a good time- I enjoy it myself. If you trade long term, you are sharp on fundimentals, this makes short timeframe trading easier IMO!

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