Daytrading leads to Inevitable Failure? Is Swing Trading the only Viable Path?

speres · Mar 25, 2009

Quote from heynow:

Expertise in trading intraday noise is not a scalable skill. If I had not bothered with daytrading and focused on swing trading the past 4 years maybe I'd be ready to manage OPM by now.

Theres no such thing as noise buddy, the games play out on all time frames...........

Bolimomo · Mar 25, 2009

Quote from heynow:

Exactly if not for those three massive losses, I'd be up 75k for the year. But the fact this that such huge losses are Unavoidable. I can trade using very little leverage and trade the trend and make money 30 days in a row but then one day I come in fade a trend, average down, and its game over (25k loss). No matter what people say, discipline is a myth - its nearly impossible to maintain when compulsively trading intraday noise moves.
If your swing trade a portfolio of 20 positions then even if one position goes to zero, that still isn't enough to do too much damage.

I found a lot of holes in what you said. But my brief sob story:

Feb 17, 2004: I shorted 500 shares of RMBS at $26 for a "swing" trade.

Feb 18, 2004: RMBS gap-opened at $36 - $10.00 gap! All my stop orders were blown. I lost $5000 overnight without having a chance to maneuver or average down.

That was the last time I held any position overnight. I have been day-trading since and never looked back.

I know... you would say... that will never happen to me. Like plane crashes, car accidents, or falling down in a bathtub. That will never happen to me...

Swing trading and day trading are just different styles of trading. Both can make handsome money. Why is it that because you can't do it well then nobody can do it?

Diversify... holding a "portfolio" of 20 stocks. A hundred shares of this dogshit stock and 200 shares of that dogshit stock. You just hope and pray not one of them will burn a hole in your pocket. 7 stocks gained a bit, 7 stocks lost a bit, 5 stocks gained well... but then 1 stock crapped. In the end, you still lost (or not gained much). Not to mention 20 times the commission.

Just take today (Mar 25, 2009) for example. If you hold for a swing, what do you get? The net for the day is about zero. Big up, big down, medium up. I traded these intraday swings and made thousands.

Yeah I like to put all my eggs in one basket. I trade mostly 1 stock intraday. I attend to it every moment of a trading session. I am reluctant to even go to the bathroom. But that's just me. You can go play golf, walk your dog, lunch with your lover, and attend your meetings, and periodically check your "portfolio" on your iPhone just to make sure everything is okay.

I respect your chosen style of trading. But day trading is in every way as valid and lucrative as swing trading or buy-and-hold (if they still make money these days).

timcar · Mar 25, 2009

Question OP is asking: Does daytrader look at the same indicators as a swing trader or are the indicators the same but instead the time frame is just longer?

austinp · Mar 25, 2009

Quote from Red_Ink_inc:

"Exactly if not for those massive losses, I'd be up 75k for the year"

This is an extremely lame excuse. ........ You know, if not for the fact that I'm 5"10, 165 lbs I could play linebacker in the NFL.

If you have a style that makes $600 a day and takes 25k losses once a month, well then you need a new system.

Discipline is NOT a myth. If you really believe that, do yourself a favor and close your account at once.

You say you make money trading the trend nearly every day, then fade a trend and average down. How about you stop trend fighting and averaging down?

You obviously have some skill but your posts are riddled with weak excuses. Stop being mentally lazy and execute your plan.

I'm 5'9" and 185+ lbs myself. Lift weights five days per week. Pretty happy with my progress, squats = bench = deadlifts = military presses are all going up consistently.

But about once per month, I get the sudden urge to drop those weight plates right on my feet. I usually start dropping 10lb plates and finish with 45s. Yes, it does tend to crush my toes and stalls growth progress dead-flat, but hey, everyone who lifts weights does that.

Show me a weightlifter who has discipline enough to keep from purposely dropping 45s on their feet. No one can avoid that. Stupid weight training... it never works for anyone.

FanOfFridays · Mar 25, 2009

Quote from austinp:
Show me a weightlifter who has discipline enough to keep from purposely dropping 45s on their feet. No one can avoid that. Stupid weight training... it never works for anyone.

That's a concise and funny summary of the main problem the OP is having. Trading, probably more than any other activity, will paint with a phosphorescent brush those who look outside of themselves to explain the outcomes in their lives.

WesSeid · Mar 25, 2009

Quote from heynow:

1 Limiting profits. The very nature of daytrading means that you are cutting your profit potential short by not holding for more than a day or a few hours. There are are moves that go on for days, weeks, and months with only the slightest pullbacks. These are the moves that make your year.

6 Great profit potential also means greater loss potential. Sure you can make 2x the daily range daytrading but more often you can lose 2x the daily range.

Daytrading limits profits, but yet it has "great profit potential" of 2x the daily range? ?? 2x the daily range and not holding overnight sounds pretty good!

People can use leverage, or not. People can diversify, or not.

The best trader I know and talk to on a regular basis swings some I think just to say he can, but mainly he's daytrading the 30 or 50 or who knows how many stocks he watches every day. And yet his advice to new people is to trade one thing and learn how it moves.

I usually figure swinging is swinging for home runs and daytrading/scalping is swinging for singles, and both can work, just depends on you.

As for not scaleable, Don Miller daytraded the es last year for, what, 1.2 or 1.7 million? Somewhere in there. I suppose if that's small change for someone, then maybe that would be considered not scaleable.

toc · Mar 25, 2009

with some contracts like S&P500 and Nasdaq futures, an average daytrader is fighting off against some real smart money.

floor brokers and trading desk folks know where the stops and limits are and gun towards them or away in order to lure in the average joe's into giving it up.

these guys also know when a program trading tool by some big instituition has kicked in etc. and in the mean time average joe is trying to make sense to what is happening so suddenly.

the only disadvantage the big players have is the ability to rapidly turn the ship around i.e. load up or off load the 1000s of contracts quickly. i think floor traders are really hard working folks on the wall street.

duhmentor · Mar 25, 2009

Quote from heynow:

Now when I say all daytraders, I'm talking about independent discretionary daytraders. I'm not talking about HFs running algo bots and doing market making, arbitrage, etc.
The reasons why I feel a daytrader is ultimately doomed for failure:

1 Limiting profits. The very nature of daytrading means that you are cutting your profit potential short by not holding for more than a day or a few hours. There are are moves that go on for days, weeks, and months with only the slightest pullbacks. These are the moves that make your year.

More like limiting your risk.

2 Daytrading is a very addicting and can become compulsive. The more frequently you trade the more addicted you become to the action. Also the more frequently you trade the more compulsive your actions become.

you mean you have no control over what you do?

3 Irrational fear of holding overnight. Many daytraders think that daytrading is actually less risky than holding overnights because they think they have too much "headline" or "overnight" risk even when they have a position that is deep ITM.

You donât have any way to manage your risk over night.

4 Daytraders often use excess leverage. Futures and options offer so much leverage that an intraday move can blow u out.

Who is stopping you from taking a small loss.

5 Daytraders don't often diversify. Its really hard to intraday trade a portfolio, so most guys just concentrate positions in one or two instruments.

Itâs easier to manage one position. If it doesnât work out you take a small loss and move on.

6 Great profit potential also means greater loss potential. Sure you can make 2x the daily range daytrading but more often you can lose 2x the daily range.

You are the one responsible for your losses.

7 Daytrading is ultimately a non scalable skill.

Why is that?

I admit I'm flat YTD and thus in a long slump. I had three 25k losses in the past three months. But my average for the past 240 sessions is still 600/day. I want to finally give up daytrading and start swing trading but don't want to give up my "bread and butter". And I feel i can't grow my account swing trading as fast as I can daytrading.
Has anyone successfully made the transition? Is swing trading better? I'm just tired of trading intraday noise. [/B]

Same rules apply only the time frame is different.

toc · Mar 25, 2009

'2 Daytrading is a very addicting and can become compulsive.'

it is not really when money is being blown up.........no fun that way at all in trading!

NoDoji · Mar 25, 2009

Quote from austinp:

I'm 5'9" and 185+ lbs myself. Lift weights five days per week. Pretty happy with my progress, squats = bench = deadlifts = military presses are all going up consistently.

But about once per month, I get the sudden urge to drop those weight plates right on my feet. I usually start dropping 10lb plates and finish with 45s. Yes, it does tend to crush my toes and stalls growth progress dead-flat, but hey, everyone who lifts weights does that.

Show me a weightlifter who has discipline enough to keep from purposely dropping 45s on their feet. No one can avoid that. Stupid weight training... it never works for anyone.

Austin, my friend, ROTFLMAO!

I mainly day trade, fairly new at it, improving steadily, up 30% this year, haven't even begun increasing my position size yet, and never used more than a small fraction of my PDT margin.