Wed 10 Aug 2005
For the most I believe that short term trading with many types of trading systems based on technical analysis are very unpredictable.
There is however one type of short term trading I believe could possible work in the long term, and that is Arbitrage trading. It will of course be no free money, and the potential for loss will still be present.
Arbitrage trading
Arbitrage trading is the simultaneously buying and selling of the same asset on different markets. You make money when you manage to sell at a lower price than what you buy it for. Then there are variations of the basic concept, that you take two different stocks that share some fundamental values such as future merge or in the same sector, the logic is that two such stocks should move in tandem. When the stocks diverge you short one and buy the other, and then when they converge back you will make money.
I believe in this because it has some sense of logic to it. It is logically that two stocks that share some fundamentals will move together. But trading is a lot of stress, and for the blue eyed it may seem like easy money, but it is not. From time to time there will be events that will move the pairs so far away from each other that you will have to cover with a huge loss.