We distinguish between swing trades and trend trades -- ranging from multi-day to multi-week holding periods, occasionally multi-month -- and generally utilize a mix of both. When macro conviction on a trade is high (as it was with Aussie from the start), it is easy to stay in. To each his own and so own, but daytrading just seems crazy inefficient relative to the opportunity that is out there. It is not uncommon to see entire industry groups and sectors make 30 to 50 percent moves within a six to twelve month period, both up and down (long or short). We see the most value in looking to carve out big chunks of those moves -- though in choppy markets we are happy to bag profits in three to five trading days.
I have no doubt you're doing well. However, I'm curious to know what kind of ROE you guys are generating. If you feel you can share, thanks, but I fully understand if you rather not disclose.
To be clear, there was no intention of knocking daytrading. A very close friend is a highly successful daytrader. If you want to make, say, 300% ROE in a good year, daytrading is the way to go, and swing / trend methodologies won't touch that. But the efficiency comparo (imho) comes in respect to time and energy commitment and capital constraints. For all the successful daytraders I know, time and energy commitment is extreme; when they are focused on markets, they aren't doing anything else, and the process is very energy intensive, e.g. even though they leave by 3 pm every day, they are mentally wiped and ready to go relax, not take on another project. An individual who is not a full-time trader, or who has other pursuits, will have trouble committing to this level of time / energy investment. (And if he doesn't commit to such, he will have trouble competing.) For full time market participants like us, on the other hand, the key metric is capacity constraints. We like strategies that we can expand and grow into with money under management, still being effective at $50 - $100MM AUM or more. The bigger you get (in terms of AUM), the more important it is to consider timeframe as a capacity factor, along with the efficiency impact of letting trends do the work for you. (Unless you are doing HFT / Rentech type stuff, which is not our particular brand of vodka.)
Just a point about some of this. To be sure, our top people make 7 figures, even though they may have started out out with $50k or so. Time frames are variable for the top people as well. MM's, Specialists, and other professionals tend to provide liquidity to the markets by fading the trends. We do that as well, to a point. We can easily go with the short term (daily, hourly) trend, based on simple market mechanics and order types. We fade on the openings, and with MOC's etc. We don't have to fade, we can do whatever we like during the day as well. Simple improvement for the discretionary trader who is not reliant on order flow. We can hold long term as well. We can do pairs, mergers, and all the rest, as well as make money based on good entries and exits on day trades. When we were on the trading floor, we rarely even thought about "day" trading. We simply "traded" - sometimes hedging, sometimes scalping, sometimes developing longer term positions. To be limited by the term "daytrading" is not necessarily a good thing. As I've always said - "Trading is as easy as you'll let it be, or as difficult as you want to make it." All the best, Don
Luxury retail stocks are taking it on the chin as investors adjust to slower growth expectations. The group weathered a challenging domestic economic environment relatively well as US and European consumers reined in spending. But now that emerging markets are also reporting decelerating economic growth, the groupâs prospects are becoming much less attractive. Consider this, from Marketwatch regarding Tiffany & Co. (TIF)âs revised earnings outlook: Tiffany also said spending by financial sector employees has continued to slow while âsubstantial competitive discountingâ remains a problem. Meanwhile, shoppers balked at entry-level silver jewelry after Tiffany raised prices to offset the rising cost of materials, from precious metals to diamonds. While visitors from abroad still drove sales in the Americas, Tiffany said it saw a drop in sales, especially to European tourists, at its New York store. In China, sales have slowed, echoing remarks made by such European counterparts as Burberry and LVMH. Still, Tiffany said its store growth plan there remains on track. Read full commentary here