I take an integral approach to trading. High frequency (day trade): YES Swing trade: YES Arb: YES Automation:Limited but looking into it more Long term investing: YES 2 key ingredients for my success over the years: Find an edge and work it until it goes away Study new things, incorporate working strategies, improve, repeat.
Interesting thread with good posts! I am not sure if day trading is a failure, after all many traders were firstly earlier day traders before they became full time traders. Day trading is a good starting point to learn about Trading and minimize the losses also. Also, it helps to learn trading while having some source of income.
Just my style and personal preference. I always felt like I needed to know the "worst case" before I committed any money to my strategies. I've seen discretionary traders eke out huge profits, but that doesn't stop huge losses, which, at any scale is what I try to avoid with my mechanical systems. This whole thread probably follows the path of a discretionary trader, with average $600/day profits and "occasional" $25k losses. Too large of losses is always going to be a problem and I believe these sort of disproportionate losses taken "occasionally" are the main reason why discretionary trading doesn't really work. At least not for me. Maybe I'm going a bit far to say it doesn't work, but perhaps I should add the caveat emptor to "in the long run" where we're all dead. It seems that could be said for any "trader" not holding the market portfolio, though. Thinking about it, I have taken paper losses on c2 that big, and in real terms about half of that...hmm, puts it in perspective as he stated the drawdown continued to $75k, which I've only come down about $60k......
To succeed you have to have a trading niche that is consistant with your place in the market. -If you pay $5 a round trip in ES do not try to compete with those who pay almost nothing. -Swing trading is easier in some ways (cost to average profit size should be much larger) but it is not without pain and losses. The best Swing strategies I have developed must sit through drawdowns in order to succeed. The end of month reporting of swing trading CTA's and hedge funds smooths results and hides the true nature of their day to day volatility. -It is not really about day trading vs. swing trading vs. whatever else there is. The question is: how can you deploy your capital to get the results best results given your resources and psychology.
You either have an money making edge or you don't. The time frame is irrelevant. You could be making money with 10 second holding periods or 10 month holding periods. It doesn't matter. Every strategy is different with its own set of risk parameters that you as a trader need to adapt to. To box yourself in with statements like "Daytrading leads to Inevitable Failure? Is Swing Trading the only Viable Path?" and "Now when I say all daytraders, I'm talking about independent discretionary daytraders. I'm not talking about HFs running algo bots and doing market making, arbitrage, etc." only limits you as a trader. What is wrong with "algo bots, market making and arbitrage"? Does the money made from those strategies not get accepted at some places? I know a guy up 7 figures this year on gimmicky strategies other guys I know turn their nose up at as "not real trading". Hint: it ain't swing trading. But again, the time frame doesn't matter, the profitability does.
There is another interesting thread on the same topic which is as follows: http://www.elitetrader.com/vb/showthread.php?s=&threadid=151916
This really hit the point . Those computer programs can analyse the market situation far more rationally (they have the support of historical data and calculate the winning probabilities) than human beings and move much faster than us. Though I don't think daytraders are not going to become as said by OP, I do agree that computer programs are taking advantage consistently from daytraders, especially when the market has low volume.
Explain how a computer can find the stops to hunt them down? To show you how stupid that remark was you said the computer hunts down the popular stops. If they are so popular why does a computer need to hunt them down? You guys are just scared of a brainless machine, admit it.
Daytrading, is that the style that involves being a slave to the screen, a drone to the action for all eternity? All sounds about right, for the average human that is, people never learn do they? Dackster.