Chapter 23, Part I. Multiple Time Frame Intro. Page 6

Disadvantages of long-term trading are:

- Since you make trades relatively rarely – you need to have a lot of patience. That is 50% of long-term trading;

- You have to put much more money into your account, since your stops will be much farther than on intraday trading;

- Much time has to pass, before you will understand whether you have entered right or wrong;

- If you will fail – you will fail miserably, since each trade will eat much time and money (if your stop will be triggered) – farther stops, long swings.

Short-term trading usually includes trades that are based on the hourly time frame and higher. That is my preferred time frame. As a context you usually use the daily trend and time frame but also should know weekly and monthly support/resistance levels and overbought/oversold levels, while the trend is not so significant. Usual duration of the trade varies from few hours to a week.

Advantages of short-term trading are:

- Less demand for patience, more active trading and faster results;

- More opportunities for trading;

- Less demand for minimum account value, since swings are shorter and stops are tighter;

- Absence of reliance on just single trade for extended time period to make money;

- Significant amount on time to create a trading plan for a day and plan each trade;

- Less depending on fundamental analysis;

Disadvantages of short-term trading are:

- most of the time you still need to sit in front of PC;

- Higher requirements to get good quotes and market data;

- Choosing a broker becomes a more important task to do;

- Transaction costs becomes higher;

- Knowledge of market mechanics are preferable;

- Spikes, fake outs, macro data releases becomes a real danger;

- Overnight price action becomes an additional risk.