[Stocks, FX, Cryptocurrencies] Short-term investment vs. long-term investment


Those who trade in stocks, Forex, and cryptocurrencies are fighting with various strategies such as short-term trading, long-term trading, and scalping. However, only “short-term trading” is done in that. Some may say that they only do “long-term trading”. What kind of trading method suits the person depends on the person’s ideas and lifestyle. But I can say for sure that the strategy must be flexibly changed according to the market price.


Short-term trading

Short-term trading is a method of making payments within a few minutes after entry and at the latest within a day. This trade tends to be less likely to get caught up in sudden political and economic indicators. On the other hand, it tends to be difficult to seize a big trend change and take a big price range. Big trends will last for days or weeks, and positions are supposed to be carried over to the next day. Furthermore, in the case of short-term trading, the profit that can be obtained by one trade is small, so you will have to make many entries. In addition, making multiple entries also carries a risk each time you make an entry. It’s also a tactic that isn’t very suitable for people who can’t spend all their time trading.

Long-term trading

Long-term trading is a tactic that catches a big trend change and keeps the position for several days to several weeks, at the longest for about a month. Since this strategy can take a large price range, it is a tactic that can produce a profit margin of 200% and 300% if fitted. It’s great for people who don’t have the time, but it’s not very good for people who get the rhythm by making multiple entries. Even if you are about to get a larger price range, it may not be profitable because it will be fully returned after that. There is also the risk of being 100% involved in emergencies, epidemics, and large economic indicators due to long-term retention.

The correct answer is to adopt both

Both short-term trading and long-term trading have advantages and disadvantages. There is no one-size-fits-all method or strategy to win. Therefore, it is necessary to use it properly depending on the market situation. Russia’s invasion of Ukraine has been taking place since late February 2022, and it may even lead to World War II. In such cases, it is a rule of thumb to compete in short-term trading instead of holding for a long time. Unexpected news may flow and suddenly go up or down 100 pips. Below is the daily AUD / JPY for February 2022. Various news such as bombardment and peace flew around, the market was confused, and soaring and plunging repeated. Long-term trading is reckless in this situation.

AUD/JPY Day Term Leg 02-2022

On the other hand, long-term trading is an effective strategy in peacetime. Since there are no sudden political changes or economic indicators, the big flow that once happened will not change quickly. In this flow, it is wise to hold a position all the time instead of entering many times. The chart below is the daily USD / JPY for October 2021. I kept buying it all the time, and if I bought it for the time being, it would definitely be profitable. It is more effective than repeating the number of entries many times and aiming for a small profit. Each time you make multiple entries, you also have to take risks. Once you get on the big stream, it will carry you on the stream like a ship floating in the sea.

USD/JPY Day Term Leg 10-2021