What you will learn:
- Short term trading has higher transaction costs than long term trading
- Long term traders have more time to make decisions
- Portfolio management is easier for long term traders
- Companies advocating short term trading may have ulterior motives
At PFX, we are known for advocating longer-term trading strategies over shorter-term trading. In this section we will explain why we feel that way and help you understand some of the advantages of long-term trading over short-term trading.
To be clear, while we feel that short-term trading is inferior to longer-term trading, we understand that many traders enjoy operating in the very short term and there are even a few who are successful at it. It is also appropriate to add that short-term trading can be fun. Some of us here at PFX allocate a small part of our portfolio to short-term trading because it is enjoyable. However, the questions we want to answer in this section are not whether short-term trading is more fun than long-term investing but whether long-term trading has the potential to be more profitable and provide more risk control and whether all of this is more achievable for new investors.
Short-term trading: We would classify a short-term trade as anything with a holding period of less than a week. Short-term trading includes day-traders and scalpers who may hold a position for a few seconds or minutes as well as short-term swing traders, who may hold a position for a few days. A great way to tell the difference between short term and long term traders is the chart period they favor. Longer term traders tend to use daily-bar or candle charts. Short term traders may use charts as short as 5 minutes.
Long-term trading: A long-term trader falls outside the short-term horizon and is not only identified by the period the trade lasts but also how the position is managed throughout the holding period. Being a long-term trader does not mean you are a static trader who does not actively manage a position. A long-term trader may actively manage a position for several weeks to several months. This is not the same thing as “buy-and-hold.”
We think that the disadvantages of short-term trading over long-term trading are ignored for two controversial reasons, and our experience has shown them to be important influencers when traders are entering the market and trying to decide what kind of investor they will be.
Watch the video and get the rest of the article here:
Profiting with Forex (PFX) - Watch Forex Professionals Currency Trade
- Short term trading has higher transaction costs than long term trading
- Long term traders have more time to make decisions
- Portfolio management is easier for long term traders
- Companies advocating short term trading may have ulterior motives
At PFX, we are known for advocating longer-term trading strategies over shorter-term trading. In this section we will explain why we feel that way and help you understand some of the advantages of long-term trading over short-term trading.
To be clear, while we feel that short-term trading is inferior to longer-term trading, we understand that many traders enjoy operating in the very short term and there are even a few who are successful at it. It is also appropriate to add that short-term trading can be fun. Some of us here at PFX allocate a small part of our portfolio to short-term trading because it is enjoyable. However, the questions we want to answer in this section are not whether short-term trading is more fun than long-term investing but whether long-term trading has the potential to be more profitable and provide more risk control and whether all of this is more achievable for new investors.
Short-term trading: We would classify a short-term trade as anything with a holding period of less than a week. Short-term trading includes day-traders and scalpers who may hold a position for a few seconds or minutes as well as short-term swing traders, who may hold a position for a few days. A great way to tell the difference between short term and long term traders is the chart period they favor. Longer term traders tend to use daily-bar or candle charts. Short term traders may use charts as short as 5 minutes.
Long-term trading: A long-term trader falls outside the short-term horizon and is not only identified by the period the trade lasts but also how the position is managed throughout the holding period. Being a long-term trader does not mean you are a static trader who does not actively manage a position. A long-term trader may actively manage a position for several weeks to several months. This is not the same thing as “buy-and-hold.”
We think that the disadvantages of short-term trading over long-term trading are ignored for two controversial reasons, and our experience has shown them to be important influencers when traders are entering the market and trying to decide what kind of investor they will be.
Watch the video and get the rest of the article here:
Profiting with Forex (PFX) - Watch Forex Professionals Currency Trade