Serious Question about Swing Trading

S

Smart Money

Seems like if someone posts, "My trading is going well, I'm making x% a month", they get shot down, called a dreamer or a fraud if they don't instantly post their blotter, or their bank account, etc.

So can someone answer this question because its been driving me nuts.

I started swing trading a few weeks ago. I came up with a good system, and started making money, but then started losing money. I figured out what I was doing wrong...I was "zooming in" only when I made my buy and sell decisions and when I did that, the things I saw on the the smaller timescale made me panic so I'd dump my position before it could bear fruit.

Thankfully, I've since realized my mistake, and I've made a few good calls since then and figured out what is safe(r) and what is dangerous. I've read a couple books and found that most of the information in it was stuff I'd figured out on my own but there were some pearls there and there were some things that seemed a little far-fetched. I've been majorly backtesting my program and spending time just looking at charts for any new aspect I can learn. I've tweaked my program, and I'm happy with it now.

I've learned to view my charts from that "sweet spot" vantage point. Not too close, not too far away. You guys know what I mean, right? 1 or 2 month graphs with trades taking place over a week or so.

So here's the thing...lately (and I mean only lately), I have been making money consistently and in the safest way I know how...trying to trade only in the direction of the trend, cutting out early, setting stops, all that stuff. Its working. Its an odd feeling when you make a prediction and it happens...like you can see into the future or something.

Here's what I really want to know. (I'm serious, just please, someone tell me this.) I want to know if I've truly figured this out. I'd like to know what kind of monthly returns can a guy make once he gets swing trading figured out. 10% a month? 20% a month? More? A Wikipedia article I read says 10% a month is great. I've been making more than that, and I fully understand that it might be the environment we're in now. So can someone just answer the question without a bunch of flames, or "show me your blotter" B.S.? I don't live in New York, and I don't personally know any swing traders. You guys are it. Seems like many of the literature estimates I've read for performance estimates aren't written by traders who know what their doing. I'm trying to figure out whether I'm lucky or good. I need a benchmark. I want honest opinions, not exaggeration, from people who are really making it work.

SM
 
Percentages are a lie, cause it depends on account size. If you have 20k, making 10% a month is easier than if you have 2 million. So the real question is, how much can you expect to make each month. That depends on your backtesting.

When I backtest a method in stocks, I go back 20 years, using the S&P 500 stocks and I require a sample size of 3000 occurances min.

Just overseeing what has been happening past several months don't cut it. I need to know what drawdown I can expect, what the method will do when markets are having extreme moves and when markets go flat.

There are going to be times when markets go flat for months at a time. When trading is good, I increase size, when trading gets flat - I reduce size.

You have to know what your method will do when markets go sideways, will it keep you out?

Most of those who have started to trade whether day trading or swing trading past several months might think this is a snap, but every dog has his day. Unless your method has the abiliy to keep you out of flat or chop, trend traders lose regardless of swing trading or day traders and this will be your biggest decline of profits for the month.
 
Quote from Handle123:

So the real question is, how much can you expect to make each month.

wrong question



I need to know what drawdown I can expect, what the method will do when markets are having extreme moves and when markets go flat.

a better question to ask.


You have to know what your method will do when markets go sideways, will it keep you out?

And what will you do when you have a prolonged drawdown?
how much pain can you take?
More...
 
You can't talk about % without talking about acct size.

You need both parameters in order to make a real assessment.
 
Quote from Smart Money:

I'd like to know what kind of monthly returns can a guy make once he gets swing trading figured out. 10% a month? 20% a month?

SM
More...

Can you explain what you mean by "getting swing trading figured out"?

What time frames are involved, what do you trade, what is you position risk?

Most swing traders lose money. some say the percentage of losers is as high as 90%.

I am satisfied with 2% a month with my risk parameters.
 
At 10% a month you will multiply your money 9.8 times every 2 years. $10k would become $900 million in 10 years and $270 billion in 15 years.

So, either you can do this, and a $10k account can reach $270 billion in 15 years, a rate of wealth accumulation which would make you richer than Bill Gates, George Soros and Warren Buffett combined over their entire careers. Or you can't do it.

I will let you try to work out which one is more likely.
 
Quote from Cutten:

At 10% a month you will multiply your money 9.8 times every 2 years. $10k would become $900 million in 10 years and $270 billion in 15 years.

So, either you can do this, and a $10k account can reach $270 billion in 15 years, a rate of wealth accumulation which would make you richer than Bill Gates, George Soros and Warren Buffett combined over their entire careers. Or you can't do it.

I will let you try to work out which one is more likely.
More...

Obviously his method has a big element of discretion, so the primary variable affecting scalability is his psychology. No one can consistently scale a fixed percentage -- they eventually hit a wall where psychology (and liquidity) dominates position sizing. So your critique is kinda misleading.

But I agree with the gist -- it's not possible in the long run, mainly because a test of a trader is not % gain, but <b>pain</b>. Everyone gets there in time; how you react determines if you're viable.
 
Quote from Smart Money:

Here's what I really want to know. (I'm serious, just please, someone tell me this.) I want to know if I've truly figured this out. I'd like to know what kind of monthly returns can a guy make once he gets swing trading figured out. 10% a month? 20% a month?
More...
Anything is possible. I've seen a trader who made more than a "10-bagger" (that's a 1,000%) in one month. Of course, he was leveraged to the hilt. But he obviously knew what he was doing and what he was up against.

On that note, it's not so much about how much I can make or lose but rather how I made or lost money. Was it due to genuine skill or mere dumb luck? As such, this game is all about confidence. You will be able to conquer the market once you acquire confidence. If you don't know what I'm talking about, you'll know when you get there.

Cheers!
 
Quote from Handle123:

Percentages are a lie, cause it depends on account size. If you have 20k, making 10% a month is easier than if you have 2 million. So the real question is, how much can you expect to make each month. That depends on your backtesting.

When I backtest a method in stocks, I go back 20 years, using the S&P 500 stocks and I require a sample size of 3000 occurances min.

Just overseeing what has been happening past several months don't cut it. I need to know what drawdown I can expect, what the method will do when markets are having extreme moves and when markets go flat.

There are going to be times when markets go flat for months at a time. When trading is good, I increase size, when trading gets flat - I reduce size.

You have to know what your method will do when markets go sideways, will it keep you out?

Most of those who have started to trade whether day trading or swing trading past several months might think this is a snap, but every dog has his day. Unless your method has the abiliy to keep you out of flat or chop, trend traders lose regardless of swing trading or day traders and this will be your biggest decline of profits for the month.
More...

Sent you a P.M. I'm swing trading and my time horizon is generally a weekly cycle. I have thought about what will happen when all this volatility dies down. I've thought that one way to compensate for that is to leverage heavily but I realize in pure chop that might not work. Perhaps move into commodities futures since what I'm doing now should translate. I'm playing indexes and commodities funds that don't turn around very quickly. Honestly, I'm scared to apply my method to stocks because there is so much about stocks that is not publically disclose. Like are the books being cooked, is the CFO embezzling, etc. I do believe in my fellow man, but what I'm saying is that larger funds or commodities tend to move more predictably because nothing is hidden at all. Heck, even accrual accounting distorts things.

I guess the bottom line is that as long as I can leverage up enough, things would have to be pretty flat to not make some amount over my transaction costs. I'm a swing trader, so I can keep my day job (though I'd love to ditch it).

SM
 
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