Rhody Trader

Yesterday Brett Steenbarger posted Matching the Time Frames of Your Analyses and Your Trading which focused on how traders can sometimes allow their view of the larger macro picture affect their more micro trading. To put it quite simply, Brett was saying trade what price is doing now, not where you think it should be going in general terms.

I’d add another level to this discussion.

There is the additional trap that traders can fall into where positions which start as trades become investments because the trader looks to a higher timeframe and uses that as an excuse to stay in a position (widening the stop, perhaps) when they would have been out of the trade otherwise. And of course there’s the other way around as well where investments become trades because an antsy investor starts to narrow their focus on shorter timeframes. Either way it’s a breaking of one’s plan, which is definitely a no-no.

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