Why does it seem so hard for some traders to acknowledge that there is money to be made in any and all time frames. On any given day, week or month one time frame will trump others but over the span of time the better traders will profit as the weaker traders will suffer. It has always been thus and shall always be thus.
There is money to be made in all timeframe. Daytrading is more demanding but you sleep better. Swing trading takes away some of the peace of mind during sleep.
The few traders I know of who can make single-trade killings every so often are doing so with options (simple buy side, no hedging) on something like the QQQ (60/40 tax split, just like regulated futures contracts, btw). When they expect a big move is coming up, they'll load up with like 300-700 contracts with an avg cost no greater than $1 per option ($100, of course). So that's roughly a 30K-70K position where the expectation is a 3x-5x gain. One of the guys I follow in a forum made 700K on QQQ options positions in the flash crash incident in Spring 2010. He regularly makes 50K to 100K on the bigger QQQ option swing trades where he has around 20K-30K at risk. Ironically, they are scared to death of the futures markets because it's a different mindset to them (unlimited losses due to marging reqs. vs. the option bet itself being the ultimate stop-loss upfront). But, the mindset they're really good at is with compounding their wins. When the big win comes along, they'll feed a greater initial sum into the opposing bet from the first. It's "house money" at that point so they can take the emotional hits when they fail. Extraordinary thing to watch unfold. If you're at that level of the game, a QQQ or SPY option swing trader, it probably trumps day trading in the futures market. You get the 60/40 tax benefit, more leverage possible with less cash involved and you have a limited loss. [The time decay factor in options is not as much of an issue as you would think. They're good enough to peg a move within 1-3 days.] I mean, can you imagine being emotionally unfazed by 10K-30K 1 trade option losses because you're good enough to produce far many more 20K to 100K wins and you also get about 2-3 huge wins per year (200K-500K)?
Long options requires impecable timing or you lose everything. Not true with futures. There you only lose what you risk. Options can lose 50 or even 90% of value in a few hours and this happens regularly. This is gambling, not trading.
It's not gambling if the full loss on the option position is the amount you're willing to risk. As a buyer, you can't lose more than your premium + commissions. On the other hand, with a futures position you may think you only lose what you risk (your stop loss level) but if you're holding a large position overnight and there's a black swan event during a thin market, your loss may end up far greater than what you thought your max risk was. I've seen ES gap 10 points on nothing more than a economic news release; imagine where your stop order might actually fill if a gap in a thin market is 30 or 40 points.
Ron, I'm not very familiar with futures, but with long options you also "only lose what you risk". It is only short options that can cause larger losses. Also, as far as timing goes, options have different expirations and it is very rare for longer term expirations to lose that much value that quickly. JJacksET4
Thanks for that post NoDoji! I think great minds think alike! I don't know where people talk about options like they know how they work and then get the basics of them wrong. Options are risky when people are going to buy say $10,000 of a stock, but instead put $10,000 into a short-term call. That is way, way, way over leveraged. Also BTW if option values always expired that quickly, sellers would make easy money and laugh all the way to the bank! JJacksET4
You can definitely let a good trade ride while day trading and you can press the pedal to the metal. SteveH trades this way and explains that you can start with low initial risk and leverage your gains to ride a well-defined trending move intraday: