Feasibility of using long term pattern on short term investments
"When structures recur at different scales, they're called ""fractals"", and there is something called the ""fractal markets hypothesis"" which attempts to analyse stock market movements as fractals and in terms of (related) chaos theory. Whether you can profit from it I have no idea.  If it was easy, everyone would be doing it.  Many of the non-academic pages linked in the search results (previous link) remind me of technical analysis/chartist stuff (which - to me - always seems to be a lot better at explaining things after the event than actually predicting things)." Most patterns can be used on various time frames. For example you could use candle stick reversal patterns on monthly charts, weekly charts, daily charts or intra-day charts like one hour, or even one minute charts. Obviously if you are looking for longer term positions you would be looking at daily, weekly or monthly charts and if you are looking for shorter term positions you would be looking at intra-day to daily charts.  You can also use a combination of time frames - for example, if you are trying to enter a trade over a long-term uptrend you could use a weekly chart to determine if the stock is currently uptrending and then use a daily chart to time your entry into the trade. Most patterns in general don't really determine how long you will be in the trade but instead usually can provide an entry trigger, a stop loss location and possibly a profit target.  So in general a pattern which is being used to enter into longer term trades on weekly charts can also be used to enter shorter term trades on intra-day charts. There are Patterns inside of Patterns. You will see short term patterns (flags / pennants) inside of long term patterns (trend lines, channels) and typically you want to trade those short term patterns in line with the direction of the long term pattern.  Take a look at the attached chart of GPN. I would like to recommend two excellent books on Chart Patterns. Richard W. Schabacker book he wrote in the 1930's. It is the basis for modern technical pattern analysis.  Technical Analysis and Stock Market Profits  Peter Brandt Diary of a Professional Commodity Trader. He takes you through analysis and trades.
Just to clarify Short Team Goals & Long Term Goals... Long Term goals are for something in future, your retirement fund, Children’s education etc. Short Term goals are something in the near future, your down payment for car, house, and holiday being planned. First have both the long and short terms goals defined. Of Couse you would need to review both these goals on a ongoing basis... To meet the short term goals you would need to make short term investments. Having arrived at a short term goal value, you would now need to make a decision as to how much risk you are willing [also how much is required to take] to take in order to meet your goal. For example if you goal is to save Rs 100,000 by yearend for the car, and you can easily set aside Rs 8,000 every month, you don't really need to take a risk. A simple Term / Fixed Deposit would suffice you to meet your goal. On the other hand if you can only save Rs 6,000 a year, then you would need to invest this into something that would return you around 35%. You would now need to take a risk. Stocks market is one option, there are multiple types of trades [day trades, shorts, options, regular trades] that one can do ... however the risk can wipe out even your capital. As you don't know these types of investments, suggest you start with dummy investing using quite a few free websites, MoneyControl is one such site, you get pseudo money and can buy sell and see how things actually move. This should teach you something about making quick gains or losses without actually gaining or loosing real money. Once you reach some confidence level, you can start trading using real money by opening a trading account almost every other bank in India offers online trading linked to bank account. Never lose sight of risk appetite, and revise if every now and then. When you don't have dependents, you can easily risk money for potential bumper, however after you have other commitments, you may want to tone down...  Edit: http://moneybhai.moneycontrol.com/moneybhai-rules.html is one such site, there are quite a few others as well that offer you to trade on virtual money. Try this for few months and you will understand whether you are making right decissions or not. "IMO: If you look long and hard enough at your data you're going to bump into these kinds of ""patterns"". There is no ""curse of 7"".  “Looking at the chart makes you want to hide under your desk when you see it, but remember this is only a sample size of 11, and the average performance is greatly skewed by big drops late in 1907, 1937, 1957, and 1987. Also, consider that 1907, 1937, and 1957 were all recessionary years, and equities had run up 40% for the year in August 1987, so a pullback was not surprising."" [Quote](https://lplresearch.com/2017/08/11/the-curse-of-years-ending-in-7/)" If they are truly long term investments I would not put a stop loss on them. The recent market dive related to the Brexit vote is a prime example of why not to have one. That was a brief dive that may have stopped you out of any or all of your positions and it was quite short lived. You would likely have bought your positions back (or new positions entirely) and run the risk of experiencing a loss over what turned out to be a non event. That said, I would recommend evaluating your positions periodically to see if they still make sense and are performing the way you want. "TBF - Proshares short 20+ Year Treasury  The TBF fund is designed to track (hopefully) 100 percent of the inverse daily returns of the Barclays Capital 20+ Year U.S. Treasury Index.  there's some risk of tracking error, and also a compounding effect if it's down several days in a row.  (invest with care)   There's also a TBT fund, but the risks are even greater since it is leveraged,  potentially you could make the right long term call, but lose a lot in the short term due to tracking error and effect of compounding) (that would tend to make this one more appropriate for short term 'bets' on interest rates, and less so for a long term investor) There are also quite a few floating rate closed-end funds (Click here, then click on ""loan participation funds"") that should do well in a rising rate environment. Just beware that these funds seem to incorporate a substantial amount of credit risk as well as floating interest rate exposure. Closed end funds trade a lot like securities, since the fund is closed, you have to buy shares from another owner that is selling (just like with stocks), that means the shares can sometimes trade above or below the underlying value of the actual assets held by the fund depending on buying/selling pressure and the relative liquidity of a given fund." The article links to William Bernstein’s plan that he outlined for Business Insider, which says: Modelling this investment strategy Picking three funds from Google and running some numbers. The international stock index only goes back to April 29th 1996, so a run of 21 years was modelled.  Based on 15% of a salary of $550 per month with various annual raises: Broadly speaking, this investment doubles the value of the contributions over two decades. Note:  Rebalancing fees are not included in the simulation. Below is the code used to run the simulation.  If you have Mathematica you can try with different funds.    Notice above how the bond index (VBMFX) preserves value during the 2008 crash.  This illustrates the rationale for diversifying across different fund types. In India, as suggested above, short/long position can be taken either in F&O or Spot market. The F&O segment short/long can be kept open for appx. 3 months by taking position on the far contract. In intra-day/Spot market, usually the position has to be squared at the end of day or the broker will square it during expiry (forcibly). However, having said that, it is a broker specific feature, as per National Stock Exchange (NSE) or Bombay Stock Exchange (BSE) any transaction has to be settled at the end of T+2 days (T being the trade day). Some brokers allow intra-day positions to be open for T+1 or T+2 days as long as the margin is provided. This is a broker specific discretion as the actual settlement is on T+2 (or in some cases as the exchange specifies). So, in general, to short a stock for a longer time, F&O segment should be used. For long periods of time a short ETF's performance will not match the negative of the long ETF, e.g. funding costs and the fact that they 'only' match daily returns will result in a suboptimal performance.   If possible use other derivatives like a put on a long gold etf (fgriglesnickerseven) Algorithmic trading essentially banks on the fact that a price will fluctuate in tiny amounts over short periods of time, meaning the volatility is high in that given time frame. As the time frame increases the efficiency of algorithmic trading decreases and proper investment strategies such as due diligence, stock screening, and technical analysis become the more efficient methods.  Algorithms become less effective as the time frame increases due to the smoothing effect of volatility over time. Writing an algorithm that could predict future long-term prices would be an impossible feat because as the time frame is scaled up there are far less price fluctuations and trends (volatility smooths out) and so there is little to no benchmark for the formulas.  An algorithm simply wouldn't make sense for a long-term position. A computer can't predict, say, the next quarter, an ousted CEO, a buyout, or anything else that could effect the price of the security, never mind the psychology behind it all. Vice versa, researching a company's fundamentals just to bank on a 0.25% daily swing would not be efficient. Tax advantages or not, it is the most efficient methods that are preferred for a given time-scale of trading. "The standard low-risk/gain very-short-term parking spot these days tends to be a money market account.  However, you have only mentioned stock. For good balance, your portfolio should consider the bond market too. Consider adding a bond index fund to diversify the basic mix, taking up much of that 40%. This will also help stabilize your risk since bonds tend to move opposite stocks (prperhaps just because everyone else is also using them as the main alternative, though there are theoretical arguments why this should be so.) Eventually you may want to add a small amount of REIT fund to be mix, but that's back on the higher risk side. (By the way: Trying to guess when the next correction will occur is usually not a winning strategy; guesses tend to go wrong as often as they go right, even for pros. Rather than attempting to ""time the market"", pick a strategic mix of investments and rebalance periodically to maintain those ratios. There has been debate here about ""dollar-cost averaging"" -- see other answers -- but that idea may argue for investing and rebalancing in more small chunks rather than a few large ones. I generally actively rebalance once a year or so, and between those times let maintainng the balance suggest which fund(s) new money should go into -- minimal effort and it has worked quite well enough.,)" "In general, yes. If interest rates go higher, then any existing fixed-rate bonds - and hence ETFs holding those bonds - become less valuable. The further each bond is from maturity, the larger the impact. As you suggest, once the bonds do mature, the fund can replace them at a market price, so the effect tails off. The bond market has a concept known as ""duration"" that helps reason about this effect. Roughly, it measures the average time from now to each payout of the bond, weighted by the payout. The longer the duration, the more the price will change for a given change in interest rates. The concept is just an approximation, and there are various slightly different ways of calculating it; but very roughly the price of a bond will reduce by a percentage equal to the duration times the increase in interest rates. So a bond with a duration of 5 years will lose 5% of its value for a 1% rise in interest rates (and of course vice-versa). For your second question, it really depends on what you're trying to achieve by diversifying - this might be best as a different question that gives more detail, as it's not very related to your first question. Short-term bonds are less risky. But both will lose value if the underlying company is in trouble. Gilts (government bonds) are less risky than corporate bonds." "A bit strange but okay.  The way I would think about this is again that you need to determine for what purpose you're computing this, in much the same way you would if you were to build out the model. The IPO valuation is not going to be relevant to the accretion/dilution analysis unless you're trying to determine whether the transaction was net accretive at exit. But that's a weird analysis to do. For longer holding periods like that you're more likely to look at IRR, not EPS. EPS is something investors look at over the short to medium term to get a sense of whether the company is making good acquisition decisions. And to do that short-to-medium term analysis, they look at earnings.   Damodaran would say this is a shitty way of looking at things and that you should probably be looking at some measure of ROIC instead, and I tend to agree, but I don't get paid to think like an investor, I get paid to sell shit to them (if only in indirect fashion). The short answer to your question is that no, you should not incorporate what you are calling liquidation value when determining accretion/dilution, but only because the market typically computes accretion/dilution on a 3-year basis tops. I've never put together a book or seen a press release in my admittedly short time in finance that says ""the transaction is estimated to be X% accretive within 4 years"" - that just seems like an absurd timeline.  Final point is just that from an accounting perspective, a gain on a sale of an asset is not going to get booked in either EBITDA or OCF, so just mechanically there's no way for the IPO value to flow into your accretion/dilution analysis there, even if you are looking at EBITDA/shares. You could figure the gain on sale into some kind of adjusted EBITDA/shares version of EPS, but this is neither something I've ever seen nor something that really makes sense in the context of using EPS as a standardized metric across the market. Typically we take OUT non-recurring shit in EPS, we don't add it in. Adding something like this in would be much more appropriate to measuring the success of an acquisition/investing vehicle like a private equity fund, not a standalone operating company that reports operational earnings in addition to cash flow from investing. And as I suggest above, that's an analysis for which the IRR metric is more ideally situated.  And just a semantic thing - we typically wouldn't call the exit value a ""liquidation value"". That term is usually reserved for dissolution of a corporate entity and selling off its physical or intangible assets in piecemeal fashion (i.e. not accounting for operational synergies across the business). IPO value is actually just going to be a measure of market value of equity." Is that indicator can only be used for short-term trade? First of all, indicator works perfect during trends and oscillator works perfectly in the range market(or flat market). So, indicator can be used for long term, as well as short term. I mean if it is a range market, using this or any other indicator will not help much, so it you should consider market direction first. If it can be used to long-term trade, is there something I need to change from the parameters used? like, only using SMMA(5,8,13)? The parameters are there to change them. Of course you can change them based on your trading style. Considering my statement above does not mean that trading is very easy. I never use indicators alone to make trading decisions. It is always good to use oscillator to filter out bad trading signals. CFDs should not be used as a buy and hold strategy (which is risky enough doing with shares directly). However, with proper money and risk management and the proper use of stop losses, a medium term strategy is very plausible.  I was using CFDs in the past over a short time period of usually between a couple of days to a couple is weeks, trying to catch small swings with very tight stops. I kept getting wipsawed due to my stops being too tight so had too many small loses for my few bigger wins. And yes I lost some money, almost $5k in one year. I have recently started a more medium term strategy with wider stops trying to catch trending stocks. I have only recently started this strategy and so far have 2 loses and 3 wins. Just remember that you do get charged a financing fee for holding long position overnight, buy for short position you actually get paid the funding fee for overnight positions. My broker charges the official interest rate + 2.5% for long positions and pays the official rate - 2.5% for short positions. So yes CFDs can be used for the longer term as long as you are implementing proper money and risk management and use stop losses. Just be aware of the implications of using margin and all the costs involved. Yes though I'd likely put a caveat on that. If you take short-term investments and extrapolate the results to get an annual result this can be misleading. For example, if a stock goes up 10% in a month, assuming this will continue for the next 11 months may not be a great idea. Thus, beware of how much data do you have in making these calculations. When looking at long-term investments, the compound annual growth rate can be quite useful for comparison. "If you want to make a profit from long term trading (whatever ""long term"" means for you), the best strategy is to let the good performers in your portfolio run, and cull the bad ones.  Of course that strategy is hard to follow, unless you have the perfect foresight to know exactly how long your best performing investments will continue to outperform the market, but markets don't always follow the assumption that perfect information is available to all participants, and hence ""momentum"" has a real-world effect on prices, whether or not some theorists have chosen to ignore it. But a fixed strategy of ""daily rebalancing"" does exactly the opposite of the above - it continuously reduces the holdings of good performers and increases the holdings of bad.  If this type of rebalancing is done more frequently than the constituents of benchmark index are adjusted, it is very likely to underperform the index in the long term. Other issues in a ""real world"" market are the impact of increased dealing costs on smaller parcels of securities, and the buy/sell spreads incurred in the daily rebalancing trades. If the market is up and down 1% on alternate days with no long tern trend, quite likely the fund will be repeatedly buying and selling small parcels of the same stocks to do its daily balancing."