Is trading ‘value’ a viable short-term strategy?

Buying pullbacks within a trend.

Buying value.

Buying the dip.

 

All seem like decent, logical strategies.

But are they though?

 

In the long term, perhaps with a time horizon of months-years, buying the dip on an undervalued security may prove profitable.

 

But in the short term, something that’s collapsing is collapsing for a reason.

And unless you’re lucky with your entry,

Buying the dip ain’t a brilliant idea.

 

Better then, to go with the flow.

Short term vs long term trading

Long term trading is easier.

Definitely easier.

You forecast where the economy, currencies, equities, interest rates and commodity prices will be in a few years.

You take a small position, and perhaps scale in a little.

Of course, you can’t take a large position, as timing long term moves, along with handling the day-to-day volatility and noise, would become impossible.

 

But long term trading ain’t fun.

Major data points become irrelevant.

Day to day spikes, which can be large, become irrelevant.

You sit through the pain of being up 10%, then 5%, then break-even, then 10%, then 5%, etc.

You can’t take profits too soon – because that’s not how the game is played.

 

Short term trading is fun.

Just seeing your balance go up (or down) every day is fun.

Analysing day to day price movements is challenging, and exciting.

Volatility is exciting.

 

Short term trading has a lower win rate and lower risk to reward.

Short term moves are more difficult to predict, since short term price action is influenced by many different factors.

You can’t really let your profits run too long either.

And tight stops lower your probability of success.

 

But at least you get it over with quickly.

In my mind, life is short.

I don’t want to be stuck for months waiting for the Euro to go down 10%, while enduring all the ups and downs that come with it.

I’d rather sacrifice a little profit, to take my profit now.

Life is too short for long term trading to be enjoyable on the whole.

 

Euro: History repeats.

eurusd

2014-17 is essentially an exact repeat of 1995-98.

 

Suggests EURUSD heading towards parity and beyond.

At a time when everyone’s bullish on EUR, speculative interest at highs, everything’s rosy in Europe, tapering talk…

But the obvious is obviously wrong.

 

This is a massive contrarian call, but there’s 30%+ up for grabs here.

The asymmetry is real.

The juice is worth the squeeze.

This HTML5 Remote Desktop app might replace my laptop.

I use a remote server to automate my trading, so I don’t need to look at screens all day.

But I do need something to monitor the server if required.

That’s why I got an XPS 13 to monitor it on-the-go, if needed.

 

But now everything has changed.

I found Remote Spark, an HTML5 remote desktop client.

I can now login to my server from any device – iPad, phone, Chromebook…

 

Truly amazing.

XPS 13 is now redundant.

An iPad is all I need.