Trend Trading vs Non directional and ballance

Discussion in 'Trading' started by Loki, Feb 25, 2009.

  1. Loki


    I have been trading for 3 years, mostly doing strategic options selling. Semi-directional and non directional ( Naked puts and diagonal spreads ).

    I know enough about options to keep selling them for the next 10 years. Last year my account was up more than 30% so please don't tell me that all it takes is one time to blow up. Risk management is critical does not matter what you do.

    Lately I started with some trend trading today I bought 2000 shares of SPY and at the end of the day I am down $ 2000.

    I can hold some heat, but it annoys me. I looked at Michael Covel book, I know he has a case for trend trading the reurns of the best trend traders speaks volume, it works. seems to me really complex to get good, while options selling seem much easier. All I aim for is between 1.5% to 3 % each month. It is really boring almost as watching paint dry but it works.

    I looked at the performance of some trend followers and although annualized can get as high as 20% for the last 10 - 15 years, (pretty awesome), but there are also years where they can be down 8% - 10 % or more.

    It would bother me to be 8% down for the end of the year, with the kid of money I manage 20% is plenty to make a great living.

    Here is my question: do you think that one style is better than the other or do you believe that it is more about the trader style and both approaches work ?

    And ulimately, would you try to do both, and spend A LOT OF TIME to learn them, or would you get as good as you can at one thing only ? ( I know a few things about analysis paralysis )

    I love trading, it is all I do, but to me trading and the money made is really about finding a better ballance in our life. The money per se doesn't mean much and besides I don't think, as humans we are supposed to spend so much tme in front of a screen when outside there is a sunny day and we can also do other things to do with the time we have.

    Isn't this really why we trade for ? To maximize our most precious commodity, time.
  2. Loki


    I know better than to expect details, I just asked for opinions.

    About your comment on me being a bad trader I made between 20% and 60% in the last 3 years. I have 3 year experience.

    And about making 100% in a year good luck to you. It takes a lot of money to make little money.

    Thank You for your very sharp reply.
  3. Loki


    It is easy to say but all the motivation you have won't be enough to make 100% per year. Personally I do not believe you or anyone can make that kind of return without taking a really big risk, a risk I would never dream to take in the next 100 years.

    You don't need to prove anything, it is not about you or me, it is about the fact that 100% per year is not realistic.
  4. tradersboredom

    tradersboredom Guest

    100% is more than realistic if your 'TRADING' and your account is only less than $100,000 cash for trading purposes.

    man if you can't even make 100% you should quit and get a job instead.

  5. Loki


    I don't need to work. All I do is trade full time ( not daytrader)

    Some people can make 100% in a year, but the question is if they can make it often. If I make 100% one year and give it back the next makes no difference does it ?

    To me is more about survival and consistency BEFORE high profits.

    I know that by selling options I can NOT make 100% a year that's why I asked opinions on whatever trend trading could be better than other strategies.

    Anyways I should have known better before asking a serious question. This place is more populated with gamblers than traders.

    Have a great time making your 100% this year, just like you did in 2008.
  6. Some things to consider about trend trading:

    The market only trends about 30% of the time;

    You make 90% of your money on 10% of your trades

    You don’t get in at the bottom or out at the top.

    Watching paint dry is exciting.

    Your call.
  7. Loki


    Finally a normal reply, thank you !
  8. veggen


    What timeframe "trend" are you thinking off?

    If you zoom in enough on the timeframe, you will allways find a trend. What looks like chop-sui in a 10k vol chart, might trend nicely up and down in a 500 vol chart. What might be counter-trend trading in a daily chart, might be trend traiding in a 1 min chart.
  9. Loki


    The shorter the time frame is the harder it is to make money.

    Ideal would be a few days or a month, but that is still tough, so I am thinking that it could be possible to learn about long term trends. 7-9 months. That is where the big money is made. To make money it takes time. However it is quite complex to switch from a discretionary approach to a systematic approach.