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.

 

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.

Long EUR for long term

download

Time to get long EUR.

Speculators have turned net long Euros for the first time since 2014 – when ECB started aggressively easing, and EURUSD was above 1.30.

Technically:

  • A medium term trendline at 1.10 has been broken.
  • 1.10 psychological round number taken out.

Fundamentally:

  • Euro area has large current account surplus vs US – should drive flows into Europe now that political situation has calmed.
  • ECB will soon begin to tighten policy, tapering QE.

 

Fair value for EURUSD is 1.30 based on PPP and current account differentials.

Current account differentials should drive FX markets in the medium-long term, as the path of monetary policy is becoming more clear.