How short is short-term trading?
They say that short-term trading can be for 3 hours, 5 days, 2 weeks, between 3 to 6 months, and so forth.
How long is long-term investing?
Some say long-term investing can be between 5 to 10 years or longer.
Their common denominator is that they all have a time-based answer to those two questions.
Is their reasoning logical?
I find it flawed to think that short-term and long-term can have a time-based duration.
When you put a duration to the description or meaning of “short-term trading” and “long-term investing”, it’s like giving the stock a deadline to perform according to your expectation. That’ll never happen.
Let me give you a very elementary demonstration of why I think it’s illogical to put a duration on those two terminologies.
Let’s say short-term trading is for up to 6 months.
Does it mean you would sell your stock just because it’s been in your portfolio for 6 months already?
That doesn’t make sense as far as the methodology of Equilyst Analytics is concerned.
We only sell if and when our trailing stop is hit.
If the downtrend is more than likely to continue and if your trailing stop has already been hit, you won’t sell just because the stock is yet to record its 6th monthsary in your portfolio?
As soon as your trailing stop is hit, you MUST sell regardless whether the stock has been in your portfolio for 6 decades or 6 seconds.
That’s not a suggestion but a command!
If the uptrend is more than likely to continue and if your trailing stop is intact, would you sell just because today’s the 6th month of the stock in your portfolio?
Wouldn’t you continue to ride the rally until the uptrend runs out of gas and your trailing stop is hit?
Here’s the only acceptable and logical answer to the questions “How short is short-term trading?” and “How long is long-term investing?”
How short is short-term trading and how long is long-term investing is dependent to how long can the prevailing price maintain its position above your trailing stop.
The longevity of short-term trading and long-term investing is never time-based.