THE HAnDbook of TECHniCAl AnAlysis- The Short‐Term Bullish Trader
- The Short‐Term Bearish Trader
26.3.1 the Long‐term investor
All long‐term investors are inherently bullish. Hence the term bullish may be
somewhat redundant in this respect. It is also important to note that certain funds
such as the Direxion Financial Bear 3X and ProShares Short S&P 500 are inverse
funds. As such, an investor with a long‐term bullish bias on the market would
instead be shorting the fund. Therefore, having a bullish outlook may not always
translate into holding a long position in the market.
use of Long‐term Charts Long‐term investors use long‐term charts for trend
identification as well as for signaling potential setups for entries. They also use
the long‐term chart for locating important action points or triggers for initiating
entries into the market as well as exits at predetermined price targets and stoploss
levels, including price levels that would be expedient for the additional scaling in
of new or out of current positions.
use of Medium‐term Charts Long‐term investors may also refer to important
technical and actionable levels on medium‐term charts to initiate new positions,
add to or reduce positions by scaling in or out, or exit the market altogether. This
allows for a finer level of participation in the markets, allowing for a lower‐risk
exposure, which is most advantageous. One perfect example is that of buying
the dips in an uptrend, which is best identified and executed on the medium‐ or
shorter‐term charts.
On the contrary, long‐term investors who have turned bearish may require:
■ (^) Technical levels whereby potentially lower‐risk (cheaper) additions may be
made to the existing portfolio, such as buying in at significant support levels
during a correction or pullback, instead of buying in on upside breakouts,
which is less cost-effective or favorable
■ (^) Technical levels whereby a reduction in positions could be made, in a defen-
sive move, such as scaling out of some or all positions at the break of a signifi-
cant support level
26.3.2 the Medium‐term bullish or bearish trader
Unlike long‐term investors, the medium‐term traders are more inclined to resort
to initiating both short and long positions in the market and normally tend to
gravitate to higher leveraged instruments like Spot FOREX, Futures, or Op-
tions trading. Instead of marrying into a long‐term view of the markets, the
medium‐term trader prefers to trade with the current intermediate trend, be it
up or down.
The medium‐term traders normally resort to short‐ or medium‐term charts for
a potentially finer and more precise technical entry and exit. These traders do not
usually use the longer‐term charts for entry, as most medium‐term traders have