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Online Share Trading

Engage and learn about markets and trading online

Long vs Short Term Trading

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Brommie
Frequent Contributor
I buy and sell mainly cfd's. This keep one's capital free to buy shares if a cfd option is not available. Average holding time on a cfd is about 90 days. Only buy shares if it is really worthwhile. Holding time on shares approximately 18 months. A while ago I did a thorough check on asset risk allocation and regard this only as a hobby. Have got very strict restrictions in place on the portfolio value that I allow myself. Made and lost a lot of money. Been here since 2006 and is still kicking. Over this time period, avg return on portfolio a meager 16% p.a. But I love the challenge.
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Not applicable
had an interesting discussion y/day with someone about this, and the best conclusion we came to was very simply, investors are those looking for passive income and traders are those who actively attain income

This might be bit controversial though but Graham and Buffet were traders. Graham, for example, never held a share for longer than 3 years.

Read the book Snowball...Buffet used to be a trader of note until about the age of 40.
Have a look at the charts of his business in the middle of the book, he bought and sold more share pre-40 then I ever will in my life.
//me runs for cover as he expects a lashing from all the Buffet boys.
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Werner_1
Super Contributor
I don't mind people saying their views. Graham and Buffett had/have a very strict strategy about share selection, e.g. Graham had the deep value approach and once the share normalised he would look at another deep value purchase, etc. thats why he ended up selling out and buying, but I would disagree about them being traders, the way they bought and held onto shares isnt like what most of the people calling themselves traders here do. I still believe the most important is the reason you buy the shares, to hold a company or to make small gains in share price movement.
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Not applicable
your statement is slightly contradictory, u say that Graham bought shares through his techniques got the price gain and sold, calling him an investor because of his analysis, but u say a trader is someone who looks for a price change and then sells out, which is what Graham is described as.

In your arguement then u can also call all arbitrage traders - investors.

To me still though the only difference I see between a trader and investor is how actively a person pursues profits, if I buy a property as a sideline thing then Im an investor, if I work for remax and flip properties then Im a trader, irrelevant of how I value which property to buy or not, cause in all honesty valuation techniques are smoke and mirrors, DCFs are no more right than stochastics
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Werner_1
Super Contributor
Ben Graham called himself an investor... I guess it really doesn't matter though, it comes down to technical or fundamental, those guys are more fundamental analysis people. but still i believe investors have a more prolonged interest in the well being and running on the company, these short term traders are only after price movement and not really bothered about the fundamentals of the business, etc. But i am not going to argue about the difference of these two types of people, that doesn't really bother me because i am happy with my logic and how its going. Long term investing all the way :)
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Not applicable
Im curious how you classify these people then:
George Soros (uses fundamental)
Carl Icahn and
Jannie Moutoun

Im hoping that u realize that its all semantics, we all box ourselves into something we can either understand or justify, but in reality its just illusions.
Just like in the market, we believe we know things (investors believe they know more than traders, traders believe they in the know and know more than investors), some because they did a DCF others because they spotted a Head&Shoulders, its all just smoke and mirrors....we know NOTHING, the only truth to the markets is prices go in our favour because of luck, no matter in which box you put yourself in.
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Werner_1
Super Contributor
Jannie builds very cool awesome companies like PSG, instrumental behind Capitec and so many others, do you think he's a trader? Carl Icahn is an activist investor, he has interest in the operations, management etc of the companies he invests in. George Soros is a hedge fund manager, many currency trades etc, he possibly is a trader of note! but this is a stupid arguement... it doesnt matter... What do you think these guys are? and what about Daniel Loeb?
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Franksays
Frequent Contributor
Disagree that its just luck. What it all boils down to is probabilities, be it fundamantal in the case of a DCF or patterns in TA. You want to give yourself the best probability of upside (or downside if youre short) you can using various techniques. You will never be 100% right, but its about being able to replicate this over and over again to get consistent results over time. The other thing you need to consider is the amount of effort put in for the returns youre getting. My time is valuable to me and thats why I dont trade. I'm not saying its wrong, but it doesnt work for me because the sacrifice is too big.
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Rams
Super Contributor
Yes,not luck.......impossible to predict(see my post on Shiller under Nobel). The holy grail in making money in the market is the EXIT........when you lose , you must lose small, when you winning, win big. So in trading , you exiting many times over, in investing you exiting fewer times ,....the loss part is fixed when you exit, but the reward part is not. Probabilities, I don't like using it, because you can never know the reward part, ever......
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Not applicable
Carl Icahn is one of the most ruthless corporate raiders on the markets, he didnt get 2 hoots about the companies he "invested" in. He was a trader, by your defintion.
Jannie Mouton is the SA version, having stepped over people with a ruthlessness, (seen from both what I read and personal accounts from friends on what happens in PSG).
He definitely didnt care about his investments, it was just about the money, thats why he has the best growing share in the market, it was not because he was a humble investor.

http://www.nytimes.com/2010/03/21/business/21icahn.html?pagewanted=all&_r=0

Carl C. Icahn likes to be called an activist investor, not a raider...
Yet he bristles at being labeled a “raider,”
despite the fact that he is widely viewed as a founding member of the clan that roamed Wall Street in the 1980s, occasionally pursuing hostile takeovers with ruthless abandon.

George Soros is seen as a trader, however he uses fundamental analysis, balance sheets, etc to make his decisions, no different to Buffet or Graham.

My point as said earlier though is really just saying what we believe about the distinction between trading and investment and line between is as disillusional as believing that strippers arent really in s*x industry.
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Werner_1
Super Contributor
That makes sense! and long or short term, doesnt matter what strategy one uses or how one determines if a company/share is good to invest in if one cuts losses and lets profits run you will make money.
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Werner_1
Super Contributor
dude, you just don't understand my logic AT ALL! for any of those PSG companies to do well, Jannie wasn't only after price movement, it was building a solid business up, ruthless, doesn't matter, he cared about the business model, how the business worked and how it grew.... OK. do you then say that someone like Johann Rupert is also a trader? And you didn't answer about Daniel Loeb? if you didn't know hes a very successful hedge fund manager in NYC... also considered a activist investor but has a portfolio of value holdings and is very successful. I am not interested in arguing with you on this stupid subject, you obviously don't get my point...
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Not applicable
I think u missing my point, I dont consider Johan Rupert or any of them anything, the distinction between these boxes only exist in your mind, they are not real.
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Werner_1
Super Contributor
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Not applicable
look Im not trying to p$$ you off or anything, just saying like the Christians create teams (Anglicans, Protestants, Catholics) in trading we create the same boxes, to prove that 1 team is better than the other.

Im just saying its all semantics, cause the cause, effort, the work is the same, everyone is after the same thing, the teams are made up in our minds, and the truth is no-one team is better than the other. Buffet wouldnt have had the same respect if he lost all his money.

Sorry, u seem upset, didnt mean to do that.
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Alonzo7
Frequent Contributor
Buy and Sell mainly CFD's (95%) of Portfolio. Been here since 2009. I Trade "Full Time". Lost HUGE amounts of money in the 1st 2 years trading Warrants.(Why & How I attempted warrants, I just don't know). Currently made up all my initial losses using the best instrument ever (CFD's)..my opinion only. Trading CFD's for 18 months now. Average holding time for CFD's = 20 days. Only trade 5 different companies (mainly Defensive Companies eg. Shoprite, SAB etc). Up 16% for the year thus far. Aim is for 45% growth per annum. I never ever use Stop Losses, however always use Price Alerts. Cheers...
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Rams
Super Contributor
so, do you exit on the price alerts?
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Alonzo7
Frequent Contributor
Sometimes, BUT it depends on more than 1 factor...
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