Why Trade Long Term?

short term trading is a sure way to destruction for 98 % traders and it is the only long term trading that eventually makes you successfull due to its nature of being so. Those who want to succeed i think they should shed away this nidea of day/short term trading. My ideas and someone may differ please

I’ve experienced that I only win by trading daily charts and up-to monthly charts.

Intraday trading is often choppy, causing a loss for most of us. Trends are more clear in longer term, so I agree with hello1234 on this point.

Regardless of being an amateur or a professional trader, long term trading gives us a fewer trades, more pips. only thing that we have to use very small lots, or start with a big capital.

I aggree 100 % with you.

And one more thing daytrading bring a lot more stress.

Regards

Vladimir.

I have yet to understand why day trading is so popular. It has to be the rush people get. I am learning trading now and clearly long term trading is the way to go for previously stated reasons… I play poker and play limit to manage risk and I bet sports and bet one-two games a week that I have a edge again risk management…read about W Buffett or Peter Lynch, (Wealthy Americans) and they are long term traders. You can “guess” wrong long term 10 times and be right on the 11th and make profits. (I am not suggesting guessing). If you have a reliable system you can look at the computer 1 time per day and manage long term trades. If you focus on risk management in long term trading your profits will soar when you hit a trend… sorry, a bit of a ramble but being new I tried day trading and it was not fun.

The good news…
don’t have to sit at the computer all day
don’t have to be overly concerned about daily news
don’t have to be overly concerned about entering and exiting strategy
don’t have to be overly concerned about stress
don’t have to be overly concerned about not following system rules
Long term systems are fairly simple to manage (mostly indicators driven)

I wanted to comment about this sentence in a particular way.
If you use a moderately good long-term system, you will be able to catch those “thousands pips” movements and trends. You can still enter early, at the same time you limit your risk with false signals.

When I look at the GBPUSD trends in a weekly chart for example, it’s amazing how you can catch the start of a big uptrend/downtrend, similarly all other pairs.

I am definitely in agreement with lots of what’s been said. I generally consider myself a part-time trader. By that I mean I look at the charts periodically to see if there’s anything interesting. If there is, I’ll put on a trade or at least place an order if a set-up is forming. Sometimes that’s a position trade. Sometimes it’s a swing, or even a day trade. It depends on my schedule. That’s the great thing about using technical analysis. I can apply the same techniques regardless of the timeframe I’m operating in at any given point.

The point is that I can’t or don’t want to spend hours on end in front of the screen. Position trading means using wider stops, but I just reduce my position size to get the risk I’m willing to take on a given trade. I certainly don’t mind risking 100-200 pips for the opportunity to make 3-5 times that!

Thats also my strategy. Set up a system to check out once a day and leave it alone until next day. I think the weekly and daily charts are better for the trading but I could not figure out a good system to do it. I am trying…

Someone has a suggestion?

Success!

The Vegas 4 hour would probably do you well. There also is a Vega weekly right?

Topchess, those 1,000 pip moves on Cable look nice. I actually think I will implement longer term trading with cable but still stick with short term trading with EUR

it is evident that success comes from long term trading with higher time frames and than sitting tight till trade is over but if all of us agree than lets present some system that can help traders in this direction. lets create some system based on daily charts with position holding period from a week to two months. if some one have please do present here for discussion.
long term trading is the only gate way to success. when we talk of this thing that 95 % traders loose money in there quest to earn or build wealth. we are actually talking of day traders. it is the most difficult thing one can ever imagine that day trading is really something not for every one.

There are good systems for 4h (including Vegas 4h) but for daily graphs I know just one that it is really discussed, the fozzy (one that I didnt like).

Check 4h graphs once a day can not be a good idea. Weekly systems I think it is too long term :wink:

That is a opportunity to discuss a daily system.

You are right. The weekly chart is giving a larger drawdawn. But, it’s very useful for trend confirmation from Daily signals.

I’m not going to agree with that statement at all. There are plenty of people who do very well trading short-term. It’s all a question of matching your trading timeframe to your personal situation and style.

Now, having said that, my biggest trading successes have always been in longer-term trades. I’m not even talking daily chart stuff here. I’m talking weekly and even monthly at times. My personal methodology incorporates using volatility to spot trends getting ready to develop.

in short term trading fundamentals are mostly in play and even those to whome traders are not aware and a point of entry is many times criss crossed befor it goes in the direction of long term frame. in long term charts a point once entered will take time to reach again and that is why it is profitable. in short term term trading you can only trade few currency pairs while in long term you can trade as amny as you have the ability
my comments someone may differ please

I think you mean that the other way around. In the short term the market is mostly technically driven, not fundamentally so. It’s about order flow. Fundamentals have a longer-term influence.

If you are referring to data releases, interest rate announcements, etc. I wouldn’t necessarily refer to those things as fundamentals. What the market does in reaction to that stuff is more psychological than anything else.

I held some of my trade for just 3 days, and the rollover fee was just scary : i.e for 3/100k lots of USD/JPY :
opened Jan 9 noon, closed Jan 11 3.04 am, interest was $ 205.50

Does somebody know exactly how they come to that number? How is the calculation for that particular example?
Does the profit/loss of the trade effect the interest?
On that USD/JPY I profitted 159 pips worthed $ 1,325

but on other transaction:
3/10k lots of EUR/CAD,
opened Jan 10 morning, closed Jan 10 evening (that’s one night)
interest was only $ 36.00
Loss 201 pips, worthed $ 1,711.88

Again, how is the calculation for that??

I trade medium term (holding positions for a couple of days on average), which works for me as I like to base my trading decisions off the long term fundamentals.

For example, one of the components that I like to think of my edge is that the US dollar is weakening. It might be a slow, gradual weakening (with the occasional resurgence by the dollar bulls), but the only place the US dollar is going long term is down.

Why fight that? I look to make the most of it and only trade against the dollar when the other currency in the pair is showing strength.

When you say the dollar is weakening, what do you mean? To me that doesn’t necessarily sound like a fundamental statement. It’s mearly a statement of how the USD has lost value against other currencies. That’s reflected in the exchange rates, which you could say makes your statement a type of technical analysis. What fundamental basis do you have for your view?

The market “thinks” that Fed will start to cut interest rates in March, that’s why the market is prepared to sell dollar into any currency strength. But I am not convinced yet. There is no fundamental sign that the housing slowdown is affecting the broader economy, even strong Nonfarm payrolls released.

So until we see some downside in coming fundamental releases, I do not think Fed will cut rates any time soon.

When I say that the dollar is weakening I’m refering to a weakening of the US econonmy relative to some of its main trading partners (Europe, China, etc.)

There is some pretty conflicting and divided opinion out there about how the US economy is going to do this year. My own view is that there is a good chance for a small recession. My main basis for this is the slowdown in housing in the US. Some think the bottom has been reached. I don’t. I can still walk out my door and see houses that have been on the market six months or more. A continued slowdown in housing means less mortgage equity withdrawals which puts pressure on consumer spending. It will also have a continued effect on unemployment, which also impacts consumer spending. If housing has hit bottom then obviously my outlook is all wrong.

This quote from a recent report from Comstock Partners sums up my view quite well:
“In addition our own studies indicate that a serious economic slowdown in the period ahead is more likely to end in recession rather than a soft landing. Not only have soft landings been extremely rare in U.S. financial history, but expansionary cycles featuring a series of fed rate hikes, an inverted yield curve and a sharp drop in the growth rate of the leading indicators have almost always been followed by a recession and bear market. Note that the soft landing in 1995 was not associated with an inverted yield curve or a 20% drop in commodity prices, while the soft landing in 1985 was not preceded by a series of fed tightening moves. Every recession starts out looking like a soft landing in the period of transition between economic expansion and contraction that we are probably in today. In the current instance the unusual housing boom and subsequent collapse make the prospects for recession seem even more likely.”

I’m not blown away by the supposedly ‘good’ data coming out of the US the past two weeks. I’m only too aware of the fudging that is done on the numbers. For example, this month’s non-farm payroll headline number of 167k new jobs looks great on the surface. When you realise that 55k of those supposed new jobs are just the result of the Bureau of Labor Statistics ‘birth/death’ model it makes you think.

Last December US Treasury Secretary Henry Paulson talks up a strong US currency the day he’s heading off to China to ask them, pretty please, to make the Chinese remnimbi appreciate ASAP (which obviously equates to a weaker dollar).

Europe had a much stronger growth year in 2006 than many expected, and looks to continue on that path into 2007 (more ECB rate hikes are widely expected). The Fed is in wait and see mode. Inflation looks like it still has a hold, but growth is easing off. Will it ease off just enough, and we end up with the goldilocks so hoped for? Or will it go too far, and inflation says just above desired levels? I wouldn’t like to wager which way the Fed will go next at this point in time.

The fact that the dollar is the reserve currency of the world isn’t in too much jeopardy at the moment, but it is being quietly questioned. Several countries are looking (well their central banks are looking) to shift some dollar reserves over into euros, just in case. The UAE announced this publicly, which can surely on mean that several others are doing it in private.

The US deficits are widely out of control, with no real end in sight. Only a weakened US dollar has any hope of boosting exports and cutting imports to stem the badness of the trade deficit. A weakening dollar also helps to ease the burden of other debts held by the US.

Of course in the world of forex everything is relative. If I thought that the US economy was going down the tubes, but that I also thought the EU ecomony was also hosed but worse than the US one, I would be a dollar bull.

Obviouly my firmness in this view shifts with time, and is constantly open to scrutiny to hopefully capture any long term change in trend.

Well argued in general terms, though this particular sentence is incorrect.

A weakening dollar has no impact on USD demonminated debts held by the US since the interest and principal payments are in USD. It would, however, make repayment of non-USD debts more expensive (if there were any) as more USD would be required to make the payments.

Personally, I do not care much for fundamental concerns. I’ll keep an eye on interest rates, but that’s about it. For me the more interesting element is the viewpoints being expressed by market participants. Neither side of the debate (good economy vs bad economy) seems to be the more dominant at the moment.