I am a swing trader trapped inside the emotional body of a scared scalper. Transitioning has not been easy.
Actually I don't know what I am doing, so I tried everything and anything. The reality is in this business, 6 month is way too short to prove anything. Call me back in 2035 and ask me how and which works.
Because the potential is there to make mucho dinero AND more dinero can be made by selling every decline and buying every rally. On single bars and on groups of bars VS buying and holding through every decline and every rally. In addition the effect of compounding profits alread made over and over again and again has the potential to result in much mas dinero being made over a unit of time. So....while you are hold for a big move over several days or weeks based on your EW modality I as a scalper have been jumping in and out over and over and compounding money. While you were holding your breath and hoping the big move pans out I was playing nickel and dime with the market and compounding those nickel and dimes! Do the math. It is there. At least the potential is there if a scalper is REALLY good at discretionary PA trading. It can be likened to: Would you rather take a one-time payment of $1 million or $0.01 on day 1, $0.02 on day 2, $0.04 on day 3 and so on for 1 month? The answer to the question, “Would you prefer $1 million or the proceeds from a penny doubling every day for a month?” seems obvious. Most will select the $1 million. After all, a penny is worth nearly nothing to day and after one week, you only have $0.64. The million dollars must be the right answer. WRONG ANSWER. At the end of 30 days, if you double a penny every day, you will have $5,368,709.12. Why do most people choose $1 million over a penny doubled for 30 days? Because they DON'T do the math. Of course the above is not quite equal with trading because trading is taking place in an uncertain market but the above has certainty intrinsic in the plot. But it does serve to show how compounding can work over a unit if time be that 5 minutes 60 minutes, daily, weekly, or monthly. Or any other unit of time. The examples below that J.M. Hurst elucidates are longer term but the principle remains the same if 5m, 60m, daily, weekly, monthly, or yearly time frames. Bottom line: buying (long) every rally taking profits and selling (shorting) every decline and covering has the absolute mathematical potential to nuke any buy and hold strategy. But you gotta be good at it! And have a high win rate! And have techniques to deal with paper losses until they turn profitable. This concept of buy every rally and sell every decline OVER A UNIT IF TIME was brought to my attention years ago by J.M. Hurst in his book: The Profit of Stock Market Transaction Timing. I have never ever forgotten that concept. Hence my scalping strategies and techniques (many of them) are guided in the background by that single concept. I am a scalper and I like compounding money in the day to day and intra-session moves as opposed to longer term investing and hoping it pans out. Plus I sleep at night free from concerns and worries of a position I might have on because I don't have any on! I am flat at the end of the session no matter how many times I scalp in the session. Below in my next post are some extracts out of his book I found on the internet. I have a hard copy of his book that I bought years ago. Look over the excerpts and think about them.
Your defintion of a swing trade is really a long term investment when it goes wrong. You can never lever with that approach and as volpri pointed out, you arent fully grasping the power of compounding
I am already in trouble before he showed up on this thread, against everyone else, defending the lonely @volpri, keeping him company. You told me to quit fooling around with day trading instead, I doubled down jumped in with both feet. I failed you Master taowave.
I know the feeling. The dream is scalp entries with occasional swing holds. Now where did I put those lottery tickets?