Daytrading vs position trading

[Dispassionate]

Which is the more profitable?

 

[coolTrader]

It depends on what instrument you are trading though

 

[Dispassionate]

It depends on what instrument you are trading though

Lets say stocks

 

[Stockjunkie]

Profit inntrading terms need to be defined as Reward : Risk , anything less than that may be considered outright gambling and not trading.

We must also narrow down what we mean by DT , as this can mean a number of different techniques.
What we must define it as , is mini PT's , thus a DT takes positions but does not hold them for as much as a PT due to the shorter time length , the US DT rooms have been mentioned as a good example.


As such , from my experience PT is far more profitable .

 

[darktone]

Which is the more profitable?

theres no answer to that non - sense question

 

[Bigbusiness]

Profit inntrading terms need to be defined as Reward : Risk , anything less than that may be considered outright gambling and not trading.

We must also narrow down what we mean by DT , as this can mean a number of different techniques.
What we must define it as , is mini PT's , thus a DT takes positions but does not hold them for as much as a PT due to the shorter time length , the US DT rooms have been mentioned as a good example.


As such , from my experience PT is far more profitable .

Over the past two days the DJIA has hardly moved on a daily chart but there have been plenty of opportunities to DT. So I don't see PT as having an advantage, as DT has the potential to make a lot more points. I also find the methods I use for DT work much better than any method I have seen for PT. Not having to hold overnight lets me take each day as it comes and I don't have to waste time stuck in a bad trade.

 

[Stockjunkie]

Over the past two days the DJIA has hardly moved on a daily chart but there have been plenty of opportunities to DT. So I don't see PT as having an advantage, as DT has the potential to make a lot more points. I also find the methods I use for DT work much better than any method I have seen for PT. Not having to hold overnight lets me take each day as it comes and I don't have to waste time stuck in a bad trade.

Come on , you can't judge anything on 2 days . I see no evidence that DT " can make more points ".

Over the last 2 months , the short term swings have been anywhere up to over 300 pts , of which there have been many . Anyone can see that .

Your problem is that your method brings a low R:R , hence it fails on the longer term .

I know what you are going to say , and I know what I'm going to say in return.

http://finance.yahoo.com/q/bc?s=^DJI&t=3m&l=on&z=m&q=b&c=

 

[Bigbusiness]

I know what you are going to say , and I know what I'm going to say in return.

http://finance.yahoo.com/q/bc?s=^DJI&t=3m&l=on&z=m&q=b&c=

Banana, banana, frisby forty three. Was that what you thought I was going to say

We could argue for a while and then decide I was right but I have better things to do. darktone was right.

theres no answer to that non - sense question

 

[Directional]

Your problem is that your method brings a low R:R , hence it fails on the longer term .

I know what you are going to say , and I know what I'm going to say in return.

Your problem stockjunkie, is that you make sweeping statements that inherently undermine the point you are trying to make.

There is the potential for DT to radically outperform PT - if correctly executed, Daytrading has the ability to capture profits from the intraday swings and daily range of the market.

Position trading generally only captures the difference between the open and the close. So although a position trade will have a greater avg profit per trade than daytrading, daytrading can capture the range from each daily bar - more trades but smaller profits balanced with correspondingly smaller losses.

The sum of capturing say 20-30% of the daily range of each daily bar from intraday trading will easily outperform capturing 20-30% of a bigger move made over multiple days from position trading.

That doesnt translate into meaning that every trader can do either, or any type of trading successfully however. It also doesnt mean the either cannot be done. I know traders who intraday trade very successfully with highly enviable risk/reward ratios.

 

[Directional]

Banana, banana, frisby forty three. Was that what you thought I was going to say

LOL

If he did know you were going to say that, I'm very interested in knowing what he'd already got in mind to say in reply!?

 

[turtle trader]

The question is irrelevant, the most profitable method is the one that suits you & that you've mastered.

 

[peto]

43..Isn't that the answer to life, the universe, and everything?

 

[tomorton]

I partly agree with turtle trader - if its profitable for YOU, you should keep doing it. I don't day trade because it wasn't profitable for me.

On the other hand, anecdotal evidence suggests it isn't profitable for the majority either, which is not to say that the minority cannot make pots of money, just that the majority of newcomers should not expect to be profitable in DT.

 

[Bigbusiness]

43..Isn't that the answer to life, the universe, and everything?

No, that was 42. The same as the number of levels in the journey from the basement thread (not that I read all of it). I wonder if Socrates is a Duglas Adams fan? 43 is the answer to life, the universe, and everything +1. A far superior number

 

[fxmarkets]

Level 42, now your talking....... Livin it up, Livin it up....

hmm what is more profitable... I'd have to go with trying both and seeing what clicks for you ... I used to be busy short term, its good for timing exact entries, but was being nagged with hang on a minute thats a fraction of the typical ATR.... this was conflicting in me. So I thought why not focus on the exact timing but on a bigger timeframe, it involves hours of waiting which some may find boring? but it didn't take long to get used to it..... not for me anyway. it results in less trading in the sense of assuming risk, yet the risk is minimal and potential gains increased depending on what the market decides to do of course.

I dont have a problem of waiting 6/8 hours couple of times in a 24 hr session.. this might be too difficult for some.

hmm but thinking about your question, I still hold less than intra 24 hours, but it seems like a lonnnggg time compared to 10/30 mins. "Intra Session position trading " perhaps best describes it. but I do just focus on 1 market.

 

[Stockjunkie]

Your problem stockjunkie, is that you make sweeping statements that inherently undermine the point you are trying to make.

You need to think about this. Trading is a game where sweeping statements DO apply . only 2 things can happen in trading - you win or you lose . very sweeping.

There is the potential for DT to radically outperform PT - if correctly executed, Daytrading has the ability to capture profits from the intraday swings and daily range of the market.

Non sensical really , there is a potential for anything to outperform anything but then again one needs to prove it and that seems to be " offensive " for a lot of people here .

And PT can capture profits from the intraday swings and daily range of the market , and more .

Position trading generally only captures the difference between the open and the close. So although a position trade will have a greater avg profit per trade than daytrading, daytrading can capture the range from each daily bar - more trades but smaller profits balanced with correspondingly smaller losses.

You need to know what PT is before you make comments on it . PT can capture any length of move whether it's 15 mins or 5 days , it is still a position .

The DT's love to think they can outguess the market on every 5 min barchart or whatever , but that is just a theory . In reality the best they can do is slightly better than breakeven and the worst is to lose their pants . Very poor return if you ask me.

The sum of capturing say 20-30% of the daily range of each daily bar from intraday trading will easily outperform capturing 20-30% of a bigger move made over multiple days from position trading.

If your version of DT is taking only 20% of every barchart then you're not going to get very much for your money .

20-30% of a bigger move ?? HA , try 75% , and who's to say you can't do anything in between . I wouldn't even spit on 30% .

That doesnt translate into meaning that every trader can do either, or any type of trading successfully however. It also doesnt mean the either cannot be done. I know traders who intraday trade very successfully with highly enviable risk/reward ratios.

Maybe maybe not but I'm sorry , I don't accept anything in this game that is not empirically back up . intraday trading can mean a variety of things .

I need to see the balance sheet before I accept it .

 

[Dispassionate]

Let me see if I can clarify the problem a bit - The reason I asked the question is because ultimately if one is a daytrader, the time that you spend in front of your screen all day long has to be justified;

Say position trader has 100k capital
Say daytrader has 100k capital too.

If both were equal in intelligence and ability, who would get the better return on capital at the end of the year?

Bit of a hard question I know, but the problem of the value of time is a real one.

 

[Stockjunkie]

It depends what kind of DT we are talking about , but the odds favour the PT at year end .

 

[fxmarkets]

if they both have a method which shows similar r/r then trade frequency will tell you . as its simply more frequent. trade expectancy, ratio per trade * frequency of trades.. how many times will you flip over 5/10 milion ?

What do you want to do with your time dispassionate ? who do you have to justify time to ? do you need to work or slog it 50 hours a week to earn a respectable wage? are you o.k with slogging it for 80 hours and not having anything to show for it ? In a way time and trading and rewards /loss gained in a moment of time can be way out of wack with societies normalised time = money .

 

[Splitlink]

Let me see if I can clarify the problem a bit - The reason I asked the question is because ultimately if one is a daytrader, the time that you spend in front of your screen all day long has to be justified;

Say position trader has 100k capital
Say daytrader has 100k capital too.

If both were equal in intelligence and ability, who would get the better return on capital at the end of the year?

Bit of a hard question I know, but the problem of the value of time is a real one.

I think that probably time is on the traders side. I have done both so, although I may be dumb it can be said that the same amount of intelligence has been applied to both ways! I am a dead loss at day trading and much better at swing and position trading BUT the shares in my portfolio seem to keep growing all by themselves. They rarely get sold, you see, except for minor adjustments to the portfolio during the year. Day traders are in and out of trades constantly, swing and position traders less so. but they are still very active. I always try to get finished by lunchtime, because I have other things to do, so daytrading is not for me. I've just closed a trade with DGE that I opened on the 15th. Who makes the biggest return on his capital? Very difficult to say.

Split