Successful Traders Love It, We Hate It

Mar. 16, 2022

When I started to seriously learn about trading, everything was on short-term charts.

Otherwise, it’s not really “trading”.

And it’s boring.

No, the cool systems were on the 5, 15, and even 1-minute charts. There was cool jargon with them and lots of indicators. Lots of complex stuff to learn.

Sure, some fuddy-duddies traded systems on 1-hour charts, but those people went to bed at 9 pm.

With short-term charts, the complexity and fast-moving action was where all the profits were. Want to know why most traders fail?

It’s because they didn’t have this specialized, sophisticated knowledge.

To get rich, learn a system on fast charts. And if you want to really be the best, you could always study the holy grail: multiple timeframe analysis.

So that’s what I did for many years. How did it go?

Not great. But that’s probably because I didn’t study hard enough.

Lately, though, I’ve come across something very interesting.

Hugely successful traders use long-term charts.

(Gasp.)

Wait, is that true? Let’s think for a second.

Who’s the most profitable investor of all time? Warren Buffett. What timeframe does he use? Very long-term.

Who won the U.S. Investing Championships last year? Mark Minervini. What timeframe does he use? Daily (or weekly sometimes).

Who made 14,972% in just over two years, turning $46k into $6.8 million? Jesse Stine. What timeframe does he use? Weekly only.

And when William O’Neil studies the greatest stock winners of all time, what timeframe does he use and recommend? Weekly.

Weekly charts? That seems crazy. Which is why I’ve dug deeply into this topic.

And today, just like reality shows,  we’re counting them down…

Here are the Top 3 Reasons Weekly Charts Are Terrible:

3. Small sample size. It’s hard to get statistical significance on Weekly Charts because very few trades are taken.

2. Stops are too big. A stop below a recent low is a long way on a Weekly Chart.

1. Too boring. Traders love to trade every day. They want action. Weekly charts are definitely not that.

But here are the Top 3 Reasons Why Weekly Charts Are Superior:

3. They keep us in very long-term, profitable moves. We won’t get sell signals on Weekly charts very often. Thus, we’re letting our winners run.

2. Very easy lifestyle. There are systems out there that have research showing vastly better results than the market while only looking at possible signals on Fridays (the end of a Weekly bar). Almost every hustler claim of “Win Big on Five Minutes a Week!” is a lie. But if that claim uses a Weekly chart, there’s a good chance it’s true.

1. Every signal works better. The noise that we’ve seen in 2022 and even in 2021? It doesn’t exist on a Weekly Chart. Further, when something triggers on a Weekly, it means business. It’s usually the start of something. Possibly something big.

Have I been missing the boat all these years?

I have become more long-term in the past two years, but have I gone long-term enough?

Does real, sustainable trading success live on Weekly charts?

I’ll let one of Minervini’s winning trades from his 300%+ winning year in 2021 provide a possible answer:

That’s a move from $12 to $33 on a Weekly chart.

Holy macaroni.

In our next Newsletters, we’ll examine some Weekly systems.

Talk to you soon.

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Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.