Buy & hold v. intraday trading

[Mr. Charts]

I intraday trade US shares for a living, so these comments are specific to that market.

There are many comments about using buy and hold as a benchmark - why?
If the market has been steadily rising then that standard is reasonable. However a lot of the time markets range or fall so any trading strategy which outperforms an index appears outstanding but might only generate minimum profits or even losses.
An intraday trading approach takes profits before the end of the day and there is no exposure to overnight news, events etc so money and risk management are much easier.
In a bull or bear market the profits are obviously much easier to make intraday.
My point is that using buy and hold as a benchmark for trading success is inadequate and ROCE is a far superior and consistently analysable benchmark for trading success.

 

[darrenf]

I agree. IMO the same goes for any type of "trading", intraday or otherwise. I trade mainly forex so a comparison to a stock index would be even more inappropriate.

When you say ROCE (presumably this is return on capital employed), do you mean % return of the amount in your trading account or % return on the amount risked (this could of course be a multiple of the first method with the use of margin etc)

I personally use the first definition as my objective is to steadily grow my starting capital on a month by month basis. I am aiming to grow my capital by 6%+ per month on average on a compound basis.

I trade part time, position trading fx. I often wonder if my objectives are too high/ low but from previous posts, I think this is a very personal thing and also depends on individual risk profile, trading method etc. However, I would be interested to hear other peoples objectives etc if anyone is willing to share.

 

[BBB]

Why be a day trader or a position trader? Why not just be more flexible in your approach to what the market is telling you? If a trader has small pockets and so is forced to trade a smaller (intra day) time frame, then fine. BUT if a trade is entered in the morning session, progresses well and ends up closing strongly, then why not carry overnight if the next time frame up shows there to be an established trend. That way, you get to take even more bunce!! Whats wrong with turning a day trade into a position trade?

Does the phrase 'Let your profits run' ring any bells??

Flexibility is key. Rigidity will imply that your supposed rules and discipline ensure you never get to take home that money that is rightly yours!!

 

[BBB]

And please dont give me any of this profit target rubbish! A good trader should be able to tell when the trend is up and when it is about to reverse. A good trader takes all that the market gives him and walks away, he doesn't leave half the move on the table.