Here's something to ponder: if you got in toward the beginning of a swing, and out around the end of it, what you would find is that you would average 2-3 points per day in the ES. Go back for instance to the move that began in late November from around 1040. Let's say you bought there, and sold near the top in late January for 1140. A successful trade by anyone's measure....100 points. You would have had to sit with this position for 44 trade days. This works out to 2.27 points per day. Let's say you bought at 1100 on March 25 and sold today at 1140. Another nice trade....40 points. 3.07 points per day for a holding period of 13 trade days. Now here's the question: Could you make 2-3 points per day trading the ES in and out? If you could, this equals most of the longer term position trades you might have made had you had very good timing and the patience to allow them to make their move. Trading in and out take more time, and certainly much higher commissions and/or slippage....a factor that you wanted to ignore but is foolish to ignore because they are a major factor. My personal opinion is that day trading almost always "sounds" better theoretically. But in my opinion the traders that make the most money are the guys who hold positions for a longer period of time. OldTrader
Your posts are always so good. Thank you for your contribution in this persons thread. Please keep sharing your wisdom. Now don't let this go to your head, get back to work! Michael B.
I am not sure if I understood correctly but from what you say may I infer that if you had only a small capital to trade, say something below 100,000, then you would commit all of it to day trading since you can make 50 times more with the same amount of money in comparison to position trading? Also, would you say that you are a worse position trader than day trader or rather that day trading can yield higher returns with the same risks (and an appropriate capital)?
No, I think what he is saying is that he is balanced or diversified. There are less than 8 hours to a trading day for most, and one can do only so much. Michael B. P.S. If he just speculated, he could be gambling. Instead he looks at the WHOLE picture as a return and a velocity of annual return. P.S.S. Excuse me for putting my nose in this. Do I have this right? Jack?
There is ONE side of the equation that is not being considered here: You will have to be correct everyday without fail at 2 pts per day to equal the one trade triggered on the swing position! This is not possible by any means. You will lose more with increase frequency of trading. The more you trade or overtrade the greater the risk of ruin. the less the frequency the higher degree of success when if you are correct in your analysis and execution of your trade signals. p.s. just because you hold onto a position over an extended periond of time doesn't mean that you will make more money. You can lose 64 out of 100 trades and still come out on top. or you can lose 6 out of 100 and still be in the red. Money Management & Trade Management along with a Robust System is key.
Now, I see more closely that you are getting responses from people that trade one market two ways. Like the ES or NQ. My answer was dealng in a way that is parallel to Gary Smith's recommendations. That is, capital is taken out of index profits and applied in streams of short term equities applications. The viewpoint of doing intraday trading and also short term investing is a practical pragmatic approach for two types of markets, each of which have their specific efficiencies to deliver capital to me. I work appropriately to extract efficiently what is being presented to me by different kinds of markets each having their specific efficiencies to produce opportunities. Two pairs of efficiencies. People who trade the indexes us multiple contracts. I trade at market based upon keeping on the right side of the market at all times. Sometimes I am sidelined due to no activity. By saying I get to a place where it is possible to have partial fills on market orders you can see my capital limitation. I cannot put more into the effort because I would have to change my modus of operation to a less efficient one. As markets get bigger, I will do more. I am capital limited. For equities, I limit my money streams to a maximum numbers of shares because of two limitations. Timely actions are limited by how much I impact the market personally. I do a series of market trades to enter or exit. As the money velocity of a holding declines I exit. I enter as money velocity increases and passes the stock I am exiting. This is simple first derivative stuff. And it is even more crude. For any price I only hold a maximum number of shares that directly relate to the stocks daily volume. There is a linit that I thought up for how this works. I trade high beta stocks simply because they make a lot of money for me. They are efficient in providing capital to me. I am efficient in taking capital out. You can see I enter late and leave early. Equally important is picking high beta stocks to enter and hold. I strive to not impact the market as I trade so it takes me many partial fills to not affect the market. Now you can see four different efficiencies that basically determine the ratio that I gave you. My views are basically oriented as a person's who is proactive and creative. The REX person posts from a viepoint that is not proactive and creative. I am an amateur and I have had the opportunity to look far and wide to see where to operate with a lot of considerations. Time is the most important consideration. I acheive the highet money velocity that I can, all based upon my skills as an individual to participate in the market place. I divide the 7 hours of the day between indexes and equities. Equal ammounts of capital applied to two different markets turn out to provide a very high contrast in profit taking efficiency. 50:1. If I compare my best day in each, the cash on cash ratio is 1:100.
See below: http://www.elitetrader.com/vb/showthread.php?s=&threadid=30369&perpage=6&pagenumber=9 NUFF SAID. T-REX
Nice work I looked at the LEH chart yesterday when you entered the position (almost at the open) - it really takes conviction to enter at such point, so the profit was well-deserved. Cheers !