Agree with most of what people have said in this thread, with one important difference - as Handle123 pointed out. Carefully chosen swing trades (duration from 2days-2 months or even longer), offer 5:1, or even 10:1 or rarely even 20:1 reward:risk in trader's favor. The trick is to catch a big trend at a good level. As a day trader, who closes position at the end of day, it is impossible to catch the full trend, even if everyday you play in the direction of trend, because of ensuing gaps that a good trend invariably produces. And because typically a day trader is highly levered, every now and then he will be taking losses on his position even when that position is in the direction of trend. There is another side to this story though - if as a day trader, a person has a great methodology and can manage drawdowns relatively strictly then his compounding ability is FAR MORE than that of a swing trader.
Thanks GMST, I am deligently researching and trying to break the myths of trading. I am currently working on a concept - creating a opportunity. this (if i can successfully jot down) has potential to replace all patterns or trading methedologies with one - Which is making money when the market moves. Keep an eye on the thread http://www.elitetrader.com/vb/showthread.php?s=&threadid=232746&perpage=6&pagenumber=1 I will ask for interested individuals to PM me - I will not post it on a open thread. GL and keep an eye on vix
=========== JP; its murray T. I agree with much of that; not that i ignore how insurance companys make money. In other words how insurance companys make money can be a big help, over time...........................
Two more things that may or may not have been touched in this thread. First is the fact that if you are back testing, then day trading will give you a lot more statistics and perhaps a little more confidence in your back tests than swing trading because of the large number of trades. Likewise, because of the large number of trades, you can expect your performance to converge to your expected returns quicker, while your PL will be noisier (larger swings) for the poorly sampled swing trades and it will take much longer to converge to your mean profitability (e.g., months to years). Second, in day trading, you can do well without looking at news and earnings. The information will be reflected in the charts that you are staring at and the price swings have little relation to fundamentals. In swing trading, you better be paying attention or you could get caught with nasty gaps, and in the long run, earnings and news will influence the overall direction of the price. As others have noted, there is a large "live-performance" aspect to day-trading that is less of an issue with swing trading. That's why many people like to automate their day-trading so that there are no issues with the execution of the strategies.
there is a downside to this as an edge gives you a bias and the trick is not to let the bias get between your eyes and the screen