Day trading is definitely more profitable and safer than Swing / Position trading

[Splitlink]

Hi Grant & Lee Shepherd,

It's a 5' chart.

Here's a screen shot of Rolling and March.

Split

 

[darktone]

News does terrible things to overnight traders, Paul!

Some time ago, I had an overnight trade on the Daily Mail Trust---DMGT. It was decided overnight that the company was not going to sell its free press arm. The shares opened with a crash the next morning!

I would not be surprised to see Footsie open with a stop seeking crash on Monday, only to pop back up again within a short space of time. Neither would I be surprised to see it not happen.

I prefer to be watching, then, rather than sweating through my Sunday church sermon.

I have come to the conclusion that God is not a capitalist, as so many Americans believe.

Split

Having a position overnight and having a position over night (weekend inc) that you cant escape from until the opening bell are two very different things! . Have noticed that dow can really swing about after hours, part of the reason why i prefer fx, in general the asian session tends to follow suit. Still in the same boat over the weekend tho, agree its best not to do it unless you have a decent profit cushion.

 

[Lee Shepherd]

This is very true as when the futures take over from the underlying market,

All figure's and scenario's are examples only:

Say ftse 100 has closed(open outcry)at 6000, futures will now take over and track the potential open price for the next session, if Asian markets and DIJA start to decline then ftse 100 futures (quoted on LIFFE) will gladly follow suit hence the price quoted on finspreads that you refer to has 'spiked' or 'dipped'. The ftse futures are now trading at 5600 so this will be (as it gets closer to next trading session-open outcry) the open price or near as dam it. Any difference in prices will be soaked up on 'risk free' trades(arbitrage).

Of course theres always risk if you cannot close any position on any trade at any time.
At any part of day whether it be open outcry, electronic or futures trading or even to that matter closed at the weekend...planes flying into buildings will have a negative effect (as experienced 9/11), thus driving down prices immediately or at next session or on futures. Either way the event or news will have an effect on the underlying market value. Due to high volume trading on events it's very likely that you'll experience lag on your platform or have problems getting through to your broker or/and trying to find a buyer/seller for your contract/s.

This is another issue with scalpers that have issue's with trying to dump stock when no one will take it..then lose more money than expected..although cost's extra(as insurance) one can protect themselves by guaranteed stops(if broker permits).

Splitlink, thanks for posting charts. Explain what the issue is so I understand without doubt what your saying.

Having a position overnight and having a position over night (weekend inc) that you cant escape from until the opening bell are two very different things! . Have noticed that dow can really swing about after hours, part of the reason why i prefer fx, in general the asian session tends to follow suit. Still in the same boat over the weekend tho, agree its best not to do it unless you have a decent profit cushion.

 

[Splitlink]

As far as I am concerned, there is no issue. I posted an example showing the Ft climbing 80 points in less than 30 minutes. We look at it and form our own opinions on daytrading versus holding overnight, which is what this thread is about, although I had already formed mine long before.

Split

 

[Lee Shepherd]

What is your opinion regarding the 80pts climb? and if you can still trade on your platform would that have not given you a great opportunity to get a good long, although the underlying market was closed it didn't stop you trading on your platform and taking advantage on a short time scale(daytrading).?

My opinion is the market duely reacted to the dow jones.

As far as I am concerned, there is no issue. I posted an example showing the Ft climbing 80 points in less than 30 minutes. We look at it and form our own opinions on daytrading versus holding overnight, which is what this thread is about, although I had already formed mine long before.

Split

 

[Splitlink]

I don't have an opinion on the 80 points climb. I didn't see it until this morning. It was just a fact of life. It was there, this morning , and that's that, because I could not have traded it, in any case.

Lee Shepherd, this is an example of what the markets are like in real life. Quite unpredictable and the risk is tripled after hours. I'm for a quiet time, as much as that is possible, trading from 0800 to 1330, most times. I believe that there is enough action in the markets then, to be able to make an opinion on the action and to trade accordingly.

Split

 

[barjon]

.................. I have traded overnight and follow Barjon's Swing Trading thread ......................Split

split,

...........and can you find in those threads any occasion where an opening gap has taken you beyond the swing high (low) stop level? Conversely you can find many occasions where an opening gap has added significant gains to an ongoing trade and where you'd need to be pretty deft to compensate for it via intraday trading.

Of course, particularly with the current volatility, opening risk often exceeds 100 points, but you can compensate for that by reduced position size if it is too uncomfortable.

I have to admit, though, that daytrading is seductive. Try as I might I still need to keep topping up my daytrading "play account" from my main "eod" account. That may be because I'm a lousy daytrader (clearly, I am), but it may be that those gaps account for much in my main account

good trading

jon

 

[Splitlink]

split,

...........and can you find in those threads any occasion where an opening gap has taken you beyond the swing high (low) stop level? Conversely you can find many occasions where an opening gap has added significant gains to an ongoing trade and where you'd need to be pretty deft to compensate for it via intraday trading.

Of course, particularly with the current volatility, opening risk often exceeds 100 points, but you can compensate for that by reduced position size if it is too uncomfortable.

I have to admit, though, that daytrading is seductive. Try as I might I still need to keep topping up my daytrading "play account" from my main "eod" account. That may be because I'm a lousy daytrader, but it may be that those gaps account for much in my main account

good trading

jon

I knew that you would come in, sooner or later.

You are right, but that is because those stops are so far away that you need binocukars to see them. Get stopped out on one of those and, brother, your readers circulation would get cut proportionately.

Never mind, I do read your thread in the hope that I can find one that I can afford!

Split

 

[barjon]

i've got a spare pair of 8x42 leicas going cheap

jon

 

[darktone]

As far as I am concerned, there is no issue. I posted an example showing the Ft climbing 80 points in less than 30 minutes. We look at it and form our own opinions on daytrading versus holding overnight, which is what this thread is about, although I had already formed mine long before.

Split

For sure.. Theres are charts that will fit both opinions and to be fair a lot depends on the current state of the market. Look at Dow right now, youd be wanting a pin point short entry to even hope of keeping that one alive over night. But it would have been a different story when the **** was falling out it some weeks ago.
As always. Horses for courses!

 

[Lee Shepherd]

Splitlink,

ok no worries,

I hear what your saying, I myself closed out some positions on the footsie between 8 and 9pm(GMT) friday night, if it does come back down on futures before market opens(outcry) then traders (positions) not paying attention will unduely be caught short (excuse the pun). Anyone long on ftse could have at least closed (limit) some positions as if the market does open down(unlikely at these levels)(but of course depends on Asia sunday night/monday morn) would then give them the opportunity to buy back stock at lower level with profits taken and thus trade the range.

Good luck with your trades.

 

[darktone]

Of course theres always risk if you cannot close any position on any trade at any time.

That would be my main concern. Getting your pants pulled down with no exit! Well, its just not a good place to be is it!

 

[Lee Shepherd]

Definately would not be a good place to be if in your at the blue oyster bar..

That would be my main concern. Getting your pants pulled down with no exit! Well, its just not a good place to be is it!

 

[splorff]

Hi,

I think Day trading is definitely more profitable than Swing / Position trading provided the following are true.

(1) The trader is equally adept in Day / Swing / Position trading.
(2) The same level of risk is taken.
(3) While day-trading the trader does not overtrade.
(4) The trader only takes high probablity and low risk trades with a high winning ratio and average profit to loss ratio. This calls for patience and generates less trades.
(5) Average trade profit is high (i.e. slippage does'nt eat most of the profits).
(6) Funds 50k - 1 million

The reason why I think Day trading is better than Swing / Postion trading in the above circumstances are as follows.

(1) You avoid risk of overnight exposure.
(2) Can take advantage of leverage.
(3) Compond profits more quickly
(4) Overall exposure is much less reducing risk to your account.

Do you agree or disagree ?

I'm too inexperienced to have an opinion on this, but I do like the idea of day trading. As a swing trader I have had poisitions change dramatically over night and over weekends.

But I think day trading is probably more difficult. Do you guys use fibonacci levels and other things?

I would like to sit beside a day trader to watch and learn. The mentor would need to be in the UK ideally in the North West. I'd be happy to pay X % of any (if any) profit I made, as a consequence of the mentorship, until an agreed fee is paid. PM me if interested. You need to be making your living as a day trader.

 

[moreliver]

As usual, it's been interesting to see so many variations on trading method on this thread. As others have pointed out, different traders with different styles get different results from day versus swing trading.

I keep my trading overheads dead low by using a spreadbetting platform, from which, obviously, I get my leverage. Knowing what I know about slippage, spread and so forth there's no way I would preserve capital and generate consistent profits daytrading with this arrangement. Swing trading, on the other hand, means I can avoid slippage issues, and placing orders mostly end of day means I don't have panic attacks from the trading platform acting up or from worrying about intraday volatility, order book manipulation etc.

Gapping I regard largely as a boon. Over time, those gaps add to profits as long as I'm trading in the right direction in the first place. And if not, well, stop loss, eh? That said, there are some instruments I would not feel comfortable holding overnight. Index futures, for example.

Whether day or swing trading, overall exposure depends on position sizing and drawdown limits. I personally risk no more than 2% of capital on each trade and I do not risk more than 12% in the market simultaneously. Also, I will stop trading and overhaul my methodology if I ever hit 20% capital drawdown. Anyone who's seen a drawdown table will realise why.

I have day traded occasionally, but only when my own incompetence has required me to watch the screens and get myself out of trouble with my finger on the CLOSE button at all times. That I have managed my mistakes into profit does not excuse the lapses nor prove the suitability of my arrangement as a daytrading choice.

 

[RogerTheTrader]

Last night gave an example as to what can happen in overnight trading. As long as you are prepared for these sort of things--- OK! But a nasty surprise for a lot of short traders on Footsie and one of the reasons that I prefer day trading.

I have not checked as to why that happened, but it did. Curiously, it was not a flash spike as they, often, are but took an hour to develope.

Split

US markets had a similar Friday. Open a tough up, gradual slide all day, huge rally in the last 45 minutes. The DOW rallied due to news that Ambac might be bailed out. Financials led the way. Another emotional response. If you were on the right side of each move in the day, cheers!

I used to day-trade regularly, but didn't care for the required "screen time". Slippage made being profitable challenging. Plus, I found managing more than one trade in a day rather difficult.

I've converted to primarily using spreads with options, focusing on a delta neutral strategy of managing my portfolio. My goal each month is to build a project expiry P/L line that is a large dome with very wide B/E points. Sudden flashes in the market have little effect on my overall + or - on a day. My primary gain comes from time decay of the options.

Friday's action skewed my already slightly negative delta to nearly a minus triple digits, beta weighted to the $SPX. Monday, regardless of the market action, I'll be adding bullish trades to bring the delta closer to zero and closing bearish trades that may be in jeopardy. If the rally continues, I'll try to keep the delta slightly positive.

I'm currently using a stepped portfolio risk per trade with less at risk on low probability directional trades and more at risk on very high probability trades. Overall, the risk per trade is much lower than I've ever used before, which has me in a large number of trades. I've developed a system to quickly review the trades in about 5 minutes and can do this several times a day. No one trade can really hurt me.

You're spot on, if the swing trader has a few positions and they're all headed in the same direction, you're safer trading by day. But a hedged portfolio will only smirk at volatility and let you sleep at night. Not being vulnerable to volatility allows me to have my tea - away from the screen - peacefully.

To each his own...

As always, keep your risk low and your profits high.

Roger

 

[teezeike]

I'm too inexperienced to have an opinion on this, but I do like the idea of day trading. As a swing trader I have had poisitions change dramatically over night and over weekends.

But I think day trading is probably more difficult. Do you guys use fibonacci levels and other things?

I would like to sit beside a day trader to watch and learn. The mentor would need to be in the UK ideally in the North West. I'd be happy to pay X % of any (if any) profit I made, as a consequence of the mentorship, until an agreed fee is paid. PM me if interested. You need to be making your living as a day trader.

Hi,

About Posiyion and DayTrading

1. If you INVEST position/Swing.
2. If you TRADE daytrade.
3. It is possible to identify one good or bad stock and take mid or long term position.
4. It is difficult to identify whole market direction to take position in the mid-long term.
5. It is difficult to identify one good or bad stock and take short/day position.
6. It is possible to identify whole market direction to take a short/day position.

About their Risks:
1. When you look down the road....what is nearer tend to make sense than that is farther.
2. You require more technical skills to manouver short term trading. You do not require much of skill in mid-long term.

About their Rewards

1. The formula for amount is A=P(1+R/100)^N. P is principal.position value, R is the rate of return..% profit or Loss, N is the term...number of trading days

So from above, it depends on the average profit/loss per time period. Say we position 1 lot of SPX for 1 month at margin of $2,000.00 we make 50% of that ..that is A=2000(1+50/100)^1= $3,000.00

If a day trader makes on the average 5% on the same margin(rolled) per day. Then we see A=2000(1+5/100)^30= $8,643.00.

Yes the position trader pays only 1 commission while the day trader pays 30x(assuming 1 trade per day).

You can now make your own conclusions.

Rgds,\

Teddy

 

[fcmisc]

2. You require more technical skills to manouver short term trading. You do not require much of skill in mid-long term.

Why do you think that you don't require much skill in mid-long term trading? Surely longer term trades will be affected more strongly by information that is available to everyone. Whereas with short term positions, while a lot of market moving information is still public, it can take a few minutes for prices to reflect the news when it comes out. Monkeys who trade full time can take advantage of this lag if they remain alert all day.

 

[teezeike]

Why do you think that you don't require much skill in mid-long term trading? Surely longer term trades will be affected more strongly by information that is available to everyone. Whereas with short term positions, while a lot of market moving information is still public, it can take a few minutes for prices to reflect the news when it comes out. Monkeys who trade full time can take advantage of this lag if they remain alert all day.

Correct.

Information(historical,current,future) moves the market in this order.

1. Historical...What was the outcome when it happened..before...9/11, Recession, Big discovery..(time tested)
2. Current..What just happened or happening..( Right Downs..., Rate Cut, Capital Infusion,...Bankruptcy)
3. What might happen...Rumours..."Buy the Rumour Sell the Fact"..Bear Stern to be bought by Chinese Bank...Warren Buffet to invest in Whatever...

It would take a great skill set and solid plan to navigate these short term than mid-long term. Long term news should be stale...short term very HOT. Its accurate interpretation is the SKILL that gives first strike advantage.

 

[RogerTheTrader]

Hi,

About their Rewards

1. The formula for amount is A=P(1+R/100)^N. P is principal.position value, R is the rate of return..% profit or Loss, N is the term...number of trading days

So from above, it depends on the average profit/loss per time period. Say we position 1 lot of SPX for 1 month at margin of $2,000.00 we make 50% of that ..that is A=2000(1+50/100)^1= $3,000.00

If a day trader makes on the average 5% on the same margin(rolled) per day. Then we see A=2000(1+5/100)^30= $8,643.00.

Yes the position trader pays only 1 commission while the day trader pays 30x(assuming 1 trade per day).

You can now make your own conclusions.

Rgds,\

Teddy

Fine post, Teddy.

I'd like a little feedback on some challenges and questions I have regarding day-trading.

1) PRESET TARGET: If I was seting a predetermined profit target on the trade, for example, 5%. I could reasonably achieve that on most trades. However, I'd have one trade that would be turning negative, I'd need intra-day support or resistance to hold to stay in. If there was no hold, the trade would become quite negative, with possibly a loss of 15% or 20%. That, in effect, wipes out three to five days of trading profits.

2) LETTING IT RUN: A preset target, ensured small incremental wins, but was fragile with regard to overall P/L. Letting a trade run, although, had inherent risks. I'd seen many a nice gain evaporate like dew in a desert within seconds. If I had capped and closed, I'd have a profit. However, some days, I'd let the trade run, and pile up a huge profit.

3) INSTRUMENT: I was trading a highly volatile instrument, options on the $RUT. Slippage was rough. I'm considering trading other instruments, like the SPY or QQQQ, which have very small spreads.

In US markets, I've heard some day-traders say they prefer to trade the stock, less slippage, as opposed to the option, where you can spend a lot of the day just making up the spread.


Questions to the successful day-traders:

1) Are you working with preset gain targets, even if the chart may allow for more of a run?
2) Are you letting trades run with the chart?
3) How critical are the instruments you trade? Can an accomplished day-trader trade most anything or are there certain specific instruments that allow you to find an edge?
4) Are you day-trading indexes, as opposed to stocks?