How I Trade

by Henry W.
(Seattle, WA)

I am trading the following: stocks, mutual funds, foreign exchange positions, and commodities.

I have a small trading station, essentially, my computer, an exchange broker subscription with daily news, and an excel spreadsheet. I am a firm believer in the fact that day trading will make you lose money as 90% of the day traders are losing money.

But, I also believe that the buy and hold strategy is unlikely to give you the results that one would expect.

First, there are commissions, for example, the performance of a mutual fund or of an exchanged traded fund is usually reduced by one percentage point or more due to commission.

On top of that, individuals make bad choices when they buy financial instruments, they tend to buy too much when the stock market is doing well, and they tend to buy too little when the stock market is doing badly.

As a consequence, I only keep one third of my holdings in a traditional buy-and-hold approach, one third is in cash, and one third is in middle term trading.

Have you have heard of middle term trading? I am sure you haven’t. This is because most financial institutions are actually doing this kind of trade, but they do not let their customers engage in it, as it is associated with limited returns to them.

I have done 76 middle term trades in the last 20 years. I am in my 40s and I started very young. Out of 76 trades, I have closed 74 trades with a profit, and 2 with a break even.

Example, I take a position in oil. Oil goes gown 10%, I buy a fraction of the original position. It goes down 50%, I buy a multiple of the original position. Oil goes up 100%, the original position plus some of the additional position is sold, at an average profit of 75%.

On the 74 trades with a profit, I have profits that go from 4% to 220%.

Barry's Reply: Thanks Henry for posting your trading journey. It seems that you've found your 'middle term' trading to be just the right trading niche for yourself. Sometimes that's all it takes to do well, is finding just the right time frame or style to go with our personality.

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