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| Short Term Trading |
Not for the Faint of Heart?
The bottom line is short-term speculation is incredibly difficult. And
I'll be the first to admit it isn't for everybody. Heck, it probably
isn't for most folks. However, to suggest short-term trading is an
impossible endeavor to succeed at is just plain wrong!
The major principle of short-term trading can be put as
follows - the less the duration of a trading operation is, the less money one
can make. Do you remember an investment that you once have taken part in? It is
most likely that the term of a deal exceeded a day. As a general rule of life
corresponds to the main rule of speculation: time needed for the profit might
increase.
Prosperous Forex traders know that the market may move slightly in
one minute, it may continue moving in 5 minutes and move even further in 60
minutes, and it is unknown to what extent it may move within a day or week.
Short terms of trading limit potential of profit. That is why there are few
examples of traders who have achieved a lot dealing with short-term trading.
The wrong arguments underlie the reason for working during a day.
They are as
follows: without leaving deals open over nights, one avoids exposure to
relevant news, and thus the risks are minimal. First of all, your risk is under
your control. You have a possibility to place stop loss levels, i.e. the levels
where a position closes automatically. Even if the following morning the market
opens with a gap longer than a stop, there are methods to cut down losses. When
you open a position with a stop, you may lose only previously determined amount
of money.
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| Wall Street |
Irrespective of the fact when or how you open the deal, a stop
minimizes the risk. Buying at the highest level of a new market or at the
lowest level, you risk equally. The rejection to move positions to overnight
limits the time during which your investment could increase. Sometimes the
market opens against you, but if we are on the right way, in many cases the
market opens in your favour. And what is more important, finishing our trade at
the end of the day or, what is even worse, at a random moment, i.e. at 5- or
10-minute chart, we limit potential profit drastically.
Remember that the
difference between the losers and winners is that losers stick to their losses.
The other distinction is that the winners keep their profitable positions,
while the losers exit too early. It looks like the losers cannot stand being in
a winning position, they are so happy to get some profit that they exit the
game too early (usually during the day of entry). You will never earn a lot of
money until you learn to hold your winning positions. Meanwhile, the longer you
hold them, the bigger profit potential you have.
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| Profitable Short Term Trades |
When sowing the field,
successful farmers do not dig plants up every several minutes in order to look
to what extent they have grown. They just let them grow. The natural process of
growing could teach traders a good lesson. The successful traders' work
resembles the farmers' job - one needs time to grow profitable deals.
Happy Trading...
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