Investing should be done on long time horizons and not short

Had a wonderful vacation in the Islands of Greece. Took me 25 hours to get back to Dubai THX to Turkish Airlines! Need I say more?

Here are a couple of long term charts that should be noted. It is important to understand that investing should be done on long time horizons and not short. As I have said many times in the past. You take today’s sentiment and trade it for the future sentiment. On 5 minute, 1 hr, or even 4 hr chart trading. Sentiment doesn’t change. Only price does. Sentiment takes months if not years to change. It is very important to understand that Sentiment is a very big component of successful Investing! That does not mean you do not analyze smaller time frames! Of course, you do. You need to manage the investment. But that again does not mean you day trade every little tick or change your mind about a position because something moved. This is very difficult for me to explain to you because it requires experience and knowledge. The intangible aspect of trading that I cannot give you. It is up to you to put the time in and acquire.

 

You can simplify it, by saying making 50/50 chances of guessing and think you are right, you can point to an event that you thought would do cause a position go up or down and completely disregard the other times you had a vague hunch or feeling about a move that went wrong. You could look at a pattern or structure that went wrong 15 times in a row over a period of time and think it is crap but you will miss the other 85 over a longer period of times when it went right! You could have experienced a flash crash and then think a flash crash will ALWAYS happen every day and trade accordingly and blow your account out taking a series of quick stops over and over again. Death by 1000 paper cuts. or worse take a series of quick profit trades and let the losers run. Bad “mental game”! Start doing mental accounting. Meaning, guessing about a flip of a coin and making decisions based on what came up last time heads or tails, as if the coin gave a flying fuck if it was heads or tails. Applying probabilities to 10 coin tosses when in fact it takes thousands and thousands of tosses to get 50/50. I could go on forever going over all the defects our minds produce on a single investment. The point is to seek the evidence for yourself. It is up to you to go back and test what I tell you over hundreds of charts and time frames. You need to acquire the knowledge and confidence so you may be able to properly learn to invest successfully over time. We could all take the same trades at the same time, and have vastly different results. Why? Because we will all manage the same trade differently. More experienced will do great, less experienced traders will blow out their account. Which is why I always say, USE A PRACTICE ACCOUNT! Because to be good at anything YOU MUST PRACTICE AND PRACTICE AND PRACTICE! After 25 years of trading, I AM STILL PRACTICING! LEARNING! HONING MY SKILLS! You should do the same!

Author Jim Boukis