The TBL method of trading is tuned and optimized for short term trading – because that is what I currently do.

However, it is also an effective way to trade longer term because the elements that need to be in place for a trade are essentially the same for a short term trade and a long term trade. But there are differences in the two modes of trading;

1. Short term trading requires more attention from the trader and also requires actions be taken quickly. The setup we are looking for may be the same as that of a long term trade but the window of opportunity is much shorter.

2. Long term trades must be constructed with hard stops – whereas we infrequently use hard stops in short term trading.

3. The only reason – in our opinion – for trading the longer term is to attempt to make a larger profit. If that were not the case, then the added risk of being in the market overnight would not be worth taking the trade.

Successful trading, whether short term or longer term – is primarily about good management of risk versus reward. Most markets today can be moved significantly by fundamental events that cannot be predicted, so the risk of holding a position increases significantly with time. And I would add, that even if I could predict the event, I could not predict the market’s reaction to that event. The mass psychology of the market, and its reaction of unexpected events, can often be unpredictable. I think it best to avoid being in at such times whenever possible.

Now we readily admit that those unpredicted fundamental events can possibly move the market in the direction of your trade. However, betting on that contingency is gambling – with a 50 percent chance of losing. We do not like those odds, so we trade short term and significantly reduce the odds of being n the market – and on the wrong side – when a fundamental event happens.

Trading of all types – involves a degree of uncertainty. A savvy trader will attempt to reduce the degree of uncertainty by all means possible. We have been trading for a very long time – and frankly admit that the current market uncertainty is the highest we have ever experienced. I did not become a short term trader by desire – but as a result of adaptation to the markets I trade. I will take a longer term position in a market if the setup is sufficient to justify the added risk – but it happens infrequently in the current market environment.

It is our opinion that the successful trader takes what the market is willing to give. Today, for me, that means short term trading is my best chance for profitable trading..


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See the Music of the Market

The unique trading method that is Trading Between the Lines