Dow: Intra-day or Intra-week?

[fudgestain]

One of the most interesting questions that seems to arise which revolves around if and how to make money from online trading, say, trading an index, but particularly the Dow, is this: are you strictly an intra-day player or do you play with positions you may run for more than a day (a few days, a week even)?

By intra-day trader, I mean you do not carry a position overnight. You prefer to close out and you're square when you stop trading for the day.

There seems to be a lot to do here with personality, risk aversion (or not) and your playing aims and style. I am strictly an intra-day player so I think there is a lot of comment I would like to make. Not now but there have been earlier corporate times for me when I've played for as long as it takes (ie might be a day only, or days, or weeks or even months) .. so I know some of the feelings and sentiment with longer term play.

Do you have a view on what suits you? Do you have a view on what others do - intra-day or longer?

 

[Helenqu]

I agree with what you say but I think it probably depends a lot on your account size too. If you can afford to take potentially large drawdowns then allways-in is a more profitable way to trade. However if like me you trade with little money your risk management rules will probably make it impossible to hold overnight. Hence my sub-hour holds on all my futures trades

 

[rossored]

Personally I am absolutely useless at holding stuff overnight. I'd be up all night watching the chart feed anyway!

I dont mind holding a position for a while if I think it's going to go somewhere, but generally my time frame is pretty small - probably sub-hour, as Helen says.

 

[Andreas]

I have been trading the Hang Seng index for a while, so I can relate very well to fudgestains question.

There are a number of factors that determine the way you trade. Personal style and risk exposure you feel comfortable with is one of them. As mentioned by Helen, account size is definitely another important one.

I started purely day trading, never holding overnight. Did well for a while, and then started to trade in levels. Getting in the market with two positions, or one and adding another one when the market went my way. Then taking profit on one position, and let the other on overnight if I was happy with the strength of the trend. Last year I had a S&P position on for more than 2 months. That was the maximum I ever held an index futures position.

To make a long story short, you will have to decide for yourself what you feel comfortable with, and what your account feels comfortable with.

Good trades to all, regards,

Andreas

 

[Skimbleshanks]

I found that trading overnight is in fact a nice profitable little number, and combined with longer term position trading, it is quite relaxing. However I had to teach myself to be more relaxed about it, so I started small using SBs and Dow September contracts. I am now able to take a 200 point swing against me without batting an eyelid, but this did come with practice.

 

[rglenn]

I usually carry my trades over to a maximum of 3days.

A bit longer sometimes as I must at least finish with a break even scenario if things don't go my way.

Helen and Skim are right though regarding enough money in your account and being relaxed over a longer period.

 

[frugi]

Good points made by all.

Two common approaches trading, say, the FTSE:

Intraday scalping using 1 min / 5 min / 15 min charts with futures. Equivalent of £10 a point. Tight stops of a few points. Multiple trades per day. Lots of screenwatching, swift decision-making and concentration, rewarded by being able to sleep at night with a definite level of profit/loss for the day.

Swing trading with SB using 60 min/ daily charts. £2 a point. Loose stops. Anything from one trade a day to one every two weeks. Lots of time to study charts, less time spent screen-watching, more relaxed approach, but you take it home with you at night and may be inclined to worret about your position.

With the second approach you will have to be able to stomach bigger swings, and one's 'salary" will be more irregular (as there may be a bunch of losing trades over a period of days, while the market congests, followed by one or two whizzing trends that net the profit for the month), while with the first you know your profit (or loss!) is safe at the end of each day but you may miss some longer trends and spend "unecessary" time in front of your PC. The first approach is probably more similar to a regular job in that the hours are fixed, you're finished at the end of the day and you're paid regularly. However should you wish to take the day off then you won't be paid!

I believe that with correct staking, money & risk management etc. with both approaches one can, on average, expect the same level of drawdowns and profits, though I may be wrong about this.

Which approach one chooses is probably down to personality. I prefer a combination of the two, but often feel that the time spent in front of the PC to eke out a few points with the first approach could be construed as wasting time when there's a long hourly or daily trend that could be ridden for, well, longer!

I do not mean to demean intraday trading for a second as it is undoubtedly exciting, rewarding, incredibly demanding work that many on here clearly thrive on, as indeed I have on occasion, but I often find the swing approach more lucrative per hour spent "at work", especially as it frees up time to potter, paint, do chores and write terrible music which sort of adds value in a non monetary way!

I use a very simple, almost purely mechanical 5/9/20 MA system for FTSE swings which probably makes holding the positions for a number of days easier than if I applied the more subjective approach I'd use for intraday stuff.

 

[Andreas]

I use a very simple, almost purely mechanical 5/9/20 MA system for FTSE swings which probably makes holding the positions for a number of days easier than if I applied the more subjective approach I'd use for intraday stuff.

Frugi,

Interesting you mention your MA system. I used something similar for trading the Hang Seng (the longer swings), only I used 2/9/30 EMA, assisted by 10 RSI.

 

[fudgestain]

Definitely lots of interesting stuff coming up .. you don't have to reveal any of your trading secrets but this is a dimension which can help everyone: whether or not you will trade beyond one day.

Rossored, you make a very honest point that you don't want to be pre-occupied overnight with carrying a position. Two points: risk profile is very much lower by not carrying anything overnight or longer; and secondly it can be very wise to give yourself a break so you are fresh for the next days trading. You know what I mean .. a complete mind shift: spend some time copulating with your girlfriend or moosey on down to the local to swallow down a couple or so pints of larger. Attend to the leisure zone of the brain!

Or even do some quiet homework on charts or figures for the next day without having to fret over a position you might otherwise be carrying.

 

[fudgestain]

Rglenn, I notice that you usually put a 3 day maximum on your positions. Does that mean that you are most often trading intra-day only?

My own preference currently is intra-day trading only, because the Dow offers abundant points each day for my purposes. I don't have the time or need to run overnight positions - plus it keeps my risk profile very low.

 

[rglenn]

Fudgestain

You have a great method there if you can clean up on the markets intraday.

Most of my profitable trades fall on the 2nd day.

I would say about 10% of my winning trades are intraday.

Last time I tried to trade intraday I got my arse whipped!

Every respect to those that can do it - one day maybe someone will enlighten me.

 

[Bigbusiness]

I am mainly intra-day but I am moving towards overnight using small stakes with a spread bet, like Skimb mentioned. But it is too easy with small stakes and I find it much harder with a larger stake. With a small stake I can forget about it but with a larger stake it is constantly on my mind. So I hope to slowly increase my account and slowly increase my stake.

Must go now as I have a long overnight on the Dow and I must check it

 

[oatman]

I'm trading intra day on the Dow. I can't wait for it to get back to "normal". Y'day's range 60 points

 

[mma]

* . I am now able to take a 200 point swing against me without batting an eyelid, but this did come with practice. *


wow ! strong stomach , good for you

 

[frugi]

My own preference currently is intra-day trading only, because the Dow offers abundant points each day for my purposes. I don't have the time or need to run overnight positions - plus it keeps my risk profile very low.

Fudgestain, surely the very nature of intraday trading means it demands more of one's time in comparison to to holding multi-day swing positions (as one need only check a swing trade two or three times a day)?

Also I do not understand why overnights are necessarily more risky as one can reduce risk with smaller stakes as bigbusiness says.

The FTSE and Dow cash are quoted 24 hours by the SBs so there's little danger of a gap ploughing through a stop loss, and none if a controlled risk bet is used.

Sorry I don't mean to sound confrontational - just curious!

 

[fudgestain]

Hi Frugi .. like you little puppy dog icon.

To your point, I use the first half hour and then the next one hour of the Dow - total 1 and half hours. So, no, I'm not glued to the screen for the full trot - 6 and half hours. This is a feast for as long or as short as you want.

But I'm not against longer term play, no way .. as said before I have done that in what for me were earlier corporate days.

Also both you and others on this thread deserve utmost respect for your own successful play.

As well I don't want to overdo the point about risk aversion; obviously though if you are not running positions overnight you are not at risk .. on a timescale you are running a shorter trading risk intra-day. But as you say you can still limit longer term risks with stops .. but stops do make a lot of traders unhappy.

 

[rglenn]

fudgestain

That sounds very good to me 1 and a half hours work a day.

Now that's the type of Job I'am looking for.

 

[fudgestain]

Bryce Gilmore, seasoned trader and mentioned here on another thread, says this: "Over the years my trading time frame has reduced itself to intra-day – now I would never dream of holding a position over night; although I do not say you should follow my practice, I just find it makes my life so much easier not having an open position, when I can’t be there to watch what is going on."

I would agree with him, but that doesn't in the slightest invalidate the success of those operating using a continuum of more than one day. Its quite clear that accomplished traders have contributed to this thread .. and that helps anyone who is not against learning more.

I have to say that I am not familiar with Bryce's central teaching Wave Trader but it sounds different to my methodology.

Rglenn on your point, I have to admit to more than just 1 and half hours work in front of the screen. I allow at least another hour for preparation before starting .. running off hard copies of updated data, briefing myself, etc - 'checking my instruments,' as I call it, just as pilot does thoroughly before take-off.

 

[2468steve]

Hi,
another way of looking at overnight trading is one of opportunity,although of course it must suit your style and comfort.
if the success of trading is to do the opposite to the majority on the basis of 90% of traders lose,one could argue that if the majority don't like the risk of holding overnight/weekend,therein lies an edge or opportunity.
I remember last year on holding a Dax short overnight,which was in profit so I felt comfortable holding.The following morning Dax had lost 200 pts on opening after Worldcom Chapter 11........painful if long of course!!
In fact if memory serves me,Dow opened nearly 400ish down and actually ended session +ve.....

cheers