Why Bigger Isn't Always Better

Discipline and transaction sizes are important when learning the tricks of share trading.

- Simon Brown

As well as being a long-term investor, I am also a short-term trader on the JSE, trading index futures before the equity market opens. Although the profits (or losses) are small in every trade, the profits are larger than the losses and I get a few more winners than losers over time. So ultimately, it’s profitable.

The key point is that the process is very different to long-term investing. Firstly, price is my only guide. I am not concerned at all with the fundamentals. Sure, they matter, but they matter and reflect into the price over the longer term. In trading, price is my only truth.

Either something is going up and I should be long, or it is falling, and I should be short. Secondly, as price is all that matters, I don’t use indicators and oscillators. They’re pretty, but they’re merely a mathematical derivative of the price so I ignore them, with one exception: limited use of moving averages.