Position trading vs scalping/day trading

[Interceptor]

Good morning(if it still is when you read this!)
I'd like to firstly recount my own experience since starting to trade, and then ask for any observations and/or constructive criticism which anyone would be kind enough to offer.
I traded for the first time approximately 4 months ago. I primarily spreadbet the FTSE and the DOW dailies through IG Index, using ADVFN for real time charting.
Now here's a funny thing; every single position I've taken thus far has either been a winner, or(importantly!) would have been if I'd had the courage to stay on it a little longer. That's over 200 positions! BUT, on 5 of those positions I lost my bottle and closed out for biggish losses, resulting in an account position of only just being in front. Also(again, importantly), on probably 50% of the positions which I did profit with, if I'd been using stops I would have been stopped for losses.
So, to the conundrum. Do I continue with my existing trading style, but lengthen the time frame within which I'm willing to let my positions run, or, adopt a new style of trading, incorporating tight stops and ferocious money management?
As far as charting and TA issues are concerned, I feel most comfortable/confident looking at time spans of a few hours to a week or so. On the money management side, I feel 'safer' on an intraday minute to minute basis.
Any assistance gratefully received!

 

[Rhody Trader]

Firstly, you definitely want to be diligent and consistent with your money management, though I'm not sure about "ferocious" and "tight stops" make me nervous as often that means ones too tightly placed.

Secondly, you need your money management and trading timeframes to be the same. You can trade off a daily chart and place stops based on a 5 minute chart. That's a recipe for disaster.

Thirdly, it sounds like you have the very common afflication of being afraid to lose money and to give back gains. That's something you need to overcome. Consistency and the acceptance of the fact that you are going to lose money on trades sometimes and that you won't be getting out of positions at the exectly perfect level very often will take you a long way.

 

[Interceptor]

Thanks for that, Rhody.
The biggest reversals I've had were the Microsoft/Yahoo surge, the feds 'surprise' interest rate cut and when The Sage of Omaha made bond buying noises. Each of which gave me cause for consideration that there may of been a tectonic shift in the markets; all of which turned out to be but momentary blips.
So, am I best hanging on in there for the ride, or running to the exit door with everyone else?

 

[breadman]

x75,
What you have just said in your first post is the problem I see when I look at alot of systems. You trade a system for 4 or 5 months everything is going well you make 5 to 10 % a month then in the 6 month you loose 30%. You then loose confidence in the system start to make changes add in a extra indicator move your stop loss making it bigger or smaller. In truth the system is not tradeable long term. If 5 trades out of 200 lost you more than 50% of your profit for that period I don't think you could make money long term using this system. Your biggest winners must be bigger than your biggest losers for the system to have any chance.

 

[Interceptor]

That's sort of how I feel, breadman. The problem is the trade-off between cutting your losses, and, effectively turning a lot of the profitable trades I had into losers through stopouts. Its a bit of a head-mincer!

 

[Interceptor]

In fact, a perfect case in point just occurred.
I was short the FTSE when the US inflation figures came out, and it went north in sympathy, a long way past anywhere a stop would of been.
However, I left it; result a good profit.
Help!!!

 

[breadman]

x75,
you need to look at the 5 trades that went wrong. What would have happened if you delayed taking the 5 trades that went wrong until you got better prices. How much would you be up if you did not do the 195 trades that made you money but only did the 5 trades that lost you money, but entered your positions at much better prices. Are you using the same entry rules for all the trades.

 

[foredog]

If you'd had a stop, you might have locked in a small turn on your firsr FTSE bear, the you could've sold again when it looked like coming off again, the market could easily have kept going to up 150 then you'd be in deep......

It's very frustrating to get stopped out for a small loss only to see your trade go back into profit, but it will be much easier to make back this small loss in another trade than trying to make back 20% of your account you've just lost.

Live to fight another day!!!!!!

 

[Rhody Trader]

In fact, a perfect case in point just occurred.
I was short the FTSE when the US inflation figures came out, and it went north in sympathy, a long way past anywhere a stop would of been.
However, I left it; result a good profit.
Help!!!

Why did you leave your short on? Was it because the basis for getting into the trade in the first place hadn't changed? Or was it because you couldn't bear taking the loss or froze up, just plain hoped for it to come back, or something along those lines?

If your answer is that things hadn't changed, then you're fine. If it's in the other direction, you're in trouble. You need to correct things ASAP because one day you'll get caught on the wrong side and the market will hurt you very badly.

 

[Interceptor]

When the trade went on I was convinced that it was in a good position. It's a little difficult to answer whether I thought anything had changed. We seem to be going through a period of hysterical market over reaction to, not just good and bad news, but even indifferent news. Following earlier experiences I decided to wait this particular piece of market silliness out, and fortunately it turned out ok.
Perhaps in these crazy times you have to filter out some of the market's excesses?