Hey trader,
I’ve never been on a cruise, but I’ve spent 26 years on one.
I love to vacation. Very little excites me and leaves me as calm as heading to an oceanfront destination.
Yes, I usually work while on vacation. Working in a different, usually tropical, environment makes it feel like a vacation anyway.
Two Ways to Travel
My brother and his wife just got back from a Caribbean cruise, so I asked him for his thoughts. I’ve never been on a cruise and have very little desire to go.
He said there are good and bad points compared to simply going to a destination.
On a cruise, you’re subject to all the negatives of being on a ship. You deal with waves that make the ship unsteady, limits on where you can go, and the noise of so many travelers in a confined space.
On the other hand, you get to see multiple locations and enjoy excursions at various ports. The food can be amazing, too.
Those are his words, since I have nothing to judge it by myself.
Going to a destination eliminates many of those annoyances, but you give up some of the benefits. There are no waves to leave you feeling unsteady and uncertain.
You have more autonomy over where you go in the area, and it’s easier to find privacy and quiet. Conversely, although you choose when and where to go on excursions, you’re limited to one geographic region.
Choosing between a cruise and a destination isn’t much different from choosing between intraday technical trading and longer-term fundamental trading.
Life on the Cruise Ship
If you’re trading an intraday chart, you’re on a cruise. The volatility that comes from price waves can be uncertain and shaky.
Those waves hitting the tape can make you unstable and even knock you off your feet.
Scalping intraday also limits where you can go. Fewer option strategies work intraday, and your choices come down to long or short with a quick target.
You don’t want a long-term strategy built on intraday signals. It’s not advisable to take a long walk on a short plank, whether on a boat or in an intraday trade.
Then there’s the noise. Intraday trading has a lot of it, from big candle shadows and news reports to spikes in volume and volatility that are excessive and annoying in the short term.
Noise can cause us to exit good trades or jump into poor ones. It’s just noise, not a real commitment to direction or price.
All that being said, just like a cruise, you get to visit many different ports. You can take a long position, hit your target, and reverse to a short.
The number of trade signals available in a single day is nearly limitless.
Life at the Destination
Longer-term fundamental trading is calmer, like a destination vacation, with a lot less noise.
Looking at the big picture, studying financials and fundamentals, and timing entries with longer-term charts and daily candles means you aren’t being shaken by waves.
Every tweet, economic announcement, and volatility spike is absorbed into the net result of the day and shown as one daily candle. That makes it clearer what you’re trying to do.
You also have more autonomy in entering and managing risk. You can choose from multiple option strategies that last days, weeks, or months.
However, you’re generally limited in direction. With good fundamental and long-term techniques, you’re watching for timing in one direction, and you’ll see one signal over many days.
You won’t have both long and short trades in a short period of time the way a day trader does.
Don’t Change Plans Mid-Trip
Both cruises and destination travel have advantages and disadvantages, just like short-term day trading and long-term fundamental trading. Which one you prefer is entirely up to you.
There’s one very important rule. Don’t change your travel plans mid-trip.
If you’re on a cruise, don’t get off at a random port and miss the boat. You don’t want to be stranded somewhere you never planned to commit to.
If you’re at a destination, don’t abandon your vacation by jumping on a random boat. You may never make it back to your destination, or even home.
Trading is the same. It can be dangerous to your account to open an intraday scalp and then decide to hold it for the long term.
Likewise, you shouldn’t scalp long and short around a position you’re holding for the long term because of fundamentals and dividends. Both deviations from your plan can cost you a lot of money.
The Takeaway
Pick your travel style, and then follow these three rules:
- Pick your timeframe before you enter.
- Write down your exit.
- Don’t change either mid-trade.
Have a nice trading trip.
Blake Young
Senior Market Strategist, TheoTRADE
