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Many traders have real trouble working out the time frame in which they wish to trade. On the one hand, they want to trade the longer-term moves, yet at the same time they use very tight stops. The two are incompatible, and will leave them with small losses as they watch the big, profitable moves take off without them.

Some traders have fears about overnight gaps in markets. If this is a real fear for you, your philosophy of markets and trading may well be that it is dangerous to hold a position overnight. If this is your genuine belief, it should have a profound impact on the type of trader you should be if you are to sleep at night. In fact, it may mean that only intra-day trading is for you.

My trading philosophy is almost the opposite of this. It is my belief that markets, from time to time, make large moves, and that the big money is to be made trading the big moves. This belief came from studying the price action of stock and commodity markets over a long period of time, and by accepting that, as long as I trade with the trend, overnight gaps will, on balance, make me money. I am in good company, as W.D. Gann and Jesse Livermore, two of the greatest traders of all time, shared this philosophy.

Your trading philosophy is a very personal thing. The important thing is that you clarify your philosophy in your own mind, and that you apply it consistently to your stock trading.