Trades typically operate at the short end of the time-curve. Their time perspective ranges from as low as a few hours to a few days. Their basic urge is to ride the momentum in the stock and get out once the momentum starts weakening.
Short term players know quite well that trading can be a zero-sum game if now played problem. The most important consideration for a short-term trader is the preservation of capital and all their trade actions are determined by that. Typically, traders play in the short term for 3 key reasons…
They see more value in churning the money for a return of 3-4% per month rather than waiting for a full year in the hope of great returns. For traders, the cost of every profit booking opportunity missed is the next trading position foregone.
Traders believe that all the information and intelligence about a stock is in the price. Therefore, their key challenge is to identify and predict when volatility and momentum are coming into stocks. That can be done by watching the ticket and the charts.
Thirdly, traders play the short term purely for the adrenaline. One of the greatest traders in the history of the stock markets, Jesse Livermore, used to admit that the adrenaline flow of trading was simply unmatched. Long-term investment can never match that kind of adrenaline rush.