Short Term or Long Term?

[Leth]

Short term positions usually last from intra-day to several days.
Long term positions can last from a couple weeks (depending on volatility) to months, even years.

Either can trade with the same rules with the difference that one set of parameters are specific for short term trading, while another set of parameters are suited for longer term trading.

Also, through backtesting, you will see that the net profit can be better in short term trading than long term. The biggest difference is in the number of trades over time. Therefore, in terms of odds, it is reasonable to conclude that the number of correct trades would be less the more you trade. In addition, we must not forget that constant transaction costs, hidden fees (slippage), etc... can eat away at your possible short term profits.

So, we can see that the longer term is more laid back with less stress. The shorter term is less laid back with more stress. Both can make money, both can lose money.

Is there anyway we can find out what type of trading style is right for you without losing large sums of our hard earned money? Sure we can.

Odds are most of us don't know many professional traders on a personal level that utilize a wide variety of trading methods. Therefore, educating ourselves with the right material and gaining the right perspectives will go a long way in understanding our psychological make-up, needs, and goals. In addition, if you are fortunate enough to have access to a successful trading mentor; take advantage of his/her knowledge as much as you possibly can. If you do not have a mentor, you can always find one in a book and adopt thier styles (whether short term or long term) just as I have.

Here are a few resources on trading information to get you started. These 7 books (out of the 110 or so i've read up to date) were paramount to my education. After you read these and gain an overall bigger picture of the game, you can then read other books on any trading method you wish to use so you can make your millions.

1. Reminiscences of a Stock Operator by Edwin Lefevre (the trading bible, read it, period.)

2. Trend Following: How Great Traders Make Millions in Up or Down Markets by Michael Covel (covers trend following in detail)

3. Market Wizards by Jack Schwager (interviews traders of different methods and perspectives, very useful in helping you choose the style thats right for you)

4. The New Market Wizards by Jack Schwager (interviews traders of different methods and perspectives, very useful in helping you choose the style thats right for you)

5. Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackey (good book on mass psychology)

6. Trading Tribe by Ed Seykota (excellent book on personal psychology; expensive but worth it)

7. Speculation as a Fine Art and Thoughts on Life by Dickson G. Watts (philosophy at its best)

As you can see, these books are quite diverse; covering the majority of the most important aspects of the trading game; use them to your advantage.
Only after educating yourself will you know whether short term or long term is right for you.

Enjoy your journey.

[rookie]

thanks for the books recommendations...and great article!