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

RE: Scalability for day-trading

Day trading can be very scalable, depending on your instrument of choice. Of course you don't day-trade penny stocks and expect that to be scalable. You pick the most liquid stock or ETFs.

For example, trading SKF, SPY, GS, AAPL.

You can trade 1000 shares of them or 10000 shares of them in the same minute. It won't impact the market a bit. These things... trading over 100,000 shares a minute, nobody gives a hoot to your 10k order. 10k of AAPL, $100 = 1 million dollar.

Or you can trade your 200 shares and be happy to catch the rides.

From making $100,000 a year to 10 million a year, you don't have to do things much differently. You just trade with more shares and scale-in and scale-out.
 
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.
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:D :p :D
 
I was lucky, I started investing before PC's in 1981, so I learned long term first, I learned to chart by hand. As time went by and commissions went from $125 per 100 shares to $25 in late 1980's, I added swing trading and in the 90's - added day trading.

By far, day trading offers the least return for risk for me. Based on a one lot in ES, five trades may reward me with ten points while risking a total of five points, wow - 2 to 1 return, but in long term, that same five points can offer me much greater return to risk, 12 to 1, and using options in long term offers a hedge against gaps. And long term, I work but a few hours a week, swing trading an hour a day, but day trading is countless hours during and after. But the "game" is so compulsive and fun, of course when I was losing my ass everyday years ago, wasn't much fun.

If you have a sound robust method, it will not matter whether you trade on weekly data or one minute bars, markets move about the same regardless of instruments. What changes are required are "tweaks," all instruments have a personality of it's own, so rules have to be altered for the differences.

But even if your method is robust, because of the nature of the method, swing or long term, one might not be able to financially endure the risk compared to a breakout method on one minute bars.

As far as averaging down, tried it twice last year, lost one months profits in two days, had the shakes and mumbling to myself for days, never again. When it works, you look like a genius, when it doesn't you are sick. When my account is going down, something is not working, stop the pain.

What I see much of thru the years, most people don't understand the old saying:
"Cut your losses and let your profits run"
Many put a monetary gain limit for the day and quit, while they don't have a clue as to how much to lose before they quit. Cut your losses (have a monetary daily limit) and let your profits run (on profitable days keep going till the end).
But much is proven in your well backtested method.

Quote from timcar:

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?
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Quote from heynow:

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.

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.

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.

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

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.

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.

7 Daytrading is ultimately a non scalable skill.
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I'm going to answer each of your 7 points:

1 A good trader using a good system will trade that same move, just one day at a time. This is actually more profitable, because if you're doing it right, you're compounding profits and scaling up on each trade.

2 Addicting? Compulsive? Are you talking about gambling or trading? Bottom line, if you approach trading like gambling and not the business that it is, you're GOING to lose no matter what type of trader you are.

3 I trade Forex, so I have no input here

4 What kind of trader goes all in on every trade? Regardless of the leverage used, the use of carefully placed hard and mental stop losses eliminates being 'blown out'

5 Shaking my head on this one- Diversification is for brain dead financial advisors. A good daytrader has to find his/her niche, study it, know it, breath it, live it, and then trade it.

6 That goes without saying, that's where risk / reward ratio comes in. A good daytrader knows his/hers to the letter and also knows his trading accuracy. If these numbers jive, he/she makes money, if they don't they go broke, simple.

7 I don't have anything to say on this one except- 'absolutely false'
 
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.

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.

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.

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

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.

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.

7 Daytrading is ultimately a non scalable skill.


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.
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"There is freedom within, there is freedom without
Try to catch the deluge in a paper cup
There's a battle ahead, many battles are lost
But you'll never see the end of the road
While you're traveling with me

Hey now, hey now
Don't dream it's over..."
 
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.
More...

**********
10 Stars. :D :) :cool:
 
Anybody who traded in an office nows the sick feel of watching the trader who eats like a bird and shits like an elephant.

You think discipline is a myth because you have no strategy.
I guy who has an edge or knows he can make money refuses to let positions go past his stops because he wants a shot at another setup.

someone who is just guessing and has no systems lacks the discipline to take the loss because their mind tells this trade is the same as any other so why not hope it comes back.

How many of your winners had to be be doubled down?

There is a very good chance you have no edge.

discipline is easy when you have an edge.

In the 90s we had an office full of guys with an edge. They all had discipline and they all made money for a few years.

Out of about 20 guys we trained only one or two guys were incompatible with making money when the edge was working well.

Note: no emails please. That method no longer works.
 
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