How many trend followers here?

[snooptrader]

Quote from Grizzly Trader:

Newtoet, you err.

Please consider that even a very slow trading strategy like that provided by classic Dow theory will significantly outperform buy and hold. Price movements that are noise in longer time frames are opportunities in shorter time frames. The practical limitations on this general principle are the costs involved in trading in comparison to the size of the price movements and the impact the activity has on the market traded.

Also, I am not much inclined to agree with your statement that risk is directly related to time frame. I have not given this much consideration because I mostly think of risk control in terms of position size and money management. If we consider a time frame of centuries, the risk involved in a diversified investment is reduced to weather or not a society will advance or decline. Please provide the reasoning for your assertion concerning risk and time frame.


Regards,
Griz

I think you guys are talking about two different things. Your original post did not reference buy & hold, and it sounded like you were comparing swing trading to day trading.

Now, you mention buy & hold. ET was clearly saying that swing trading held more profit potential.

Peace.

 

[formikatrading]

For me personally, I can't sit in front of my computer to the extent needed to be a daytrader - my personality just doesn't fit with the demands.

 

[Grizzly Trader]

Quote from snooptrader:

I think you guys are talking about two different things. Your original post did not reference buy & hold, and it sounded like you were comparing swing trading to day trading.

Now, you mention buy & hold. ET was clearly saying that swing trading held more profit potential.

Peace.

The principle is applicable regardless of time frame but is most easily demonstrable by comparing buy and hold ( the infinite time frame ) and any form of trading. Truly, this is so obvious that I am surprised that it generates any discussion at all. I can think of only one instance when a longer time frame will even equal the profit potential of a shorter time frame and that is when each
price point in a series is either none-descending for a long position or none-ascending for a short position.

Provide any series of price points and it is a trivial exercise to demonstrate that a shorter time frame can yield a greater profit. It does not matter if the price points are minutes, days, weeks or centuries. The only practical limitation involves the slippage relating to spread and transaction costs that increase inversely with the length of the time frame. As costs are reduced and spreads narrow, it becomes practical to trade shorter and shorter time frames.

To me, the most important impact time frame has on trading is the amount of labor involved. A buy and hold investor experiences almost no work at all while a day trader is faced with a substantial burden. Each trader will make a personal choice as to how much effort they are willing to expend for what return. My personal choice is to swing trade because I value leisure over wealth. Lazy > Greed.

Regards,
Griz

 

[snooptrader]

Quote from Grizzly Trader:

The principle is applicable regardless of time frame but is most easily demonstrable by comparing buy and hold ( the infinite time frame ) and any form of trading. Truly, this is so obvious that I am surprised that it generates any discussion at all. I can think of only one instance when a longer time frame will even equal the profit potential of a shorter time frame and that is when each price point in a series is either none-descending for a long position or none-ascending for a short position.

Provide any series of price points and it is a trivial exercise to demonstrate that a shorter time frame can yield a greater profit. It does not matter if the price points are minutes, days, weeks or centuries. The only practical limitation involves the slippage relating to spread and transaction costs that increase inversely with the length of the time frame. As costs are reduced and spreads narrow, it becomes practical to trade shorter and short time frames.

To me, the most important impact time frame has on trading is the amount of labor involved. A buy and hold investor experiences almost no work at all while a day trader is faced with a substantial burden.

Regards,
Griz

Maybe I am just ignorant, but I have a hard time comprehending what you are trying to say. I think swing trading provides the ability to make more profits that day trading. Not knocking day traders, as I know there are many successful out there. But, for true wealth swing trading is key, IMO.

 

[easyrider]

Quote from formikatrading:

For me personally, I can't sit in front of my computer to the extent needed to be a daytrader - my personality just doesn't fit with the demands.

Different strokes. I love sitting in front of my computers. I feel like I am connected to the entire world at the ends of my fingertips.

 

[Grizzly Trader]

Quote from snooptrader:

Maybe I am just ignorant, but I have a hard time comprehending what you are trying to say. I think swing trading provides the ability to make more profits that day trading. Not knocking day traders, as I know there are many successful out there. But, for true wealth swing trading is key, IMO.

Perhaps what you are trying to say is that swing trading allows you to deploy much more capital then day trading and I would gladly agree that this is a true statement.

Indeed, I would think that as wealth increases, a trader must extend the average length of trades if the goal is to maintain a consistent work load.

Regards,
Griz

 

[ig0r]

Quote from snooptrader:

Maybe I am just ignorant, but I have a hard time comprehending what you are trying to say. I think swing trading provides the ability to make more profits that day trading. Not knocking day traders, as I know there are many successful out there. But, for true wealth swing trading is key, IMO.

What Grizzly is getting at is that the shorter the time frame the more money you can make, but this doesn't work very well in practice because it's quite impossible to capture all the little moves. Maximum return can be measured in surface area of the path of price, the lower the time frame the more noise/more surface area

 

[ertrader1]

When stocks would move 15 to 20 points a day, day trading was very profitable with less capital required. If you had massive capital like many prop houses dished out back then, you could make millions upon millions.

However, todays daytrader has been delt a few bad cards. Penny spreads, less broad range mometum, very few good stocks that move intraday more than a dime or even 50 cents.

I had to switch timeframes and markets, from equities to options.
Options have a the minum, so far until BOX's PIP catchs on, a nickle spread, and they move by nickles, dimes and sometimes more.

I know, ZERO daytraders from my days that still daytrade and are sucessful. Sure they have a few winning days, or month or two, however on a consistent bases its 3 steps forward, 8 steps back for daytraders.

Of course you'll hear the ET crap about how the daytraders clean up, etc. Its all BS.

 

[ShoeshineBoy]

I'll state the obvious: typical trend following techniques in a sideways market will whack you just as badly as using the typical "overbought/oversold" techniques during a trending market. You've really only got two choices to overcome this difficulty in standard position trading:

1. Find strategies that work well in all markets.
2. Forecast whether or not you are in an oscillating or a trending market.

Both 1 and 2 are non-trivial and are the reason why you don't hear about a new Carrera parked in every swing traders' new Malibu mansion...

 

[ertrader1]

Many traders who dont scalp intraday, sit in front of their computers all day long. It doesnt make anysense not to sit in front of your computers if your a true trader. You never know when X will happen and if X opportunity arises.

Someone who buys Csco and lets it ride for weeks only cking qoutes once in a while is not a trader IMHO, that is a short term investor.

So, not just intraday scalpers (daytraders as defined) sit in front of their computuers all day. Any serious trader who makes it his/her life and trades for a living treats each day seriously, regardless if they are in a position or flat.

Fly by night investors dont.