Long Term Secrets To Short-Term Trading

Figure 3.1 High grade copper (daily bars). Graphed by the "Navigator" 
(Genesis Financial Data Services). 

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Figure 3.2 Cotton #2 (daily bars). Graphed by the "Navigator" 
(Genesis Financial Data Services). 
Figure 3.3 Soybeans (daily bars). Graphed by the "Navigator" 
(Genesis Financial Data Services). 

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Figure 3.4 Pork Bellies (daily bars). Graphed by the "Navigator" 
(Genesis Financial Data Services). 
Figure 3.5 Comex Gold (daily bars). Graphed by the "Navigator" 
(Genesis Financial Data Services). 

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Figure 3.6 Day T-Bonds (daily bars). Graphed by the "Navigator" 
(Genesis Financial Data Services). 
have captured a major move that can pay off the small-range days. If I try to dance in and out, I will 
invariably not make as much money as holding to the close. The truth is whenever I have tried fancy 
dancing, I have had to pay the piper a stiff fee. 
To further prove this point, Figures 3.7 through 3.9 show the results of a simple little system for trading 
the S&P 500. The rule is simply to buy on the open every Monday if that open is lower than Friday's close. 
This is the start of short-term system building, so don't get enamored with the results or the system quite yet. 
My point here is to show you the tremendous advantage of knowing you can make more money if you hold 
until the close. 
Figure 3.7 depicts what most short-term traders want to do, make about $500 a day trading so the 
results reflect a stop of $3,000 (large, but that's what this volatile market requires) and an automatic $500 
profit. Although the accuracy is high at 59 percent, the speculator loses money ... $8,150 to be specific. 
The next set of data reflects all the same rules except a $1,000 target. This time we make money, 
$13,737, again on the same number of trades, 389, giving us a small average profit per trade of $35. I have 
deducted $50 for commissions (as all results shown in this book do). To make our $13,737, we were down 
$8,897 at one point, and had 55 percent winning trades. 

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Figure 3.7 A trade with a $500 target. 
Finally, we are able to turn the corner and make money by following my basic rule of holding until the 
close and then exiting the position. What a difference, we actually clean up, banking $39,075 of profits, 
with a $100 average profit per trade, 3 times better than when taking an automatic $1,000 profit. Our 
drawdown, how much we had to lose during our worst run to make what we did, was less at $6,650; the 
$500 target trader had a $12,837 drawdown. The facts speak for themselves. Traders can argue all day long 
about what works and what does not work, but what you have just seen settles