Short term trading vs. long term trading

[Grob109]

Quote from ElectricSavant:

No, I think what he is saying is that he is balanced or diversified. There are less than 8 hours to a trading day for most, and one can do only so much.

Michael B.

P.S. If he just speculated, he could be gambling. Instead he looks at the WHOLE picture as a return and a velocity of annual return.

P.S.S. Excuse me for putting my nose in this. Do I have this right? Jack?

Yes. Thanks so much for contributing to make that clarification.

 

[OldTrader]

Quote from T-REX:

There is ONE side of the equation that is not being considered here: You will have to be correct everyday without fail at 2 pts per day to equal the one trade triggered on the swing position!
This is not possible by any means. You will lose more with increase frequency of trading. The more you trade or overtrade the greater the risk of ruin. the less the frequency the higher degree of success when if you are correct in your analysis and execution of your trade signals.

What I was implying was that you would have to average the 2-3 points per day to equal the swing trade.

So if you are a trader who makes 5 points on 2 days, breaks even on a third day, and loses 3 on the fourth day....your record would be +7 points. The successful swing trader on the other hand might be at +12.

Perhaps the most telling comment was one made to me one time by a day trader who told me that he had gotten bearish right at the top, sold the market all the way down, stayed bearish, but when he got to the bottom he had made no money. The way this happens is that as the market moves lower it has up days which don't mean much in the scheme of things, just the market breathing, but in terms of a bearish day trader these will be bad days. These will be the days that take away part of the accumulated profit. In fact, this will not be much different than simply sitting with the position....except when the market turns lower you will make it all back plus some as a swing trader, whereas you might not as a day trader.

I don't think there is any question that the market travels more when you consider intraday swings. So again, a successful day trader should make more than any of the position traders. That's the theory.

What I think is the case for most day traders is that when they go back to analyze, they have built up a very large commission bill, an untold bill for slippage, and P/L results that are underwheming. I think the day trading is more a function of what is comfortable for undercapitalized traders.

Just an opinion.

OldTrader

 

[Atlantic]

Quote from OldTrader:

Here's something to ponder: if you got in toward the beginning of a swing, and out around the end of it, what you would find is that you would average 2-3 points per day in the ES. Go back for instance to the move that began in late November from around 1040. Let's say you bought there, and sold near the top in late January for 1140. A successful trade by anyone's measure....100 points. You would have had to sit with this position for 44 trade days. This works out to 2.27 points per day.

Let's say you bought at 1100 on March 25 and sold today at 1140. Another nice trade....40 points. 3.07 points per day for a holding period of 13 trade days.

Now here's the question: Could you make 2-3 points per day trading the ES in and out? If you could, this equals most of the longer term position trades you might have made had you had very good timing and the patience to allow them to make their move.

Trading in and out take more time, and certainly much higher commissions and/or slippage....a factor that you wanted to ignore but is foolish to ignore because they are a major factor.

My personal opinion is that day trading almost always "sounds" better theoretically. But in my opinion the traders that make the most money are the guys who hold positions for a longer period of time.

OldTrader

well of course it seems more comfortable doing just a few such trades through the year (if one is fine with holding overnight) - and hold each trade for several weeks / let them run for 50 - 100 pts or whatever. but will you always be able to catch a proper entry / exit (leaving money on the table can be a much bigger problem here, i'd say)? how big will / has to be your stop / trailing stop - 15 pts - or maybe 20? with just - say - 10 such trades / year - or 20 - every single trade is much more important compared to an intraday style where maybe 2 trades / day are done on avg.
and what about those periods where the market is going nowhere over the course of several weeks - where a daytrader can make profits every week?

 

[harrytrader]

http://www.elitetrader.com/vb/showthread.php?s=&postid=259983#post259983

SQRT((261*(2002-1970))-1)*1*100*3 = +/- 27415 %

Quote from neutrino:

Yes, you are right. If your holding period is shorter you must pay much more attention and devote much more time to trading.

But let's say you do that, let's assume that you pay as much attention as is required so as to not miss an opportunity or a signal. What would be the outcome if you take the same level of risk?

 

[stocktrader]

Charting markets,
thanks for posting the chart of your LEH trade, when you entered the trade where was your initial stop loss and when you took off half your position where do you move your new stop loss to?