Suppose you have a portfolio of $1m. You have a successful track record in both short-term and long-term trading. Which is more profitable? What is your preference now?
Not many people are able to do both well. There was a long thread on this subject quite recently. ....
In theory short term since you can catch every turn. HOWEVER, “In theory, theory and practice are the same. In practice, they are not.” ― Albert Einstein
Short-term trading is more profitable; you want to churn that machine in much more revolutions. Kind of like a Formula 1 race car...they have like a 19K rpm redline, versus a normal street sports car that only averages 6K rpm. F1 race cars are the fastest around a track.
Great analogy Because very few people can drive an Fi car. Short term trading is harder. Too many people think it's easy money and end up losing GAT
Short term is harder, but if your equally as good at both then short term will make more money. I'm better at Long term, but lack the cash to play that game, why I'm trying to crack short term sufficently to make loads. Didn't take me long to crack long term, if I'd of stuck at Long term I'd likely be richer 10years on, but who knew hey!!
I think it is more to do with the size of the moves that you are looking for. I don't normally daytrade, but last week, i did a lot of intraday trading solely because i expected there would be big moves intraday that could be exploited.
Typical f1 engine has a lifespan of 500 miles. Typical Honda has lifespan of 200,000 miles. Which goes longer distance?
For you and mostly everyone else without a methodology, long term trading is by far the most profitable. With a sound methodology, short-term trading is of course more profitable. Just do the math. The thing is that with investing you have a considerably higher margin-of-error in your operations (you will do very few), but you still need a methodology and a plan. It doesn't have to be very advanced though (compared to a short-term trading operation), BUT you need to be able to follow it. I have two friends at the moment who both started investing recently. Guy A - Has taken the time and effort to craft a methodology and SEEMS to be following it so far. For instance, he bought more stocks on the recent fall and didn't panic. Far from it. His methodology is seemingly simple: he invests in companies that historically have increasing (and consistent) dividends. Guy B - Is supposedly going to be an investor, but does not have a methodology. Goes in and out of stocks and actually managed to sell his entire portfolio with a loss in panic last week. I think he coined the bottom pretty well.
Thanks for the answer. Although short-term trading is more profitable with a sound methodology, is it fair to say short-term trading is not as scalable as long-term trading? Hard to manage a big fund because it is hard to go in and out short-term?