Day vs Position Trading

The problem with position trading for me is that the stops are much wider so I have to use less leverage. With swing trades (holding from less than a day to 3 days or so), stops are tighter and you can use more leverage. In general, the win/loss ratio goes up the shorter the timeframe. In my opinion, newer traders should trade on shorter timeframes.
 
Quote from HispaTrader:

The problem with position trading for me is that the stops are much wider so I have to use less leverage. With swing trades (holding from less than a day to 3 days or so), stops are tighter and you can use more leverage. In general, the win/loss ratio goes up the shorter the timeframe. In my opinion, newer traders should trade on shorter timeframes.
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I believe that this may be at the core of why many traders fail. Using less leverage as a new trader (and old) is the proper method--get rich slowly--faster than CD's but slower. It may work for Hispa , but not for most
 
We've found over the last 5 years or so (especially), that virtually every trader has to do quite a bit of both types of trading (and more). I suggest to all my traders that they don't limit themselves to any particular type of trading...don't limit yourself. Many of our people keep multiple long term positions and sometimes day-trade around them...or keep seperate records and accounts for different "types" of trading. Extra record keeping, but it seems to be well worth it.

All the best,

Don
 
Buy1Sell2, I agree with you that newer traders should not use a lot of leverage, but I do believe that they should use the shortest timeframe they feel comfortable with because of the higher win/loss ratio they may be able to achieve with their strategy. My post did seem to indicate that newer traders can use higher leverage on shorter timeframes. That wasn't the intent.
 
Excellent post Don! I recently started trading around longer-term positions and it has been working well. I find that using short and longer term trades smooths out my equity curve.
 
Quote from Buy1Sell2:

In my view, the new trader should first learn to be a good position trader and then gradually move to shorter time frames. Newer traders generally will hang on to positions or have their stops too close and both of these will kill your account. The numerous whipsaws that a person can get into in day trading is not generally good for the new trader. That being said, for the most part, I started and have stayed a position trader. It has much less intensity to it and I can have a life as well. Being a position trader though has one issue with it--you may need to set your stop outside the max loss stop for your account. The best way to overcome this is to trade markets that you trade a smaller position in . For example , even with a lot less liquidity, I used to trade the mini Soybean contract. Not very exciting, but I was able to stay in the game. As I increased the grubstake, I was able to expand to 2 minis etc and then finally the full contract and then on up. With currencies, I started with the mini Euro etc and moved up from there.

Day trading will work for some , but not for most new traders.
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Obviously there are exceptions, but most people will do well to follow this advice.

For someone who knows what they are doing, I think you can make a good argument that daytrading has less risk than position trading. In daytrading, you control how much risk you accept and you are not going to wake up to a 9/11 type situation. That said, most newbies don't know what they are doing and will only get ground down daytrading or else will suffer a few discipline failures and take big hits that decimate their accounts and their heads.
 
Trading around longer term timeframes gives you the bias that a position trader has. For example if your bias is long, the you are looking on an intraday chart maybe tring to get a good entry long. This is not connected to whether or not a new trader should be day trading first though. As a new trader they should trade the longer frames to get a feel for how to develop bias and good trade management. With all respect, I will not waiver from this philosophy, because common sense tells me it is correct. This is not intended as a personal attack. What works for you works and you should follow that if you feel comfortable with it. It's just not right for a majority of newbies.
 
Quote from AAAintheBeltway:

Obviously there are exceptions, but most people will do well to follow this advice.

For someone who knows what they are doing, I think you can make a good argument that daytrading has less risk than position trading. In daytrading, you control how much risk you accept and you are not going to wake up to a 9/11 type situation. That said, most newbies don't know what they are doing and will only get ground down daytrading or else will suffer a few discipline failures and take big hits that decimate their accounts and their heads.
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Right on
 
I do Both almost everyday. If the long term account is going up it allows you to concentrate on short term trades and your mind set is great to make money. Problem is when your long term account is getting hammered(as mine currently is)its makes you sick to see your pl .My opinion you do one or the other .If you do both MAKE sure its in an other account your not watching every second.Hope this helps.
momo
 
Like some of the guys said, I prefer to hold core swing trade positions while I daytrade other stocks such as the day's top gainers or a stock that has news floating around it.

Quite honestly, my position trades are far more profitable than my daytrades. For daytrades, there are days where I make blockbuster gains on both futures and stocks but the same is true for losses. Meanwhile, my position trades for futures and stocks are less worrisome and more stable income generator.

for a newbie, I would definitely suggest position trading although daytrading will be a better test of the psyche.
 
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