Swingtrading Versus Daytrading Debate

Originally posted by daniel_m


But a guess is all it is, isn't it. A fool and his money will be parted no matter what the timeframe.
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You miss my point, daniel_m.... undoubtedly a fool and his money will be parted irrespective of timeframe... but my point related to the newer trader, less versed in the quick decision-making and rapid trade execution which is much more of a requisite for daytrading than for swingtrading... moreover "my hazarding of a guess" is a figure of speech which was qualified by reasoning, namely: "primarily a function of the necessity to make faster decisions and execute them with precision..." It is my belief that there is nothing unreasonable about my assumptions... I would state however that, much like other things in life, the learning curve for a newbie intraday player, could be expedited and be made less painful by having a suitably qualified daytrading mentor, such as the mentorship provided by the people at Realitytrader.com... in such a scenario, differentials resulting from execution issues between daytrading and swingtrading could be minimised....

Moving beyond execution-related differentials, your point about greater trade frequency for intraday trading is valid... trade frequency related differentials could be narrowed somewhat by running multiple swing positions in a way which would not be feasible on an intraday basis...

I suppose, in the end, the choice boils down to personal preference... indeed there need not be a choice, per se... personally, I partake in both styles, although I do find swingtrading a much more relaxing endeavor (which for me, in aggregate, also happens to be more profitable)...
 
Daytrading isn't nearly as hectic as you make it out to be Candleman! Sure, a total newbie may be bewildered by the speed with which prices change, but then such a newbie has no place making live trades at all! Not until he accustomed to the pace of the market should he be trading. Whatsmore, getting used to the daytrading rhythm doesn't take THAT long!

In other words, if the pace of the market doesn't blow up the newbie after the first week or so, his chances of NOT blowing up are just as good as the swingtrader's. (Daytraders and swingtraders alike are both equally susceptible to holding losers too long. If you disagree, please provide empirical evidence to support your claim.)

I would hazard a guess that the swingtrader is far more likely to be "married" to his losing position than the daytrader. Afterall, the daytrader knows that the next opportunity is minutes away. His emotional committment to his position is far less than the swingtrader, who might have spent hours searching for that "killer trade".
 
Originally posted by daniel_m


I would hazard a guess that the swingtrader is far more likely to be "married" to his losing position than the daytrader. Afterall, the daytrader knows that the next opportunity is minutes away. His emotional committment to his position is far less than the swingtrader, who might have spent hours searching for that "killer trade".
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This is contingent on discipline and is therefore related purely to the psychology of the swingtrader... a swingtrader (or for that matter, any trader) who has a clearly defined ruleset and the discipline to abide by it, need not be married to any position in particular...
 
apologies...

My comment was directed to the NEWBIE swingtrader. (and i offered my commentary as reasoning as to why a newbie swinger is at risk...)
 
Well, I think ultimately it's up to how you handle price dynamics, risk, discipline, psychology, trade a plan,etc. In other words, a lot of stuff has to be mastered or internalized before it makes all sense to you.

Having traded both, I can say, in daytrading, your entries and exits must be executed with greater precision. Because you can't really afford to be sloppy when a relatively "small" slippage of 10-20 cents is almost an entire move or half of a move in a moving stock. Unless you have one of those wide moving days like today. But remember, everyday you don't get that and the market is trendless or consolidating. So, I think I get "shaken out" a lot in daytrading because when you look at things at that level of detail then every tick seems like a big deal.

However, I must say I actually like daytrading. Because as seemingly noisy(as in market signals not audio-wise!) and stressful as it is, it's very enjoyable. And yes, if you do something right consistently(which is the KEY), then you can make a decent lving with incredibly short hours.

I think ideally, one should try to do both. Swing/position trade and daytrading. Daytrading to support current income. Swing/position trade to get bigger returns or capture longer term trends. But just "pure investing" i.e. buy-and-hold is kinda dumb. I mean it works well in the bull markets when CSCO, DELL, etc, had like 60,000% return from the early 90s to its peak in 2000. Now, all those gains are pretty much wiped out for buy-and-hold investors because they never developed the mentality of trading and cutting losses,etc.

So, ideally you should strive a balance. Two accounts. One for trading income on an INTRADAY basis. A separate account for swing/position trades. And of course, never take losers home.

trader99
 
what about the old adage "cut your losses short, let your winners run" ? That is an old saying that rings true for most people. If you are an absolute purist at daytrading, then your rules will not allow you to do that. You will be closing winning trades at the end of the day just because it is the end of the day and for no other reason.
 
I don't know if we will get a definitive answer to this question, but one thing is certain:

Ask a daytrader about swingtrading and he will say, "man, are you nuts? you could blow up holding a position overnight...Besides I cannot sleep on a position overnight"

Ask a swingtrader about scalping and he will say, "man, are you nuts? you will churn yourself to death trying to catch every wiggle in the markets...Besides, I don't go for the nickels and dimes, I like the quarters"

Everyone likes to defend their own bias in the markets at the expense of the other guys argument...We see that all the time on this forum...
 
So, ideally you should strive a balance. Two accounts. One for trading income on an INTRADAY basis. A separate account for swing/position trades. And of course, never take losers home.


yes, this is the ideal...and it also enables you to develop awareness in other time frames which is beneficial in trying to scale down or scale up time frames...
 
someone made a valid point about a friend being a floor trader and doing well as a scalper. Well, there is hardly any reason to be a floor trader if you are not also a scalper, that is what that game is all about. However, it is a fundamentally different situation than most people find themselves in.

First of all, there is no such thing as truly "realtime" quotes for nyse listed stocks. There is always a delay, and to make matters worse, the delay is not always the same. Part of this delay is inherent in the fact that the prices get set by humans and then must be inputed into the computer, and part of the delay is the system itself ( upstairs traders get the closest to realtime without being on the floor, and if they have a doubt they can get on the phone to someone on the floor. ) Sometimes you may only be delayed a second, and sometimes you might be delayed 5 seconds, and you would not even have a way of knowing it. If you are trying to be true "tape reader" then you are really looking at a composite tape, and in a fast moving market the tape starts to drop information like volume in order to run faster. To you it all looks realtime because you have no frame of reference. It isn't realtime unless you are really there.

The second issue is of course, commissions, since if you are on the floor you don't pay commissions, you pay a flat amount for being there ( buy or lease a seat ), or someone else pays you a salary for being there.

The third issue is order flow. If you are handling order flow coming in from the wire houses then you are flat out running a volume business and you are not doing anything like being a retail trader. If you are a local, then you can get used to how the other guys work and figure out if they have big buy or sell orders and scalp from that.

If you are a guy in a trading room paying commissions, or if you are sitting at home on the internet and paying commissions, then you are at a disadvantage in the game of scalping.

Furthermore, the only way around this is to increase your time frame so that every tick doesn't matter, and so that the brokerage firm doesn't make more money than you do.
 
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