Big moves and small moves
In the market there are small moves of 3 to 5 days and then there are big multi month moves of big magnitude.
In a year you have thousands of momentum burst moves of 8 to 40% magnitude. Swing traders generate profit by trading hundreds of such moves. Per trade profit might be just .5 to 2% of overall equity, but sheer number of these small trades add up at end of the year to give you good returns.
More trade signal a method generates better it is as for such momentum burst swing trading methods as it allows you to manage risk aggressively. I can catch many with small risk and do not need to depend on just big moves to make a year. there is always next train arriving at station, so if I miss few trades it does not matter, if your trade stops you out it does not matter.
But when you focus only on big moves missing the few big moves in a year can be a problem. If your system relies on few but big moves you need to risk big to make money (Episodic Pivots). Which is what I do when trying to capture big moves. But when you risk big you need to have higher skill and conviction.
In order to become good at trading the big moves first you need to master the small moves. Because of higher frequency of the small move that is relatively easy to learn in shorter time frame. To become good at trading only big move with higher risk it takes you years to develop that kind of expertise and conviction.
I focus on both kind of moves. For Active Trading Portfolio I look for momentum bursts moves of 8 to 40%. For Working People Portfolio I focus on bigger moves.
In a year you have thousands of momentum burst moves of 8 to 40% magnitude. Swing traders generate profit by trading hundreds of such moves. Per trade profit might be just .5 to 2% of overall equity, but sheer number of these small trades add up at end of the year to give you good returns.
More trade signal a method generates better it is as for such momentum burst swing trading methods as it allows you to manage risk aggressively. I can catch many with small risk and do not need to depend on just big moves to make a year. there is always next train arriving at station, so if I miss few trades it does not matter, if your trade stops you out it does not matter.
But when you focus only on big moves missing the few big moves in a year can be a problem. If your system relies on few but big moves you need to risk big to make money (Episodic Pivots). Which is what I do when trying to capture big moves. But when you risk big you need to have higher skill and conviction.
In order to become good at trading the big moves first you need to master the small moves. Because of higher frequency of the small move that is relatively easy to learn in shorter time frame. To become good at trading only big move with higher risk it takes you years to develop that kind of expertise and conviction.
To become good at trading small moves study thousands of small moves daily, if you want to become good at trading large moves study thousands of big moves.
Investors often "dream" of catching big moves and sitting in stocks for months or years . The question they must ask themselves , do they have skills to identify and enter those moves at right time.
Investors often "dream" of catching big moves and sitting in stocks for months or years . The question they must ask themselves , do they have skills to identify and enter those moves at right time.
If you do not have those skills efforts should be focused on building those skills. All traders were beginner at some stage and they have no god given gift , they learned these skills because they wanted to make money.
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