Can Short Term Trading Be More Profitable Than Long Term

Fundlord · Apr 7, 2015

By short term I mean catching the big moves that happen intraday and by long term i mean 1 day+.

Since most of a particular assets daily movement occurs with a very short time period for example EUR/USD mover 100pips in just 1.5hours. The rest of the day it just moves slowly back and forth.

Using tighter stops and higher leverage than you would if you were trading a longer period time frame.

I normally trade long multi day time frames but I set aside some funds for a short term strategy, besides the added screen time waiting for momentum to develop I feel my capital is safer with a shorter holding time.

What do you guys think ?

loyek590 · Apr 7, 2015

hard to make money on 100 pip moves. 4 25 pip stops get hit and it wipes out your 1 100 pip profit. You need risk reward something like risk=1 reward=infinity. For those of us that are long term traders it always looks so easy to take a quick 100 pip profit. But that is just the grass is greener on the other side of the fence syndrome. When you start daytrading it looks like it would be easier just to buy and hold.

xandman · Apr 7, 2015

For most people definitely not. You have an execution edge and a strategy edge.

HFT players/Market Makers have the execution edge. A retail player may have a strategy edge. The more you increase your transaction frequency, the greater advantage you are giving the HFT players.

Money Trust · Apr 7, 2015

I just switched from swing trading (multi-day) to day trading currency pairs and for me it's been more profitable. I used to hesitate to take swing trades but I find taking day trading to be simpler. All I need is 1 or 2 swings a day to make good money. Besides, if one can swing trade, they can day trade. The price action is still the same. On top of that, I like pulling money out of the markets daily instead of holding.

BTW, I day trade only currencies.

loyek590 · Apr 7, 2015

xandman said:
For most people definitely not. You have an execution edge and a strategy edge.

HFT players/Market Makers have the execution edge. A retail player may have a strategy edge. The more you increase your transaction frequency, the greater advantage you are giving the HFT players.

exactly, if you want to be small and retail you need to pay the price, and you pay that unfavorable price every time you execute a trade. The fewer the better. But I don't have any problem taking a short quick profit if the move looks excessive in my favor. But that crap overtime will catch up with you.

Buy1Sell2 · Apr 7, 2015

xandman said:
For most people definitely not. You have an execution edge and a strategy edge.

HFT players/Market Makers have the execution edge. A retail player may have a strategy edge. The more you increase your transaction frequency, the greater advantage you are giving the HFT players.

The only true edge in trading is capital and the prudent use thereof.

Laissez Faire · Apr 7, 2015

Theoretically, day trading efficiently is more profitable than long term trading since the sum of the swings constituting a major swing far exceeds the swing itself.

Can you exploit those swings consistently? Most can't.

xandman · Apr 7, 2015

loyek590 said:
exactly, if you want to be small and retail you need to pay the price, and you pay that unfavorable price every time you execute a trade. The fewer the better. But I don't have any problem taking a short quick profit if the move looks excessive in my favor. But that crap overtime will catch up with you.

I don't disagree. Different situational opportunities arise at different time frames. You take what you can get when it is available.

But, I do have a bias to the transaction levels and time demands of day trading.
Even a swing trader will need some day trading chops to execute a trade properly. Execution quality is significant source of profits.

xandman · Apr 7, 2015

Laissez Faire said:
Theoretically, day trading efficiently is more profitable than long term trading since the sum of the swings constituting a major swing far exceeds the swing itself.

Can you exploit those swings consistently? Most can't.

On a risk adjusted and unlevered basis, Most don't. But, it is the absolute amount of profits that are still keeping us in this game.

loyek590 · Apr 7, 2015

Laissez Faire said:
Theoretically, day trading efficiently is more profitable than long term trading since the sum of the swings constituting a major swing far exceeds the swing itself.

Can you exploit those swings consistently? Most can't.

yeah, I think you have to accept the limits of retail trading. When the started trading es on globex our costs went way down and we could trade a lot shorter. You aint going to make any money buying oil and holding it for ten years. But every market has a sweet spot timewise for a retail trader, and I doubt that is going to consistently be within a 24 hour period.