Trading longer time frames

[tradersaavy]

I didn't read any of the replies so far so if this is redundant, I apologize:

You really need to match your personality ( of course with a host of other criteria as well ) with the timeframe you trade, and you really have to know your personality.

I traded from a 1m chart for a long time because I am a bit hyper and impatient.

I have had much greater success swing trading 1 - 5 day holding periods.

I thought 1m charts were for me cuz of logical reasons.

It turns out, I stick to my rules better when not watching every tick.

As far as the overnight aspect, I trade YM so it's pretty much 'round the clock. I try not to hold over weekends.

 

[RedDuke]

Did not read the whole thread, but it is all relative and depends on ones’ psychology.

I did an interesting experiment once, I gave few technicians a weekly chart where I asked them to analyze and tell me where the instrument is heading. I got few different and valid opinions. The catch however was that, it was not a weekly chart it was 5 min chart (the price and time scale were hidden).

No way weekly charts are easier than 5 min ones. They just require significantly less screen time. But this comes at the expense of being able to be wrong less times. You make few bad trades on weekly charts and the year is gone. With 5 min, you will loose a day.

 

[taowave]

Quote from steenbab:

Hi,

There are many, many good points made during this thread; I'll try to add another.

It's not just a matter of finding a trading style that matches your personality (which is very important); it's also critical to find a trading style that captures your strengths.

In working with traders from prop shops to investment banks, I've found that their skill sets are quite, quite different. The high frequency prop traders have amazing skills in the area of working (short-term) memory and rapid processing of information. Their ability to recognize patterns and act upon them quickly is amazing.

Conversely, the longer time-frame traders often found in hedge funds and banks tend to possess greater analytical skills. Many times, they work from explicit research, models, or systems. Much of what they're good at is synthesizing large amounts of information, finding themes, and exploiting those over time.

It is very, very rare in my experience for traders to be equally adept at both kinds of trading. One is highly intuitive and action oriented; the other is reasoned and methodical. When traders combine these styles (as I do), it's often by doing the analytical work outside of market hours and then using it as an edge during those periods of reading the tape.

Our cognitive skills and our personalities help to shape the kind of trading we gravitate to--and can be good at.

Brett

Well said Brett....I think one may find that long term traders tend to look at the market as more of a puzzle,with many different pieces.By that,the longer term trader has a certain scenario he feels will play out,and seeks the most efficient way to maximise that scenario coming to fruition.

I would say that at least half my positions are in various derivatives and correlation analysis/monte carlo simulations plays a major role in the management of the overall portfolio.

 

[ElectricSavant]

BUT...

if you take the long term direction as the bias...and trade the 5M in that direction only....then well ..i am going golfing with Bill Gates now...

Quote from RedDuke:

Did not read the whole thread, but it is all relative and depends on ones’ psychology.

I did an interesting experiment once, I gave few technicians a weekly chart where I asked them to analyze and tell me where the instrument is heading. I got few different and valid opinions. The catch however was that, it was not a weekly chart it was 5 min chart (the price and time scale were hidden).

No way weekly charts are easier than 5 min ones. They just require significantly less screen time. But this comes at the expense of being able to be wrong less times. You make few bad trades on weekly charts and the year is gone. With 5 min, you will loose a day.

 

[RedDuke]

Quote from ElectricSavant:

BUT...

if you take the long term direction as the bias...and trade the 5M in that direction only....then well ..i am going golfing with Bill Gates now...

That is what I do. I have longer term for direction and based my trades on shorter time frame within longer trend (all intra day).

Doubt though, that I'll play golf with Bill Gates.

 

[ElectricSavant]

Well..kiddo..maybe you can play a game with me when you become profitable ...hehe...I read Red Dukes posts and he could out-trade me with one trigger finger...I am just playin' with him

Quote from RedDuke:

That is what I do. I have longer term for direction and based my trades on shorter time frame within longer trend (all intra day).

Doubt though, that I'll play golf with Bill Gates.

 

[RedDuke]

Quote from ElectricSavant:

Well..kiddo..maybe you can play a game with me when you become profitable ...hehe...I read Red Dukes posts and he could out-trade me with one trigger finger...I am just playin' with him

 

[TrueStory]

Quote from candeo:

I was wondering if anyone here is succesfully trading longer time frames. I have noticed that traders usually trade shorter and shorter time frames as they become more experienced and very often become daytraders. The main excuse is "eliminating overnight risk" but I wonder how much of it is actually just a need for action/excitement.
Also, I have noticed that most of the great traders hold position much longer than most traders here: Dennis, Darvas, Livermore, Soros etc..At least for trend followers. In fact trends seem much easier to analyze on a weekly chart than a daily or an intraday.

I haven't read all the posts in this thread, just wanted to throw in that I believe all technical analsysis is more significant as the timeframe gets bigger. Yes, there is overnight risk, but that is something this type of trading is ready for if its managed properly. And most news events come during the day anyway. I trade longer-term than most, not weekly charts, but lots of 4-hr and daily charts. I have no need for action. For me, not trading is not boring, because I'm skiing, or at the beach, or playing golf. As you said, making money isn't boring...

 

[whitster]

issues of semantics aside (when do longer term trades, cease being trades and become investments), i enjoy both

i scalp (short time frame) dow futures, because it offers smooth equity curve, incredible leverage and little risk per trade (very small tight stops).

i invest/trade longerterm because i am building a portfolio, and wealth through my portfolio

clearly, when intraday scalping the dow, "trading skills" are paramount - and fundamental analysis, etc. is not

otoh, in longer term stuff, i LOVE doing the fundamentals (and im not talking #'s. that's a tiny part of fundies), building positions over day, week, months, and taking a part in ownership of great companies

 

[NZDSPeCIALISt]

The biggest mindf*** with trading long term time frames is that you want time to pass, it's as if you wish your life and your days would pass quicker. You enjoy the ride but at the end of the year you look at a daily chart and you can actually remember what you were doing with each bar that you look at. It's as if your days are encoded on some little tiny colored candlestick shape, that you revisit day after day.

Trading shorter time frames and there is the bane of repetition, every day repeatedly doing similar things and it's as if your stuck in a production line.
I like this quote from Dr. Steenbargers blog:

"The psychology of short-term trading begins with the simple realization that the market's patterns run counter to the cognitive and emotional patterns of the average person. Which may be why average people do not profit as short-term traders."

In other words, what you naturally resisit is where it's at.

Then there is the surgical strike route, waiting around for those once or twice a week hard and fast moves, but you could be waiting all week and miss your move because your out on a walk (or on the phone to your girlfriend/having a snack/toilet break/engaged in a chatroom) when your settup comes (especially trading 24 hour markets, the move could come at any time).

MrMarket has something for everyone!