The benefits of long-term trading
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The majority of individuals who start trading prefer short-term trading. This comes from a common misconception that "to be a winner in trading, takes the whole day". Becoming a trader takes a lot of work and time to be able to learn how to trade properly, but it is not necessary to spend the day in front of the screen trading. The performance of a trading account is in no way related to the time spent looking at the trends of various assets. A new trader should not feel obliged to trade short term to be a successful trader. Long-term trading ranges from the daily chart to the monthly chart.
Trading is like life, there's something for everyone. There are short, medium and long term traders. Long term trading should not be associated with an investment, as might be the case for investors who acquire shares to pocket the dividends. Investment and long-term trading are two completely different things. Moreover, not all traders are made for the short term. On the one hand, there is the time available in the day to deal (if you also have a job, it's hard to spend hours trading), and there is also traders’ ability to manage their emotions.
Psychology in trading is a very important element, at the same level as trading strategy, if not more! New traders are often overwhelmed by their emotions when trading, and short term trading does not help. They feel overwhelmed by events, by the too rapid evolution of prices, by short-term volatility, etc. As a result, they give in to emotions and start making errors, making irrational decisions, no longer following their trading strategy, no longer respecting their money management rules, etc.
Long term trading makes it easier for traders to manage their emotions. You can't deny it, looking at trends for hours can send you crazy, it's sometimes difficult to manage for a seasoned trader let alone a novice trader. Similarly, taking a step back clears the mind and allows for better analysis.
For the most experienced traders, having the nose to the grindstone all the time sometimes leads to small mistakes. For a novice trader, having the nose to the grindstone often ends up by the abusive use of leverage. It takes a certain amount of time to get our brain accustomed to ignoring the lure of profit, to no longer think money but performance (percentage of gain). Likewise, one must get used to accepting a loss without flinching. If you don't know how to get past your ego, trading is not for you. In trading, you remain a beginner all your life and losing trades are part of everyday life!
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Long term trading offers many advantages that novice traders forget. However, it is often more suited to the profile of certain traders. Long-term trading requires less experience, facilitates the psychological management of trades and is more appropriate for good training. Trading is not necessarily a time-consuming activity, you just have to accept doing long-term trades.
Long term trading: A psychological advantage
Trading is like life, there's something for everyone. There are short, medium and long term traders. Long term trading should not be associated with an investment, as might be the case for investors who acquire shares to pocket the dividends. Investment and long-term trading are two completely different things. Moreover, not all traders are made for the short term. On the one hand, there is the time available in the day to deal (if you also have a job, it's hard to spend hours trading), and there is also traders’ ability to manage their emotions.
Psychology in trading is a very important element, at the same level as trading strategy, if not more! New traders are often overwhelmed by their emotions when trading, and short term trading does not help. They feel overwhelmed by events, by the too rapid evolution of prices, by short-term volatility, etc. As a result, they give in to emotions and start making errors, making irrational decisions, no longer following their trading strategy, no longer respecting their money management rules, etc.
Long term trading makes it easier for traders to manage their emotions. You can't deny it, looking at trends for hours can send you crazy, it's sometimes difficult to manage for a seasoned trader let alone a novice trader. Similarly, taking a step back clears the mind and allows for better analysis.
For the most experienced traders, having the nose to the grindstone all the time sometimes leads to small mistakes. For a novice trader, having the nose to the grindstone often ends up by the abusive use of leverage. It takes a certain amount of time to get our brain accustomed to ignoring the lure of profit, to no longer think money but performance (percentage of gain). Likewise, one must get used to accepting a loss without flinching. If you don't know how to get past your ego, trading is not for you. In trading, you remain a beginner all your life and losing trades are part of everyday life!
Other advantages of long-term trading
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Time to analyse
: Long term trading gives traders much more time to analyse various assets’ charts. Traders then have time to properly determine their entry point, stop loss level and price objectives. For a seasoned trader, doing an analysis is fast but for a beginner, it can take tens of minutes. Quality is better than quantity for analyses.-
Avoid short-term volatility
: Short-term movements are sometimes erratic and difficult for the uninitiated to understand. This short-term volatility is due to the high frequency trading practised by institutional investors. Whether in terms of price targets or stop losses, volatility makes trading more complicated.-
Trend Trading
: Long-term trading makes it possible to deal with the global trend of assets. In the short term, this is a common mistake made by beginners who analyse a chart but forget to analyse the upper time unit to determine the trend and potential resistance/support levels.-
Available time
: Long term trading enables traders to spend a short time trading. At first, carrying out an analysis may seem long, but with time, it quickly becomes fast. Traders do not have to do anything except determine their entry point and stop loss levels. They can then spend just a few minutes a day properly applying their trading method. Long term trading therefore leaves a lot of free time and allows you to have a job alongside. Traders just need to watch their trades from time to time to move stop losses or take profits if necessary. In the event of an unfavourable price change, a stop loss is there to protect you.-
Reduced stress
: By practising long-term trading, traders suffer much less stress. It's easier to break away from trading, let their positions carry and just do a quick check from time to time. With short-term trading, that's another story. Beginner traders tend to stick to the screen to watch for any movement in the pair. This can be considered a mistake. It generates a lot of stress and often pushes traders to making irrational decisions (a little correction in the wrong direction, they cut; a little rally in their direction, they cut to preserve profits, etc.).-
Fewer false signals
: Chart patterns (and other technical elements) are often more relevant over the long term. There are fewer false signals and the movements are often more straightforward.Conclusion
Long term trading offers many advantages that novice traders forget. However, it is often more suited to the profile of certain traders. Long-term trading requires less experience, facilitates the psychological management of trades and is more appropriate for good training. Trading is not necessarily a time-consuming activity, you just have to accept doing long-term trades.
