"The first ten thousand I made in the bucket shops I lost because I traded in and out of season, every day, whether or not conditions were right. I wasn't making that mistake twice."
Jesse Livermore
You do the exact same thing or you've done it :) I know it. I used to as well.
To be fair, there is an appealing argument in trading in the lower time frames. Which is that you get presented with more setups which meet the prerequisites of your back tested trading strategy. More setups, more "coin spins" in your favor.
However, aside from the obvious incremental increase in the trading fees which, by themselves, can squeeze your average returns ... There are disadvantages that come with trading in the lower time frames which are hard to quantify.
If you've been around for long enough in this industry, you must have already realized that the stock market ... well the markets, crypto, forex, commodities' futures, indexes ... is the perfect noise machine.
There is always something new, every day there's a "new era" perspective that might jeopardize your strategy. There is always a problem around the corner ... over the past month alone I can count already prominent examples like the Credit Suisse crisis, the Pound crisis, the Russian public debt crisis ... you name them please.
The media loves the stock market, they've got free juicy stories every day ... worst case scenario just the doomsday of some random stock ... well, like $META today.
Where am I trying to get to? Somewhere along my trading journey I found out that no matter how solid or antifragile my strategy was, this noise would always be around and do what it does best ... give me second thoughts about my A+ strategy ... because "this time it's different". It would inflate me with fear or greed ... and both would lead me to overtrading.
What did I do to regulate this hazardous effect from the markets? Shited my trading timeframe to the least noisy possible ... for me, the monthly. Of course I backtested the strategy applied to this time frame and discovered it was worth it ... but once again, numbers aside, the major benefit I got from the adaptation is that I no longer became exposed to these unavoidable spikes of euphoria or fear in the markets.
I still feel them to some extent, but the fact that I use the monthly time frame, entails that I can only make trading decisions at the completion of the month, at the completion of the candle. What does this mean? Any bullshit theory I get flooded with on a frequent basis needs to endure the test of the time lag between its inception and the closing of the month ... This lag tends to help me to cool down and carefully assess the information in a cold perspective ... It turns out that through that perspective, I always end up getting routed to the valuable trading principals I've learned, at a hard cost, through my journey, ignoring the sensationalism induced by these loud noises.
... and
I have more time to do other stuff that I love;
I have more time to enjoy the company of the people that I love;
I pay considerably less commissions;
I trade the best and leave the rest;
I catch gargantuan trends;
My tax filing are not a pain in the ass;
I am not stalking the ticker every minute ...
and I could go on haha.
Cheers! Today I brought you $META ... the noise haha.
Link in bio for full analysis.
Jesse Livermore
You do the exact same thing or you've done it :) I know it. I used to as well.
To be fair, there is an appealing argument in trading in the lower time frames. Which is that you get presented with more setups which meet the prerequisites of your back tested trading strategy. More setups, more "coin spins" in your favor.
However, aside from the obvious incremental increase in the trading fees which, by themselves, can squeeze your average returns ... There are disadvantages that come with trading in the lower time frames which are hard to quantify.
If you've been around for long enough in this industry, you must have already realized that the stock market ... well the markets, crypto, forex, commodities' futures, indexes ... is the perfect noise machine.
There is always something new, every day there's a "new era" perspective that might jeopardize your strategy. There is always a problem around the corner ... over the past month alone I can count already prominent examples like the Credit Suisse crisis, the Pound crisis, the Russian public debt crisis ... you name them please.
The media loves the stock market, they've got free juicy stories every day ... worst case scenario just the doomsday of some random stock ... well, like $META today.
Where am I trying to get to? Somewhere along my trading journey I found out that no matter how solid or antifragile my strategy was, this noise would always be around and do what it does best ... give me second thoughts about my A+ strategy ... because "this time it's different". It would inflate me with fear or greed ... and both would lead me to overtrading.
What did I do to regulate this hazardous effect from the markets? Shited my trading timeframe to the least noisy possible ... for me, the monthly. Of course I backtested the strategy applied to this time frame and discovered it was worth it ... but once again, numbers aside, the major benefit I got from the adaptation is that I no longer became exposed to these unavoidable spikes of euphoria or fear in the markets.
I still feel them to some extent, but the fact that I use the monthly time frame, entails that I can only make trading decisions at the completion of the month, at the completion of the candle. What does this mean? Any bullshit theory I get flooded with on a frequent basis needs to endure the test of the time lag between its inception and the closing of the month ... This lag tends to help me to cool down and carefully assess the information in a cold perspective ... It turns out that through that perspective, I always end up getting routed to the valuable trading principals I've learned, at a hard cost, through my journey, ignoring the sensationalism induced by these loud noises.
... and
I have more time to do other stuff that I love;
I have more time to enjoy the company of the people that I love;
I pay considerably less commissions;
I trade the best and leave the rest;
I catch gargantuan trends;
My tax filing are not a pain in the ass;
I am not stalking the ticker every minute ...
and I could go on haha.
Cheers! Today I brought you $META ... the noise haha.
Link in bio for full analysis.