Thanks for the informative responses! I have gravitated rather quickly to, basically, the strategy that Elder suggests. I buy on a 5 min intraday chart when it is examined in the context of larger trends including support/resistance/momentum. I will normally hold to 2-5 days. I guess I am just a little frustrated with the recent choppiness. If we resume an uptrend this afternoon, or tomorrow.. I will be fine. I can't dispute the merits of position trading. I just don't like to give my earnings back.. which obviously happens during each retracement. However, it is certainly less grueling with less commission pain.. too! -Jason
Length of trade is probably the best answer I can give. I use pullback entry sometimes which is the premise of swingtrading. But I am looking on a longer than 2-3 day time frame. Not that I won't take profits if a dramatic move occurs (or losses), but my usual trade is from 2-4 weeks long.
length of expected hold time and different money management scheme. Position traders oftn try to "build positions" and may scale in or scale out rather than moving all at once.
But being a position trader the last 3 years since the bubble likely would have been less lucrative than scalping (i.e. daytrading). But in the end it dependent on the individual and his/her discipline and money management skills IMO. My trading account is allocated for 2/3 da trading and 1/3 position trading with my objective being to make a few buck every day and build up longer term gains with the swing trades, whether they be long or short trades.
....until your stock gaps against you one day and forces you to lose 30% of your stock's value. Losses like these wipe people out of the game.
reg... you know as well as I do that would be extremely poor money management. We shouldn't be in a position where an adverse move will kill us.
You may generally manage more money swing trading. You may generally better exploit inneficiencies day trading. Btw, I usually do very well swing trading in a trading (sideways) market... It reduces a dimension or risk by reducing market-influenced stock movement. I think it is then easier!
The way I look at it, you are not in control when you are swing trading. Everything might look fine on the charts, etc. but all of a sudden you get an analyst downgrade, company pre-announcement of lower earnings expectations, SEC suddenly announcing that the company is under investigation for possible accounting irregularities, you get the idea. Now if you have the financial capability to buy a couple of thousand shares of 5 - 10 stocks spread out over different sectors, then you might be able to insulate yourself from getting hurt too much in a gap situation. Swing trading in this situation would be feasible in my opinion. But if all you have is the ability to purchase 500 shares of 3 - 5 stocks and hope to successfully swing trade, you might be in for a disappointment. First, anytime any of these stocks gap against you will cause you relatively extreme pain; secondly, swing trading 500 shares will not enable you to make a decent living. So even if you are successful at it, doing that kind of size won't put food on the table. And the longer you do it, the more chances of blowing out. My biggest gains have been from swingtrading. But so have my biggest losses. After giving this up, I started daytrading and was also consistently losing money. But my losses were a lot smaller than my swing trading losses and it allowed me to learn from my mistakes while still keeping me in the game. After 2 years of daytrading, I feel I have finally turned the corner and am now able to consistenly be profitable. My point is that if I had continued swing trading, I would have been blown out of the water since I was taking huge losses, losses which my account would ultimately not be able to absorb. To each his own I guess.
Here I have to respectfuly disagree. If you are able to carry 3-5 positions with 500 shares swingtrading, then you are in better shape than many, many other traders. And you can make an excellent living doing so. Of importance I think is the price range of the stocks being traded. I don't think less than $25 dollar stocks should be swing traded because like you said, the reward is just not there. The best and most affordable range I think is the $25-$50 range. Also of importance is the profit target for the move, along with the risk/reward ratio. I agree with you that the more you trade, the more opportunity there is for trader error. That is one of the reasons I like position trading. When I goof up, there is usually plenty of time to assess the situation before I need to make the next decision.