Work with one market at a time and use data on daily and weekly charts back for at least 2 years. Develop a comfortable stop to be placed based upon this research. I would suggest that you begin by placing your stop at a predetermined distance above the high 2 days ago or below the low 2 days ago based upon your backtesting research. No matter what system you use for entry, this is a great place to start in your backtesting. Do not trade until you have the plan in place.
If a contract is worth a total of 20,000, then 1 to1 would mean having 20,000 committed to trading one contract.
Buy1sell2, Thank you for sharing this thread. I am also a position trader and use similar indicators as you do. In your opinion or experience, how many positions do you believe is healthy for a single trader to have open at any given time? What percentage of your trades are profitable? 50/50? Thanks and good luck ! p.s. I also have a couple of questions regarding psychology but not sure if you would like to discuss these here.
exact the same as what I found. the only positive side of day trading is large intraday margin, interest free. i don't think many day traders can live more than 60 years. they kill too many brain cells, not couting the stress on heart, hands, eyes, back. i think the best combo is to team a 20 year old day trader (who also good at video games) and use the profit from intra day for position trading from an educated none day trader.
The majority of hedge funds underperform the S&P. Given this fact, I find it hard to believe that there is this army of retail traders doing really well at "position trading". Are we expected to believe that Joe Schmoe has any real insight into the markets such that he can take money at will from major trends in oil, gold, stocks etc? This thread makes it sound like all you have to do is bring up a long term chart, stick a moving average on it and then you coin money. Sorry but it doesn't work that way. Position trading is damn hard, and IMO edges are tougher to exploit than short-term trading, because the frequency is far less. It takes many years just to see 1 or 2 market cycles and build up the experience necessary to identify long-term trends and (more importantly) hold on for their full duration, whilst avoiding getting faked out or cleaned out during the significant corrections that occur. I've posted several times on long-term trends that subsequently played out, in assets like Brazilian stocks, the Nikkei, gold, silver, oil, copper etc. Having the view is one thing, but trading it on size and holding on during a hefty correction (or trying to exit then get back in before a move to new highs) is a whole different ball game. And at the time, many people had opposing views to mine i.e. were on totally the wrong side of the market. If you can have the correct view with strong conviction, and find it tough to take out more than say 30% of the move on genuine size, what chance to the vast majority who were picking tops in oil all the way up, or going long gold just before the recent selloff? I would be surprised if more than 2 or 3 people on thoe whole of this site have been long oil for the last $40, or long gold since $350, long Japan from 10,000 etc. This idea that position trading is easy is just folly.
long gold gold on the break above $343 (i believe that was it), but out on 1/2 on the parabolic rise. did not add back on the move back to 540-ish... ill buy a successful retest - $480-$485 is possible. so there is ONE of your 2-3 on this site. holding gold has not been easy.
This is based on a debatable assumption, which is that a higher relative range provides more potential to make money. What if instead, it just means there is more noise? Also, the moves over the short-term are far less as a % of asset value, than over the long-term. How many stock indices go up 100% in 3 weeks or 3 months? How many stock markets go up 7 fold in the short or medium term? The lower frequency of the long-term is compensated for by less noise, and far bigger price moves.
I agree. On short-term timeframes you don't have time to think. For long-term timeframes, you have all day.
I don't think this is necessarily true. There are position traders who don't hold through big drawdowns. I make it my goal to avoid being in a market if I think a decent correction is going to occur. Just because you think a market is going to double, doesn't mean you are obliged to sit through a 20% correction. Of course there are costs to this, in that you may miss a move. That's life. I'd rather make less and risk less.
"Position traders have to weather through possibly long periods of drawdown, and this to me, is one of its very few disadvantages." I would like to know if any of you that currently position trade have switched over to swing or day trading recently. I would like to hold longer... more money..less expenses , but my attitude of the market is rather negative right now. I think the day traders are actually coming out ahead because they're not holding over night and not exposed to all the crap thats going on. They just play the stock for what its worth in the short term which is probably the best thing to do sense the market is doing great on day, then down three days in a row the next. - nathan