I can’t eliminate it but I’m less exposed to market risk because I hardly keep anything overnight for day trading. I’m always sitting at the computer so I’m out as soon as something move against me. For swing trading, in this Market condition, My holding time frame is only 3-4 days and my size is much smaller than normal due the increase in volatility. For longer term swing trades like chef is talking about, most likely u have to use the weekly chart and the monthLy chart as the bigger picture. Your holding time frame is probably months and possibly years. I do not feel comfortable holding anything for that long unless it’s an investment in a blue chip company that’s undervalued. If u are talking about other things outside of trading, I’m diversifying, not putting too much of my networth into one investment, and actively looking for asset classes that’s not correlated.
I was talking about the stuff outside your trading accounts. Index funds, growth funds etc. If they are buy and hold you have little risk control. My long term swing trades are short term trades that kept moving in my direction. No reason to get out. I day traded for a few years and found that swing trading gave me about the same returns with a lot less stress. I only spend a few minutes each day on research and maybe the first 1/2 hour of the day trading. FWIW I went mainly to cash in March as the majority of my long term holds broke their long term. Won't be a good year tax wise as I had held some stuff since 2009. I suppose whining about having to pay tax won't get a lot of sympathy
For stuff like index funds and growth fund, I’m not too concern with market risks. My time horizon is 10-30 years so I don’t really care what the market does short term. Also, I’m in those investments for compounding return so there’s no way around buying and holding. I think it can be a never ending argument between day trading and swing trading. I think it comes down to your personal preference. Right now, i prefer day trading over swing trading. As I get older, And want to work less, I probably would lean toward swing trading too. That’s pretty cool u are successful swing trading with less than 1 hour a day. when I read your last paragraph I said “wow” but I also said “ouch”. Wow for holding since 2009. U made a fortune!!! Ouch for going to all cash in March. But paying more taxes due to making more is never a bad thing in my book. . Good job man!! i messed up big time On my investment during the crash. I’ve been waiting for a crash like this for years. When the market came crashing down in late February I allocated a good amount of money to investing and was ready to put it to work. I actually mark down to start buying on the day of the March low in spy but on the day it happened I was looking at nasdaq composite and missed it so I didn’t buy anything. The next day the market shot up 8-10 percent. I ended up buying only 1/6 of what I allocated to my investments because I kept telling myself there will be a pullback be patient. I learned a huge lesson and I’m not going to make the same mistake again.
There has to be a way. I use a simple MA cross. Probably wouldn't have worked this spring but has done alright in the past. I'm still pretty heavy to cash. I missed the whole recovery, although when I look at what I sold I'm still ahead of the game. A lot of what I got out of hasn't recovered. I'm still waiting for the other shoe to drop. Anything I buy now is on a tight leash.
i did something similar and used a simple ma and my own version of the macd to test my results on Spx going back 50-60 years to see how I will perform if I manage it myself. I could hedge with my trading account if I see reversals in Spx but I don’t have much right now in these accounts so I rather use the funds to trade and get a better return. Maybe 5-6 years from now I’ll do that. i hear u. Valuation is through the roof now. There’s a huge disconnect between the stock market and the economy but I’m not fighting the fed for the time being. I’m trying to enjoy this volatility and trade while it last.
To @10_bagger & @deaddog, I have two general chunks in my brokerage account, an ~ 80% chunk that are simply buy and hold and consists of ~ 10 name positions. I have them for years if not decades. An ~ 20% chunk I use to trade. Because of the 80/20, I kept adding to my buy and hold year after year. These days I exclusively swing options with my 20%. Money to spend came out of the 20% & dividends. I learned a hard lesson by trying to time the market with my long terms back in the 1990s and 2000s. I would be much better off leaving them alone all those years. My trading objective is very modest: To juice my accounts, in total, to outperform SPY every year and in CAGR by a few points. Best wishes to both of you.
Do you outperform your Long term holdings with your trading component? If you are doing that then why are you Buy and Holding, and if not why are you trading?
There's a big problem here. The markets are dynamic, never static. What this means, what happened once need not happen again. Hindsight is a wonderful thing. 'Growth stocks' are stocks which are basically newcomers on the scene and their price charts often go through the roof. After many years they no longer are growth stocks and languish, held often by old timers for dividends. (Don't start me on dividends, imo a total waste of time but that's another long story). Buy and hold strategies are a waste of time and you will likely get burnt. We've had many super years of a bull market, it won't last forever, one day the piper must be paid. That will be the day there will be much weeping and gnashing of teeth for the lazy buy and hold investor.