Key insight for traders

 

Short-term moves are easier to predict. You need fewer factors to consider when looking for an 8 to 20% move or a 3 to 5 days move.

Long-term moves are more difficult to predict and require more factors to be taken into consideration. and require more skills.

Much of the advice on trading you will find comes from traders trying to find longer-term moves. Wider stops, adding to a position, letting your profit run, do not sell early, phase two moves, and long bases are all aimed at traders looking for longer-term hold trades.

If you use that advice for short-term trading, you will see it often does not work. Short-term trading is a fundamentally different game.

Medallion Fund pioneered short-term trading.

Medallion started with intention of finding long-term moves' predictability, but they found short-term moves are more predictable and happen in larger numbers than longer-term moves. They found short-term trends of a few days or minutes are more predictable. That changed the paradigm in the trading world.

Medallion found that short-term moves are more predictable and if they can reduce trading costs and use very close stops, they can even make them more predictable.

As a trade ,you have two clear pathways if you think about this Short term or long-term. Do not mix the rules of the two.