Why Short Term Results Mean Nothing

Single trades mean nothing outside a trading system that is executed consistently with discipline and risk management. One trade can be as much luck as skill. Any single trade entry has a 50/50 chance of moving in your favor on entry and being a short term winner.

10 Reasons Why Short Term Results Mean Nothing:

  1. Short term results can simply be due to a favorable market environment to your specific methodology. Winning or losing one year does not determine the skill or a trader or the robustness of a trading system.
  2. A screen shot of one winning trades means nothing. Does the trader show the screenshots of all his losing trades to see if he gave back those profits at a later date?
  3. Big winning trades can show that the trader is risking too much on every trade and may end up blowing up their account eventually.
  4. Don’t care about trader’s year-to-date-returns, what matters is their 10 or 20 year returns.
  5. Spending short term trading gains on material goods is short sighted. Long term trading gains through compounding is where the wealth is built.
  6. Focus on becoming a better trader yourself not competing against someone else’s short term gains.
  7. Bull markets contain the easy money and cover a lot of sins, how a trader does in a correction or bear market really shows how good they are at defense.
  8. The long term answer to a trader’s success lies more in how long they hold a winner and how quickly they cut a loser more than their short term trading results. Being stubborn with losers is dangerous being patient with winners can be profitable long term.
  9. Short term gains can be made from a trader staying stubborn about their own predictions when he is right, while long term losses can be bigger than these short term gains by the same trader being stubborn with the wrong predictions the next time.
  10. Trend followers make money during trends, swing traders make money in range bound markets, buy and hold investors make money during bull markets, put sellers make money in bull markets, and value investors make money buy buying great companies and amazingly low prices. The market price action decides your profitability you only choose your entries and exits.

Short term trading results can be simply random. Edges in trading show up over a long period of trade entries and exits, trends, and proper trade management.