Swing trading vs. day trading

J

Jdesey

I’m so happy that I keep a detailed record so I can look at things later and analyze.

This week all of my day trades were profitable and all of my swing trades were losses. This got me looking at my track record.

I am strictly on options trader. So far I’ve only looked at 2023 but I have spreadsheet with every single trade going back numerous years and I’m sure I will find the same thing.

what I found is absolutely blowing my mind!

Out of 550 trades this year I have made an average of 14% profit per trade/ 65% win ratio considering all trades winners and losers. and I am a net winner on my day trades.

My Swing Trades are not even close.
average of -5% and a horrible 21% win ratio. Net loser.


The thing is, I don’t know why. I’m really glad I figured this out because obviously I should be focused on daytrading. The only thing I can possibly think is the time decay on options. I am swing trading 3-5 day holds and I’m going 30 days out on the calendar at point of entry.

Maybe it doesn’t matter that I know why this occurs. I am curious, but maybe it’s enough just to know that this is a thing with my trading and just focused on intraday trades.

any comments or thoughts are appreciated. Has anyone experienced some thing similar?
 
padutrader said:
what EVERY trader should focus on is only ONE thing:

FIND THE TREND.

AND IF YOU FIND MANY choose one to trade
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Very well said. This reminds me of the great NBA basketball player only focused on one thing getting rebounds. He didn’t focus on anything else, he won championships and is in the Hall of Fame for it.
 
Jdesey said:
Very well said. This reminds me of the great NBA basketball player only focused on one thing getting rebounds. He didn’t focus on anything else, he won championships and is in the Hall of Fame for it.
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Dennis Rodman
 
Jdesey said:
I’m so happy that I keep a detailed record so I can look at things later and analyze.

This week all of my day trades were profitable and all of my swing trades were losses. This got me looking at my track record.

I am strictly on options trader. So far I’ve only looked at 2023 but I have spreadsheet with every single trade going back numerous years and I’m sure I will find the same thing.

what I found is absolutely blowing my mind!

Out of 550 trades this year I have made an average of 14% profit per trade/ 65% win ratio considering all trades winners and losers. and I am a net winner on my day trades.

My Swing Trades are not even close.
average of -5% and a horrible 21% win ratio. Net loser.


The thing is, I don’t know why. I’m really glad I figured this out because obviously I should be focused on daytrading. The only thing I can possibly think is the time decay on options. I am swing trading 3-5 day holds and I’m going 30 days out on the calendar at point of entry.

Maybe it doesn’t matter that I know why this occurs. I am curious, but maybe it’s enough just to know that this is a thing with my trading and just focused on intraday trades.

any comments or thoughts are appreciated. Has anyone experienced some thing similar?
More...

Be very careful with day trading. When you day trade you enter the market almost every single day, and that gives you a greater frequency of trades. Like in any game you have losing and wining streakes. A winning strake might give you the false sensation that you have an edge.

But the reality is that if you keep playing the game, you will eventually hit a losing streak, specially if you keep running the same system over and over.

A year is not long enough to say that you are successful at day trading, so be very careful sir, because that is how you wipe a trading account.
 
Great post @Jdesey.

I remember one of the best posters on ET (@newwurldmn) once said only day trade options can be profitable. My own conclusion is options these days are so well priced that almost no retails can make money (beating long term hold).

My own statistics proved that out too. So, I trade special situations only, harder for MM to price it correctly. Even then, though expectancy is positive, win rate is < 30%. Meaning even in special situations, MM & the market were correct most of the time. They misjudged the size of the swan only on rare occasions.

Maybe on an intraday basis, it is harder for MM to be correct all the time?
 
ironchef said:
Great post @Jdesey.

I remember one of the best posters on ET (@newwurldmn) once said only day trade options can be profitable. My own conclusion is options these days are so well priced that almost no retails can make money (beating long term hold).

My own statistics proved that out too. So, I trade special situations only, harder for MM to price it correctly. Even then, though expectancy is positive, win rate is < 30%. Meaning even in special situations, MM & the market were correct most of the time. They misjudged the size of the swan only on rare occasions.

Maybe on an intraday basis, it is harder for MM to be correct all the time?
More...

Would you be able to determine a trend in the underlying by looking at those options?
If so could you recommend anything to read on the subject?
 
Drawdown Addict said:
Would you be able to determine a trend in the underlying by looking at those options?
If so could you recommend anything to read on the subject?
More...
Great question. One ought to think the market should price those in already and indeed you know from IV, if it does or does not forecast a big move. But to trade trends using it? The exact answer is above my pay grade.

If you want to better understand options, read Hull, McMillan, Bennett and Sinclair. Sinclair and Bennett are more from a trader's perspective, Hull & McMillan are text books, teaching you the basics of options. Someone here told me that Bjork's Arbitrage Theory in Continuous Time is great if you want to compute prices, etc. as a function of time. But the math is too hard for me so I have not been able to finish it.
 
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