No bad market, only bad trader. If day trading is not your niche, making a bold conclusion really means nothing.
The Art of Speculation
The Art of Speculation
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Daytrading leads to Inevitable Failure? Is Swing Trading the only Viable Path?
- Thread starter heynow
- Start date
I don't know how it is now, as i no longer day trade, but in the future algo trading is going to be more of a problem for day traders.
Tell me if this seems right.
Automated trading systems can scan for stocks a billion times faster than we can type. These programs can find the stocks that are running up or down, trading at x times normal volume...or whatever the condition may be, and execute multiple orders way before the retail trader.
Size. These bot trading systems, like the ones at James Simons HF, Goldman, and many others can take the liquidy out of the market just seconds before you click "buy" leaving you with a bad fill or slippage.
Not to mention these bots hunt for popular stop areas making day trading even harder.
The way of the future will be automation...at least on an intraday level.
........your thoughts.
CM69
Tell me if this seems right.
Automated trading systems can scan for stocks a billion times faster than we can type. These programs can find the stocks that are running up or down, trading at x times normal volume...or whatever the condition may be, and execute multiple orders way before the retail trader.
Size. These bot trading systems, like the ones at James Simons HF, Goldman, and many others can take the liquidy out of the market just seconds before you click "buy" leaving you with a bad fill or slippage.
Not to mention these bots hunt for popular stop areas making day trading even harder.
The way of the future will be automation...at least on an intraday level.
........your thoughts.
CM69
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.
Day trading will more than make up for it in sheer volume. A day trader will usually make many more trades than a swing trader. There's also less exposure for a daytrader, so they can also make larger trades.
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.
This is rubbish. Some will become addicted because they have a compulsive personality, but to suggest that all traders will become addicted to day trading is lunacy. And then you imply that the same wouldn't be true for swing traders!
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.
Overnight is significant exposure. Some don't mind it, some do. You can't call it irrational, since it's completely personal.
4 Daytraders often use excess leverage. Futures and options offer so much leverage that an intraday move can blow u out.
And these day traders don't understand the proper use of leverage or decent capital management. You're confusing day traders with bad day traders here. Many swing traders are also over leveraged, does this mean that all swing traders are doomed to fail? Of course not.
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.
Investing in a single instrument doesn't mean it's more risky, the risk comes from what they do with the money that isn't being traded. I.e. if one leaves it in cash, then they're not protecting against losses of that currency.
You're also assuming day traders don't diversify. How do you know they don't?
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're assuming day traders don't manage their losses? That's an absurd assumption. Day trading has greater profit potential because of greater volume of trades, but the risk is no greater as the risk per trade is likely smaller for a day trader.
7 Daytrading is ultimately a non scalable skill.
Non-scalable? By the time a day trader starts hitting limits they are already wealthy. You're also assuming that they can only remain a day trader. Trading is trading, and it's unreasonable to assume that a day trader can't start swing trading.
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.
Swing trading is less consistent than day trading, because you're making less trades and they're likely risking more than a day trade. Swing trading is slower because you're making fewer trades.
As for which one is superior, that's personal. Some make good day traders and others make better swing traders. It's important to trade within your comfort zone. Ultimately, day trading is more profitable up to a point (that point being where liquidity isn't high enough to day trade effectively).
Day trading will more than make up for it in sheer volume. A day trader will usually make many more trades than a swing trader. There's also less exposure for a daytrader, so they can also make larger trades.
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.
This is rubbish. Some will become addicted because they have a compulsive personality, but to suggest that all traders will become addicted to day trading is lunacy. And then you imply that the same wouldn't be true for swing traders!
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.
Overnight is significant exposure. Some don't mind it, some do. You can't call it irrational, since it's completely personal.
4 Daytraders often use excess leverage. Futures and options offer so much leverage that an intraday move can blow u out.
And these day traders don't understand the proper use of leverage or decent capital management. You're confusing day traders with bad day traders here. Many swing traders are also over leveraged, does this mean that all swing traders are doomed to fail? Of course not.
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.
Investing in a single instrument doesn't mean it's more risky, the risk comes from what they do with the money that isn't being traded. I.e. if one leaves it in cash, then they're not protecting against losses of that currency.
You're also assuming day traders don't diversify. How do you know they don't?
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're assuming day traders don't manage their losses? That's an absurd assumption. Day trading has greater profit potential because of greater volume of trades, but the risk is no greater as the risk per trade is likely smaller for a day trader.
7 Daytrading is ultimately a non scalable skill.
Non-scalable? By the time a day trader starts hitting limits they are already wealthy. You're also assuming that they can only remain a day trader. Trading is trading, and it's unreasonable to assume that a day trader can't start swing trading.
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.
Swing trading is less consistent than day trading, because you're making less trades and they're likely risking more than a day trade. Swing trading is slower because you're making fewer trades.
As for which one is superior, that's personal. Some make good day traders and others make better swing traders. It's important to trade within your comfort zone. Ultimately, day trading is more profitable up to a point (that point being where liquidity isn't high enough to day trade effectively).
How do you know it is a myth? Because you have not achieved it?Quote from heynow:
Discipline is like self actualization or enlightenment - the pinnacle of human achievement but total impossible to achieve, it is a myth.
Interesting logic: I am not disciplined, therefore discipline is a myth and unattainable.
I think you're in the wrong business.
Quote from cashmoney69:
I don't know how it is now, as i no longer day trade, but in the future algo trading is going to be more of a problem for day traders.
Tell me if this seems right.
Automated trading systems can scan for stocks a billion times faster than we can type. These programs can find the stocks that are running up or down, trading at x times normal volume...or whatever the condition may be, and execute multiple orders way before the retail trader.
Size. These bot trading systems, like the ones at James Simons HF, Goldman, and many others can take the liquidy out of the market just seconds before you click "buy" leaving you with a bad fill or slippage.
Not to mention these bots hunt for popular stop areas making day trading even harder.
The way of the future will be automation...at least on an intraday level.
........your thoughts.
CM69
In olden days, like when I started trading, specialists had an awful lot of control over a stock. That is not to say, he had so much control as to make trading a one-sided endeavor. But I learned to trade long before I learned to how to take the other side of a trade. Particularly, on the open, I was probably taking the side of the specialists and making money doing so. I did without being on the floor and without knowing for sure if I was really siding with the specialist and making money doing so.
As I a daytrader, my biggest fear would be NO intraday trading range. But for whatever reasons, there is now more range in the big caps that I have always traded than ever before. That intraday range is creating a lot of trading opportunites for both the very big and the very small and everyone in between.
My point is if computers are trading and creating an intraday trading range, then I think there is a way for the little guy to put his money with the computer that may be moving the market in a profitable direction for the little guy.
In my opinion both day and swing trading are equally difficult. But with hard word, one can make a living doing one or both.
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.
[..]
Could you explain those 2 parts that to me sounded like a contradiction in your rationale? Do daytraders have great profit potential or is it limited?