Which is more difficult? Day-trading or position trading

Personally I think day-trading requires the most knowledge, not to mention the time you have to put into it.

i don't believe either one is more difficult than the other. If one can succesfully trade then its just a case of which suits their preferred trading style or personality.

The best advice I have heard is swing/position trade (small) until you have acquired the subconscious pattern recognition of markets and how they move. In day trading some instruments it is too fast for you to have time to think things through. The best trades/best exits from what would have been losing trades are the ones where I just act, because I just 'know' but don't know what I know until maybe afterwards*. As a new trader you will likely freeze and then due to the speed the loss may become "too big to take" in that time. If nothing else protect yourself with hard stops entered at entry to protect yourself in the "rabbit [in the headlights] zone" I still freeze and I use hard stops most of the time.

* not the same as acting on emotion/fear reflex eg closing out a trade miles from your stop because of a couple of down ticks. done it before , will do it again.

If Position trading is as in medium to long term, then Day trading is a micro version of Position trading.

But Position trading requires a longer waiting time for the price to fall into the trap, compared to Day trading which can happen a few times a day.

in day trading you are looking for smaller trades compared to position or swing trading. The smaller trade size means that your costs of doing business, the bid/ask spread and commissions are bigger % factors to cover in each trade, which erode your edge and therefore statistically make it harder to daytrade vs position trade.

of course, in position trading, you need more capital to run the overnight margins and eat the inevitable bigger draws when positions run against you. bigger profits, but also bigger drawdowns.

DT is easier but with a smaller Reward : Risk profile .

PT is the opposite , which I prefer , I'm in this to win as much as possible not to make 125 trades a week and feel clever about it .

I trade or have traded the DAX for sums of E200-300K and have never had to increase my O/Ns , that just happens to lising positions I believe .

O/N can be dangerous but then again hey this is the market and if you ain't prepared and I mean truly prepared for that , then don't trade . If carefully calculated , you can reap huge gains from O/N moves - can be truly spectacular.

Stockjunkie said:

I trade or have traded the DAX for sums of E200-300K and have never had to increase my O/Ns , that just happens to lising positions I believe

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if your broker doesnt give you an intraday margin then you will be fully margined and wont need to post extra overnight margin. the exchanges require you to post full margin for overnight holdings.

nah, Day-trading is more difficult then position trading. It's emotional harder I think. You also need a lot of market knowledge to be a good daytrader. You need to know what the fast money probably does, what the paper does etc.. swingtrading is just look for a resistance write on your notebook where to get out and that's it.

DT at the end of the day is inferior to PT in my view .

DT brings to mind the lines of dweebs sitting in offices in some US city , putting on trades w/o stops and then bitting their fingers . After that they go psycho and shot everyone .

What is the optimal holding period for position trading, is it 1-5 days or over a week? For something like YM, how many points per week is realistic to achieve?

mokwit said:

The best advice I have heard is swing/position trade (small) until you have acquired the subconscious pattern recognition of markets and how they move. In day trading some instruments it is too fast for you to have time to think things through. The best trades/best exits from what would have been losing trades are the ones where I just act, because I just 'know' but don't know what I know until maybe afterwards*. As a new trader you will likely freeze and then due to the speed the loss may become "too big to take" in that time. If nothing else protect yourself with hard stops entered at entry to protect yourself in the "rabbit [in the headlights] zone" I still freeze and I use hard stops most of the time.

* not the same as acting on emotion/fear reflex eg closing out a trade miles from your stop because of a couple of down ticks. done it before , will do it again.

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Good reply. This I agree with.

Stockjunkie said:

DT at the end of the day is inferior to PT in my view .

DT brings to mind the lines of dweebs sitting in offices in some US city , putting on trades w/o stops and then bitting their fingers . After that they go psycho and shot everyone .

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Position trading makes me think of Nick Leeson.

Neither way is superior, both have their advantages and disadvantages.

I would agree with Arbitrageur. How can PT be easier than DT? If you know your longer timeframes then you should have a good idea of the shorter timeframes. Don't start going on about WL ratios either, that goes with the territory. Theoretically, DTers should make more points than PTers, theoretically. Do the math. Who's a good trader? Who's a bad trader? Which one PTs? Which one DTs? You tell me.

Arbitrageur said:

Position trading makes me think of Nick Leeson.

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Lesson was an illegal bum . He was neither a PT or DT or any T for that matter .

Arbitrageur said:

Neither way is superior, both have their advantages and disadvantages.

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That's subjective and based upon my considerable experience and good results , I believe I make a valid point .

You do know that arbing is not DT in the real sense ? DT is just mini PT .

If it was possible to take a year's worth of position trades (signals from an hourly chart) and compress them into a month, i.e divide time by 12, you would have the rough equivalent of a month's worth of day trades on a 5 minute chart.

One is a just a fractal of the other, so in theory they should be equally difficult, were it not for

a. the ability of the PT to hold overnight.
b. the extra commission cost of daytrading due to increased trade frequency
c. the extra time and speed of mental processing required to daytrade. It is harder to concentrate for 8 hours straight than it is to carefully find, build and manage a position over a period of days.

However the competent DTer does have the advantage of being able to read the market's moves more accurately. It is easier to predict what the Dow will do in the next minute than what it will do in the next 12 hours. (S)he also can apply tigher money management and still make a decent living by risking a tiny fraction of capital per trade.

I would say that day trading is harder but the potential rewards are richer, for those that have the aptitude.

Perhaps the question should be not "Which is more difficult?" in an objective sense, but "Which do you find more difficult?". Were it not for the overnights and commissions I would say the answer would depend entirely on character.

Stockjunkie said:

You do know that arbing is not DT in the real sense ? DT is just mini PT .

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yes I realise that. The risks associated with what I do are limited largely to the transaction cost of putting the trade on, though I occasionally have to keep a position on for a day or two to get a fill on my exits, doesnt really make me a position or a daytrader though.

Arbitrageur said:

yes I realise that. The risks associated with what I do are limited largely to the transaction cost of putting the trade on, though I occasionally have to keep a position on for a day or two to get a fill on my exits, doesnt really make me a position or a daytrader though.

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Yes exactly , many people don't understand that arbing or true scalping are not classically DTs.

And within those there are differences too . Some take fairly large positions price range wise within a day . Others take little 5 points jobs - this is what most people commonly refer to as DT's , you Florida type.

Search4Truth said:

This will be heavily influenced by whether you use a spread betting company or a broker to trade. It is harder to be profitable when day trading if you use spreadbetting but much easier to make a profit if position or swing trading just because of the spread that has to be overcome.

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Yes , and from what you say this applies mainly to the pseudo scalper group .

Search4Truth said:

In general I think that position trading is easier but again this will depend on the individual's tolerance for risk. I know of more successful position traders than I do successful day traders and the day traders that have lost money have usually done so because of the commissions involved.
S4T

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Can you explain who is taking more risk in your comment ?

And the 2nd part is true . If one depends on lack of commisions to make profit , then you have an structural problem , you need to to do real scalping and not the pseudo stuff , because the comms will be a permenant barrier to one.

commanderco said:

One requires deep stops, drawdowns etc, but requires no knowledge of bid/ask, time & sales etc and yet from a distance the charts look the same.
And so I come back to my opening statement.......
They are 2 different animals that appear the same and they are as difficult or easy as you care to make them.

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I disagree with this . if you are saying that PT needs deep stops the I must be the exception , because my stops are nowhere near deep . drawdowns may be deeper than DT but that is after you get in the money so the relevence is less.

What you really need is excellent entry points , I and a number of people have done this over and over again.

And why can't PT's use B/A analysis , it's not rocket science.