How many trend followers here?

Quote from Grizzly Trader:

I did not just say "yield a greater profit", I said "can yield a greater profit."

I can think of no more fundamental principle to trading then that a greater profit can be realized in a shorter time frame then in a longer time frame. This is axiomatic to the act of trading. Any person that trades excepts this as a truth or they simply would not trade, they would invest.

Every time I look at a chart, I see price movements that could have been exploited by taking a long position or taking a short position. I do not see just the first price point and the last price point, I see the opportunities that exist between. I am a trader not an investor.
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This assumes that it is actually possible to predict those short-term moves and then profit from them. In reality, most of them on the short-term timescale are pure noise and offer no opportunity for profit.

"Can" in relation to trading must focus on actually achievable profits, not theoretical profits that a trader with perfect foresight and no transactions costs or liquidity issues could achieve. So I don't think you're necessarily correct to say that you "can" or "could" exploit those moves for superior profit relative to longer-term timeframes.

There is also the issue of predictability. If I can predict that market X will rise significantly sometime in the next 1-2 years, but not when it will do so, then focusing on the short-term means I run the risk of missing a high probability long-term move for an unsure or even loss-making series of short-term moves.

If you look at the most profitable traders in the world, they are generally not daytraders or scalpers, but hold their positions for considerably longer. This would seem to indicate that the highest profit lies in the medium and long-term rather than the intraday timeframes.
 
Quote from Cutten:

This assumes that it is actually possible to predict those short-term moves and then profit from them. In reality, most of them on the short-term timescale are pure noise and offer no opportunity for profit.

"Can" in relation to trading must focus on actually achievable profits, not theoretical profits that a trader with perfect foresight and no transactions costs or liquidity issues could achieve. So I don't think you're necessarily correct to say that you "can" or "could" exploit those moves for superior profit relative to longer-term timeframes.

There is also the issue of predictability. If I can predict that market X will rise significantly sometime in the next 1-2 years, but not when it will do so, then focusing on the short-term means I run the risk of missing a high probability long-term move for an unsure or even loss-making series of short-term moves.

If you look at the most profitable traders in the world, they are generally not daytraders or scalpers, but hold their positions for considerably longer. This would seem to indicate that the highest profit lies in the medium and long-term rather than the intraday timeframes.
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I would have the same thought above. Thanks! :)
 
Well, take the DOW today.

Please note, approximate figures only. Day net trend, open to close +28 points. Major gyrations (points): 24 up, 44 down, 62 up.

The sum of the (major) gyrations hugely hugely exceeds the net trend. Game, set and match .. yeah?

Zero sum game of course!
 
Quote from Cutten:

This assumes that it is actually possible to predict those short-term moves and then profit from them. In reality, most of them on the short-term timescale are pure noise and offer no opportunity for profit.

"Can" in relation to trading must focus on actually achievable profits, not theoretical profits that a trader with perfect foresight and no transactions costs or liquidity issues could achieve. So I don't think you're necessarily correct to say that you "can" or "could" exploit those moves for superior profit relative to longer-term timeframes.

There is also the issue of predictability. If I can predict that market X will rise significantly sometime in the next 1-2 years, but not when it will do so, then focusing on the short-term means I run the risk of missing a high probability long-term move for an unsure or even loss-making series of short-term moves.

If you look at the most profitable traders in the world, they are generally not daytraders or scalpers, but hold their positions for considerably longer. This would seem to indicate that the highest profit lies in the medium and long-term rather than the intraday timeframes.
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I look at two efficiencies and how the pair can be coupled.

One efficiency is the one the market delivers on each fractal.

The other efficiency is my personal ability to trade the fractal.

I do two segments of trading with my capital.

For intraday, I use the 5 min fractal and judge the market efficiency as a limit of 3 times the range.

For position trading I use the 30 min fractal and target 10% per natural cycle period. Cuurently the cycle is compressed in time from 6 to 8 days to 3 to 4 days. I target my personal efficiency as 50% of the market cycle range. In these times a 20% range is normal for mechanically screened equities.


There are many many profitable approaches. however a specific paradigm is defined, an assessment can be made of it. It will follow the pair of efficiencies in play.
 
Quote from Cheese:

Well, take the DOW today.

Please note, approximate figures only. Day net trend, open to close +28 points. Major gyrations (points): 24 up, 44 down, 62 up.

The sum of the (major) gyrations hugely hugely exceeds the net trend.
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You are referring to theoretical maximum profits, and not the actual daily range that you or other Dow daytraders managed to capture.

Meanwhile, long-term trend traders have captured at least 2000 points in the Dow over the last year (or similar profits in SPX, Dax, and other trending stockmarkets), an average of about 9 points per day. Assume a $500k position size, and that works out to approx $500 per day on just one position, with almost no work whatsoever.

This is the difference between theoretically achievable scalp profits, and practically achievable long-term trend profits.

Now I am well aware that on some days and in some markets, you can do very well trading intraday. I am simply saying that this is dependent on the actual exploitability of the intraday moves, and not dependent simply on their range and frequency.
 
Each to his own.

To respond to OddTrader's question "whether (intra)daytrading or multidaytrading (or else) would be more profitable/risky" .. the answer is daytrading (ie DOW) has got to be way more profitable/less risky. Or perhaps more accurately, its the cumulative results of daytrading.

Cutten, I'm not interested in scalping.

The major gyrations are actual rather than theoretical maximums .. but OK scale in and scale out. You don't need the very top or very bottom but typically for a zero sum player you probably won't be far off buying the bottom or selling the top for entry. Scale out or go out on your target.

Its the model you use for capturing the major moves in the day (ie DOW) - or it need only be capturing the largest of the major gyrations in the day. Before that, its a question of the correct type of research .. and thats not charts, fundamentally.
 
Quote from Cheese:

To respond to OddTrader's question "whether (intra)daytrading or multidaytrading (or else) would be more profitable/risky" .. the answer is daytrading (ie DOW) has got to be way more profitable/less risky. Or perhaps more accurately, its the cumulative results of daytrading.
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Whether a timeframe is long or short term is relative in terms of several important (personal and general) factors such as capital, working hour, strategy, personality, etc., particularly the market characteristics of the instrument being selected/traderd.

The market characteristics would include, most importantly to this thread, how many smaller powereful trends in the shorter term timefrmae (of course relatively).

I would think there is an optimal timeframe for each individual to optimise his/her profitability and risk.

Otherwise it would be an over-optimisation due to the various types of noises.

Perhaps an issue would be we need to see not only the potential profits from a few smaller powerful trends, but also the potential losses from so many noises that would eat up our potential profits, unless we are able to wisely detect most of the noises.

I still think a Kelly ratio analysis could be useful to derive answers. :confused:
 
Quote from mdl060374:

9 PAGES! And no one has MENTIONED SCALPING = HIGH COMMISSIONS!!

The main thing for me is scalping consistantly eats away at your capital simply b/c of costs.. Hopping in and out of stocks, will churn you raccount, unless you can maintain a high win/loss ratio consistantly, which is hard to do.

Swing trading makes commissions less of an issue...
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and high slippage (news!), not to mention the "bait and switch" (or "order flow analysis") from the big players when the markets is going a bit slower.

Once you learn to "read" the markets properly (yes, it can be done) you'll discover that the moves are so much cleaner on the swing trading front.

Sherlock
 
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