Slow food … slow fashion … slow living …. The slow movement began back in the 1980s as a response to the ‘MacDonalds-ization’ of culture.
The idea is a rejection of the busy, fast, want-it-now way of living. Instead, it’s an appreciation of the process, savouring the hours and minutes, rather than counting them.
Fast isn’t always better.
The principles of the slow movement have been applied to many areas of life, from cooking and gardening, to science and parenting.
But I believe it’s particularly relevant in the world of trading, where people talk in hushed tones about high-frequency trading, as if we could all make a killing if only we could react fast enough.
While the truth couldn’t be more different
In a study of 60,000 traders run by the University of California, the 20% who traded most actively underperformed the 20% who traded least actively by 5–10% per year.
And this is no one off.
Again and again, studies show that the less we trade, the more money we make.
If you keep trades open for days or weeks, or even months, you have a significantly better chance of making money than someone who’s opening and closing trades within minutes or hours.
And – ironically – this kind of trading takes up much less of our time and effort. I think it’s the only thing in life where the less time and effort you put in … the more you get out!
Of course, if you love the thrill of day trading – that’s fine. Don’t let me stop you. But please set up a long-term strategy to run quietly in the background that’s there to make you the real money!
So, why is less, more?
There are 3 important reasons why long-term trading makes more money … and one crucial one.
- By trading less, you reduce the commission you pay to your broker.
- By trading less, you reduce the impact of slippage.
- By entering trades more slowly, you don’t feel rushed and you’re less likely to make mistakes.
But the fourth reason is the real clincher …
- Long-term traders are riding significant, established trends. This means that they are looking to pick up hundreds of points, rather than single of double-digits. It also means that they will be trading with wider stop levels, so are less likely to be knocked out by minor corrections within that trend.
And this really gets to the root of profitability.
I’ve talked in the past about how the most profitable trading strategy on the planet would have no stop level – because, if we had pockets deep enough to ride through the bad patches, we’d never actually get a trade wrong.
We could always be right – if only we could afford to wait that long.
Of course, only people like Warren Buffet can say: “As to how long we’ll wait [to be right], we’ll wait indefinitely.”
Those of us with limits to our trading funds have to be strict about cutting losses. But as a long-term trader, you can afford to have wider stops, and to let trades run for longer. And this naturally gives us more scope to be right.
There’s nothing clever about this. You don’t need to be a better trader. You don’t need a more perfectly timed entry, or a smarter exit strategy … you just need to trade longer timeframes. And – like magic – you’ve just tipped the profitability scales in your favour.
So, how do you take advantage of ‘slow trading’?
In keeping with the principles of the ‘slow movement’ … this isn’t about signing you up to the ‘next big thing’, for some flashy deal and big headline figures.
This is about tried and tested methods.
It’s about looking to the long game, and avoiding errors. (Check out this post from last year about avoiding unforced errors.)
A lot of traders struggle to access these kinds of solid trading methods, because they are often expensive, and restricted to investors with deeper pockets. But over the festive period, I’ll be revealing an incredibly easy access route to my number one long-term trend-following method.
Please watch out for this offer, because it could be the way-in to serious investing that you’ve been waiting for – the kind of trading that takes you to the next level, as a serious investor.