Quote from haub:
Well, actually I've been trading for about a year now and still have quite a learning curve to get over. I wanted to say hello and ask a question. I was primarily a swing trader, but have joined the darkside into the hardknocks world of day trading. I was wondering in our current market state (possibly an overbought market) do traders generally change their styles. For example would daytraders have moved over to swing trading once a strong trend started in April? Or is it safer to stay on the day trading side regardless of market conditions so that you have no overnight positions? Or do some day traders practice a combination of the two...ala Tony Oz? Or yet do day traders shift their strategies in overbought/oversold markets? I'm trying to keep my trading as simple as possible and use strict risk management to try to stay afloat during the learning curve. Thanks for listening...hope to get some replies.
Great question, haub. Selecting timeframes are based on a few factors, here are the primary ones:
1) Capital - Daytrading will put you in the face of the Pattern Day Trader Rule ($25K minimum equity on an account that had 4 round trips in any five day period)
2) Your system - You need a reliable front and back end (quote and execution platform)
3) Your knowledge and tolerance for risk - There are many tools in daytrading that are not needed for daytrading. If you're accustomed to swing trading, I recommend working smaller lots on daytrading. It's a completely different ball game. There's alot of noise that wouldn't otherwise concern you if you were swing trading. Momentum analysis is one of the largest keys in daytrading (swing trading as well), that will help you fine tune the entry, management and exit of the trade
We've been in a nice uptrend since April, and the market has offered both swing and day trading opportunities. I swing and daytrade, and more often that not what you'll find is that when something breaks out on a swing it offers daytrading opportunities as well.
I advise you to get comfortable with both. When the market is tearing, you'll be able to trade both timeframes. When the market consolidates again (as it may soon as we head into major resistance), the market will have a tighter trading range, and you'll be happy you learned both. There's nothing better than expecting nothing, and preparing for as much as you can
Be well.
I am trading Naz stocks that have over 1,000,000 shares traded on average. Thanks everyone for the replies. I got pretty hammered this week with the day trading. I'm having problems finding the trend and making it my friend this week. Better luck for me next week I hope!