Intraday vs Longer Term vs Scalping

by Mark Guerra
(www.leotraderpro.com)

Tell me, who do YOU think would be the most successful?

… a Long Term Trader, an Intra-day Trader or a Scalper?

Well the answer to that is all, none or some.

The reason for no definite answer is that the actual strategy or time length of a trade does not determine its success.

So what are the differences between Intraday, Long-term and Scalping, and how could you find success in any of them?

Longer Term Traders:

Well, the long-term trader aims to be in the market for a long period of time, they aim to buy and hold for the longer trends…say from 3 weeks and upwards.

A 100 pip move against their position isn’t a problem for the longer term trader, whereas an intraday trader or scalper is likely to lose all their profits or even have their stop loss hit with the loss realized if the market fluctuated against them that much.

Stop losses are wider for these guys so they avoid such typical market fluctuations.

The emotions are lower as there is much less market watching and checking involved.

However, entry opportunities are further and few between, so if you aren’t disciplined to regularly check the markets you may miss a trade and not get the entry opportunity again for some time.

Longer term trades do have the opportunity for much bigger profits in a single trade, this is because you are getting in on longer term trends.

This strategy is best suited to the busy professional/person or inexperienced trader.

Intra-Day Trader:

An intraday trader uses very similar strategies as the longer term, but on smaller time frame charts, they aim to be in and out of the market within a few days. As there are more entry opportunities a trader again needs great discipline, but this time to not over trade or get too emotional.

More entry opportunities does not mean bigger profits…these smaller trends don't move as far as the bigger ones do – so profits are limited, although more frequent but that cost comes with a higher emotional demand due to the increased speed of execution and decision making.

Scalpers:

The scalper is looking for very small but regular bites of market moves – they may be looking to only grab 5 pips out of every trade.

They have a specific profit target in mind where the whole trade is closed at that level. Longer and intraday traders will often scale out of their positions and do their best to ride the trend to the end, however long it may turn out to be. But when the market shows signs of weakening they then close out their position.

The difference here, is that the although the scalper gets many more entry opportunities, if they are only pulling say 5 or 10 pips from the market each time, they need 10 – 20 successful trades to equal one good longer trade that takes 100 pips.

Just remember, none of these strategies supersedes the other – the success comes from your ability to first find a time frame / strategy that suits your lifestyle goals, and also ensuring you have the emotional stability to make fast and accurate decisions when under pressure.

Good Trading

Mark Guerra
Senior Neural Nets Developer At Leo Trader Pro

For more interesting articles by Mark go here.

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