Some 80% of what I have accumulated thru 32 years of trading(34 years of studying) has been through long term trading stocks and commodities. I was lucky, when I started, it was way too expensive to day trade, I studied and by hand drew charts. The biggest difference is I make so much more by the gaps, much less commisions, much bigger reward to risk. Case in point, went short Natural Gas in June 2011, have to rollover on the front months as I usually trade the front two contracts, rode it down for little over 2000 ticks, my risk was 70 ticks on the futures, and I just checked it fiftenn minutes before the close on last trading day of the week. Now am long same market since April 20. I follow 42 futures markets and trade the Dow30 stocks. I got so bored of trading long term, I ventured into day trading, and like everyone in beginning, lost a LOT OF MONEY. Had to put in ten times more time, had to become incredible at computer coding, another amount of years off my life. Had to find patterns in random price noise, had to figure out why I had all sorts of horrible emotions to correct. In eighteen years of day trading profitably, only three years I made more than long term trading. I averaged last week in day trading manually $43.47 per contract after all fees per contract while risking $162.50. Time wise 7.50 hours a day times five = 37.50 hours, long term trading 3.00 hours for the week. Long term charts using weekly data, hands down produce much more wealthy folks than day trading.
The point would be to not drawdown 100%. Drawdowns around 50% in futures, and no more than 35% in stocks through leveraged ETF's is the only way to really gear leverage satisfactorily for risk management purposes. I trade between 3 to 5 to 8:1 depending on price action. I was caught in a downdraft this past week but before when I had always been doing 5 to 1 leverage on trades we found to reduce it and only go for better opportunities is when to gear up. It is important in futures to think in units, not contracts. Every chart I analyze is between 5,000 and 20,000 bars long over no more than 2 years. Maybe timed intervals have less data, but certainly without this much information it's not possible to do confident analysis with any less than 1,000 datapoints and a minimum of 20 trades in a backtest. Be sure to include at least 2 ticks of slippage and commission. The per unit position size is better than assuming that your risk will be the same whether you allocate based on percentage equity position sizing, or percentage equity position sizing per unit. Once we had built a unit backtest up, it was better for scalability because it didn't involve calculating the number of contracts, and that's mainly a futures sizing strategy that I've been the only one to have described as of yet.
Traders day trade because they think its easy and a fast way to make money. I mean, if you can take a few points off the ES contract every day, with compounding, within 30 days you'll be rich! Another excuse is that with daytrading they can avoid overnight risk. Well, with risk comes reward. And you don't risk manage by going to cash overnight, you do it by taking smaller positions.
Day trading is another short term trading style. You typically only taking one trade a day and closing it out when the day is over.
One trade per day ??? One of the prime benefits of Day trading is increased margin and defined risk. i.e Entry / Target / Stop loss -- re-entry if appropriate, in multiple asset class's and instruments... [not to mention position mgmt, adding on confirmation, pressing your winners] Day trading is not just ES or NQ, there are commodities, currencies, equities, options, futures, etc... No need to baby sit a single instrument Scan for trade setup's, entry signal fires, place stop/target, continue scanning for next opportunity, rinse and repeat... It is true that Day Traders typically closes out position's at end of day, however, most futures and currencies are 24 hr markets... If a position is well into the money and no exit signal in sight... no reason to close out completely a winning trade [effectively cutting your winners short], reduce for margin if necessary adjust stop and let it run... One instrument, One trade -- that is NOT day trading... PS: Day trading does not begin @ 9:30 and end @ 16:00, it requires planning and preparation hours before the markets open.... More time should be spent in homework identifying opportunities than actually at the DOM...