One can't open a
newspaper or trading magazine these days without being inundated by ads
promising the road to riches through day trading and e-trading. "Hurry
up...get on the gravy train to instant riches...don't dare be left
behind", they all exhort. Indeed the number of day traders has
increased exponentially over the most recent years as technology
improvements have given quote access and raw computing power to the
masses. Are
all of these day traders really making tons of money? As
we are led to believe by all the brokerage firms, seminar promoters,
newsletter and e-mail advisory services, quote and software vendors,
and e-trade gurus? Sadly,
the answer is a resounding NO for the vast majority!
Even more sadly, most of them
are losing their shirts even if they were previously successful traders
on a longer-term time frame. In one recent study done by Professor
Terrance Odean of the University of California at Davis, a sample of
60,000 traders was studied. He found the frequency of trading
greatly increased when traders went from phone trading to e-trading and
that the 20% of his sample who traded most actively underperformed the
20% trading least actively by 5-10% per year on average! In other
words, going online increases trade frequency but decreases overall
profits - and certainly requires orders of magnitude more of your
valuable time.
It is clearly
important for every trader to select the right time frame for them in
which to trade. The right time frame for any trader is primarily a
function of a trader's temperament. The successful long term trading
mindset requires, above all, patience and perseverance. The successful
short term trading mindset instead requires iron discipline, intense
focus, and steely devotion. These are more difficult attributes to
develop in the average trader. Too often the average short-term trader
succumbs to the markets lure and develops a frantic, get-it-now mindset
believing
every price blip represents a trading opportunity. As this
attitude is fanned by the media and brokerage industry, more and more
long term traders have become aggressive swing traders and swing
traders become rabid day traders - more often than not with
disastrous consequences.
For
traders with a calculating mind and patient temperament, however,
mechanical trading on a longer-term basis using daily and weekly data
offers undeniable monetary and personal benefits. There are good
reasons for this.
Big
Money Comes from Big Moves and These Take a Lot of Time to Develop
Historically, most
of the really big money in forex has been made by carefully positioning
oneself in a major move and patiently letting the move unfold and
develop - generally over months but up to years in some cases.
Look at
almost any long term weekly price chart and you will see many long,
gradual trends that offer many low risk buying or selling
opportunities. How much better off would your account have
been had you been able to take home as little as 1/3 to 1/2 of any of
these mega trends in profits. ..and done it in as little as one or 2
trades. For 95% of traders, the answer would be, "a whole lot better".
Forex-Signals-4U's
unique long term trading methods allows a disciplined, unemotional,
highly profitable approach to capturing large portions of major market
moves with minimal risk and effort.
Long
Term Trading Results in Less Trades with Fewer Mistakes and
Lower Commission and Slippage Costs
The
current trend towards trading in shorter time frames goes against a
long accepted maxim in the trading world. This states that over trading
is one of the biggest sources of losses facing both new and established
traders. Why is this so? Obviously, more trades mean more commissions
and more slippage. Few short-term traders realize, however, that their
total commission and slippage costs in any year often exceed their
total losses for the year. In other words, many losing short-term
traders would have actually made money on an annual basis had they not
incurred the exorbitant commission and slippage costs of trading
throughout the year.
Additionally, fewer trades mean fewer mistakes.
Larry Williams, an acknowledged master of day trading methods has
stated that " one of the top three reasons people lose money in the
markets is because of carelessness ". Obviously, anything a trader can
do to reduce the frequency of trades will reduce trading costs and the
likelihood of mistakes. Reduced trading is a cornerstone of Forex
Signals visitor form Forex-Signals-4U trading philosophy.
We believe this approach invariably leads to greater overall trading
profitability in the real world and it is far easier on the trader
psychologically. Not wanting to dwell on the subject, suffice it to say
that without a stable and positive psychological outlook on the markets
it is almost impossible to succeed.
Long
Term Trading Requires Dramatically Reduced Time for Analysis and Trading
If you are trading
using weekly data, only one to two hours each weekend are required to
implement a sophisticated long term trading system for 22 or more
commodities. This includes the time to completely download your quotes
and update your data files, verify which are the correct months to
trade for each commodity, figure out if you have any positions to
rollover, generate your trading signals, and write down orders to your
broker. Contrast this with the life of a typical successful day trader
who literally becomes a slave to their quote machines during market
hours. Even if you trade part-time using only end of day data, how many
times have you come home at the end of a long work day, tired and worn,
and really didn't feel like sitting down with your computer to go
through your trades? You probably felt that you just didn't have the
steam for the required hour or two and, as a result, you rushed through
it and made mistakes or critical errors in judgment. Don't just feel
bad about it. Make a commitment to change!
Whether you like it or not, successful trading
does take time to carefully assess your positions or potential trades
and avoid careless mistakes. Your wife (or significant other) and/or
kids probably end up resenting this time taken from them each evening.
If you are like most traders, you often end up feeling trapped by the
daily pressures to keep on top of your trading. These frustrations
invariably lead to mistakes or bad judgments which unavoidably lead to
mounting losses. Long term trading allows you to move back from the
market and see the forest from the trees. Trading systems from
Forex-Signals-4U can get you back on the road to making money, free
yourself from your trading shackles, and get your life back!
Analysis
of Long Term Data is Simplified by Reduced Noise
How
many times have you looked at a short term price chart with daily or
intra day price bars that looked like an unrecognizable seismograph
readout without any clear clues to market direction. How many times
have you then switched to weekly charts and easily recognized a number
of very tradable smooth and stable long-term trends. This is not an
anomaly. In fact, this disparity occurs almost all the time in the
futures markets and these differences are easily exploited by
appropriate technical analysis. Many trading systems that get whipsawed
and eaten alive in a daily or intra day time frame (especially if you
accurately include all the commissions and slippage costs) can be
slightly reconfigured to perform exceptionally well using weekly data.
Forex-Signals-4U's
trading systems allows a market-weary trader to draw on the inherent
economical, technical, and psychological advantages of trading in a
longer-term time frame by combining technically sound and rigorously
back tested trading platforms that are totally non-optimized and
completely mechanical.
How can we prove to you that this
Forex-Signals works?
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