Trading longer time frames

Quote from candeo:

I was wondering if anyone here is successfully trading longer time frames. I have noticed that traders usually trade shorter and shorter time frames as they become more experienced and very often become daytraders. The main excuse is "eliminating overnight risk" but I wonder how much of it is actually just a need for action/excitement.
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I dont fully agree with this statement. Sometimes more experience means having the patience to hold a position through a trend that can last for months. I could never do this though no matter how good I was... I'd be bored off my ass. Time frame and success are NOT one in the same, but rather just personal preference. However, I would agree that successful day traders usually are more experienced, because day trading is the hardest form of trading..IMO.

cm69
 
Quote from candeo:

Sorry if I was not clear, I did not mean to say that i would keep the trade open for a couple months. What I mean is that my sytem would allow me to do it if I need to. I totally agree with you on the fact that you should never predict where the market is going and just listen to it and react. Now, like I said about trend following, it is not because your time frame is longer that you are going to let your losses run. Again, I know daytraders who are trying to predict where the stock price will be in 10 minutes, not different than trying to guess where it will be in 2 months. And as bad if you ask me. I remember reading somewhere that 99% of "investors" with a minimum of $1M net worth are not active traders. They hold positions for months. Why do you think that is? I know it is something troubling to ask on a board populated with active traders, but if most short-term traders are not succesful, isn't it something that we should look into? Where are the millionaires daytraders? Is there a reason for this? Commissions/Spillage? Emotions?
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You are on to it here. Commissions on the short term add up, intraday whipsaw is not fun either. I think you have to have a complete trading plan. Eg. The moon is in the seventh house so I will go long beans at $50.00, target $51.00, stop $49.00. I will hold the position until the profit target or I am stopped out. When you put on an options trade do you have entry/exit, stops, timeframe. (There are some incredible options players on this board;seek them out.) Will you sell when you're stop is hit, or move it? I find myself that I will honor a stop or exit point, but have trouble riding winners. I think it is hard to sit on a winning position when reversals are imminent; this is even harder on longer time frames. Look at RIMM up from like $65.00 to $135.00, could you still hold it? I guess it depends on psychology and system. Long term trading has the advantage of lower commissions and hopefully more latitude on stops/exit and target/trend. By the way this is a tough question. Volatility stops (Average True Range) seem to work well. Sorry to ramble, but stop placement keeps me up at night!!By the way there are many successful traders here that only trade intraday. Good luck with your trading!
 
Some great comments. It is certainly true in fact that I was wrong and holding longer time frames requires more experience, certainly more discipline to be able to stay in the trade when some profits disapear. But why is it so difficult? We should be able to do it exactly as we are doing it for shorter time frames. Yes, RIMM is a good example. But take a very simple strategy on the weekly: Buy when price crosses above the 10MA, or the 20MA, sell short when it crosses below. Or anything that simple. With your stop when the price crosses back. Look at what would have happened on AAPL in the last 3 years, on SPY, on most equities/ETFs. Yes, you would still be holding RIMM, waiting for your trailing MA to stop you out. Imagine riding the trend from $70 to $135 with some Leaps. That would beat most daytraders here, no matter how succesful they are, with one trade. No need to stay in front of your screen all day. I know this is an extreme case, I know it's been a very bullish market, but like I said, look at the last 3 years, there are a lot of trends on the weekly. It just amazes me that there are so many daytraders out there who are struggling, trading with so many indicators on their charts etc. And when I ask this question I get a lot of answers saying "It is a matter of personal taste" but no one who said " Yes, this is what I am doing". Most "experienced" traders feel like they have to work hard to make money, to trade a lot, to use a lot of complicated indicators or fancy options strategies. Maybe not...
 
Quote from candeo:

But take a very simple strategy on the weekly: Buy when price crosses above the 10MA, or the 20MA, sell short when it crosses below. Or anything that simple. With your stop when the price crosses back.

It just amazes me that there are so many daytraders out there who are struggling, trading with so many indicators on their charts etc. And when I ask this question I get a lot of answers saying "It is a matter of personal taste" but no one who said " Yes, this is what I am doing". Most "experienced" traders feel like they have to work hard to make money, to trade a lot, to use a lot of complicated indicators or fancy options strategies. Maybe not...
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MA's are only good when a stock is trending...which is what guys?... 1/3rd the time?...I read somewhere, I think it was "The master swing trader" where he says that "Markets spend most their time going no where". Then what do you do with your "simple" MA strategy?..you'll get many crossover signals from a congested or consolidating stock. If you're trading off the weekly, you'll probably hold for a few weeks - months. Does that mean that you'll blindly hold your position through negative earnings, and other bad news?

MA's can take a LONG time to cross, and from what it looks like, you'd just watch your profits melt away. I use bb's, ma's, MFI, ROC, and volume. It's best to use more than one kind of indicator, if you're trading an indicator based system.

cm69
 
Candeo, the easiest way to make money on the long timeframe is to buy the indices - every month the same amount and over the long run you will be profitable if the economy is churning along for the next decades.
If you want to beat the benchmark (not the market!) it is not easier on the longer timeframe. And it is not true that almost all successful traders are on the longer timeframe (what about Steven Cohen), but it is true that they have to play on longer timeframes in very liquid markets when their equity grows because of their impact on prices. I think you have an advantage if you trade with a small stake (100 k - 10 M). You can be in smallcaps, you can get quick in and out without moving prices much. If you have a small edge and you can play for it a lot of times every day or week it will compound to a nice profit. By the way, it also reduces your risk, because playing a lot with an edge is smoothing your p/l curve.
Actually, I think it is harder to beat the benchmarks on a longer timeframe, because their is much more competition of the big guys and as it is already said markets tend to show less inefficiencies on longer timeframes.
 
i play on weekly - fortnightly-monthly timeframes.

for many positions i do cover with OTM options cause otherwise the stops would have to be set too far away.

its good though. u can have a full time job and still trade along nicely.

ultimate part time cash machine
 
Cashmoney,

Please look at the charts I talked about. Take AAPL for the last 2-3 years and look at the strategy I talked about. Look at SPY, NVDA, CELG, just pick one. In fact MAs have been scientifically proven as the most efficient trading strategy. Saying "they always work in trending markets" does not make much sense. How do you define "trending markets"? What time frame do you use? What period for your MA? Yes, you would sit through periods when nothing happens, but that's the whole point of my post. Being patient. Yes, you would get churned if you pick a period for your MA that is too short, but if you take the weekly chart and use a 10 or 20 MA, it won't happen much. It seems to me that you would still be much more profitable than by trading it every 2-3 days or every hour. About earnings? I don't understand this question. Nobody can predict earnings, news etc..If earnings are bad, then stock will drop below its MA and you are out. If you were already in puts, then it's all profits. I think it's Dave Landry who said that anyway, if you follow the trend, earnings and news will go your way. It's funny how we think that by trading shorter time frames, by being more active, by using more indicators, we can control the market better and things like earnings. And if you can't take the stress of earnings plays, don't play them. Sit-out and re-enter later. I am not saying that you should just buy and hold, but use your skills as a trader on a longer time frame.
 
Aus-spider,

This is very interesting. I suppose you mean that you hedge with OTM options, right? And you do this so that your stop is not "too far".
In that case, why don't you just trade smaller sizes? Calculate how much you want to risk on one trade, set your stop and then calculate your position size and forget about it.
Also, did you think about using Leaps on your positions for leverage?
 
<b>candeo</b>, small to medium sized (relative to market = symbol) accounts are more efficiently traded short-term IF the trader has sufficient skill to make it work.

Longer-term charts, i.e. daily and especially weekly are great for swing and position trading. Fewer opportunities per month/year, but allows more time to scan wider universe of symbols for potential trades.

Some daytraders have the perception that holding futures positions overnight incurs more risk than day trading. That is almost true, except a vast majority of day traders go broke in many small bleeds while trying to avoid the one highly unusual artery bleed event.

*

At first, day trading seems fun and exciting. After awhile, it becomes tedious and boring most of the time, except when price action is moving. After exactly seven years of this next month, I can see a time in my future where weekly charts and swing trades will be the bulk of my trades.

Currently short ER 790.00 = stop 790 w/price at 787.8 and short ES 1400.25 = stop 1401.25 and waiting (im)patiently for resolution as I cruise this site.

I'm a perfect example of the bored intraday trader... successful, but bored. Thank God for you guys here to visit with while watching charts thru seemingly endless hours!
 
I di not know much about Steven Cohen, so did a little bit of research and found this:

http://www.businessweek.com/magazine/content/03_29/b3842001_mz001.htm

Very interesting. Not sure though that I want to fight against these kind of guys and try to make sense of everything that happens in a trading day. When you read this you realize what really moves the market and that most indicators are probably worthless, especially on very short time frames. Just my $0.02.
 
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