Why is day trading so difficult?

[Davidee]

Is it just me, or is day trading so much harder than trading using medium to long-term trading systems?

It certainly seems that way to me I wrote about the reasons why here. The reasons I think it is so difficult are these -
1. The effects of randomness are so much greater on short term time frames.
2. The effects of the spread. The costs of trading are huge.
3. Winners aren't given a chance to grow larger than the losers; this means that even more pressure is put on the trader to win far more often than they lose.


Would you say that, in your experience, this is accurate?

 

[Pazienza]

Is it just me, or is day trading so much harder than trading using medium to long-term trading systems?

It certainly seems that way to me I wrote about the reasons why here. The reasons I think it is so difficult are these -
1. The effects of randomness are so much greater on short term time frames.
2. The effects of the spread. The costs of trading are huge.
3. Winners aren't given a chance to grow larger than the losers; this means that even more pressure is put on the trader to win far more often than they lose.


Would you say that, in your experience, this is accurate?

I don't think it's harder, I think it's different. The reason lies with the trader.

Intra-day he will see so many "opportunities" and will thus over-trade. When he has a loser, there will be a plausible reason to jump back in and make good his loss (of course he won't win, and the spiral of revenge and chasing begins). Whereas the daily trader must wait until the next day, in which time he is able to cool and collect his thoughts.

I would simply disagree that winners have less chance to grow.

In short, the additional "difficulty" is not really a difficulty in the market or the chart but rather in the lack of discipline of the trader.

Or put another way:

More people f*** up day trading than EOD because day trading gives them more chances to f*** up.

 

[Davidee]

Or put another way:

More people f*** up day trading than EOD because day trading gives them more chances to f*** up.

Hehe, that's funny.

 

[Pazienza]

Hehe, that's funny.

Thanks.

It is meant to be flippant, but I think it's basically true as well. I wouldn't quite say "a chart is a chart", but fundamentally I think it's more of a difference in scale than anything.

So I do think that failure on intra-day is very much user error. It takes a lot of discipline but also experience to trade intra-day successfully. Newbies like to jump straight into it (daily takes too long to make your first million LOL), so maybe that's another reason so many people get walloped doing it.

 

[Jason101]

Oddly enough I am better intraday than swing/position.
Which is a not what I want. I don’t want to spend/not got the time for 5m t/f.

I find intraday pretty easy, I think it’s because I am a tight **** and drop losers as quick as a flash, as I see it as it happen. I get a better feel of rhythm on the 5/10/15m t/f. But most of all my risk is so so small compared to my swing/position I am very relaxed about it. Oh and there is no time to fiddle with trades and sabotage myself.

 

[Masquerade]

Position trading is a far more risky proposition than trading intra-day. There's far too much complexity and potential events which can occur which a trader can't realistically account for somewhere down the line. You might get lucky and be on the right side of things, but i'd rather not leave it to chance.

 

[Jason101]

I agree, intraday you know what news is coming when. Position trading, you get all set up and invested then comes along an earthquake or something!

 

[teewoods]

Position trading is a far more risky proposition than trading intra-day. There's far too much complexity and potential events which can occur which a trader can't realistically account for somewhere down the line. You might get lucky and be on the right side of things, but i'd rather not leave it to chance.

. Day traders are vultures picking up cheap scraps while position traders are the lions who make the real killing. I was one of the ignorant who feel for day trading, after 15years I finally saw the light. I have made more in position trading in one year than I made on what I averaged every 5 years.

My advice to any one starting trading avoid day trading at all cost. You wont make real money! And I don't mean your typical £1k a week.

 

[teewoods]

I agree, intraday you know what news is coming when. Position trading, you get all set up and invested then comes along an earthquake or something!

Ever heard of stop loss? :whistling Not to mention the chances of being on the right or wrong side of the market cancels each other out. I have been on the wrong side of the market when and unexpected event happened and got closed out by £12k and equally been on the right side of the market when and unexpected event happened and up by £185k within 24hours.

 

[Jason101]

Ever heard of stop loss? :whistling Not to mention the chances of being on the right or wrong side of the market cancels each other out. I have been on the wrong side of the market when and unexpected event happened and got closed out by £12k and equally been on the right side of the market when and unexpected event happened and up by £185k within 24hours.

Hi teewoods, Yes I do have an initial stop, and then I use a daily volatility stop.

What do you trade? And what sort of breathing space do you give your trades?

 

[dribs]

It isn't. Just depends on the trader.

 

[teewoods]

Hi teewoods, Yes I do have an initial stop, and then I use a daily volatility stop.

What do you trade? And what sort of breathing space do you give your trades?

I trade Indices, fx, stocks (cfd) commodities. (Wheat and soya). My stops are dependant on the the market and my entry level. For instance, a few Weeks ago I was short the DAX @ 7261 I had my stop 7460 I was looking at exiting at the 7060. luckily events went my way and I closed out at 5900. People may say day trading is the key and position trading is risky but last week with 25 contracts and the move that went my way - I beg to differ. I have had these big moves a good number of times, once you win big, you begin to appreciate the power of position trading and start looking at the bigger picture.

Look at it this way, when a football match is being played who see's the overall structure of the game better, the player on the field or the manager on the touch line?

One thing I would stress, I am a more bearish than Bullish. I sleep well as a bear trader, the biggest and most volatile moves are bearish.

Regardless of the advantages of position trading over day trading, people would continue day trade. One reason aside from the fear factor is that it's a psychological thing, people need to see money coming everyday or regularly to give them some sense of satisfaction.

I wont be trading again till November, the markets right now are not conducive for my style of position trading, I need things to settle down. It might be a good time for my day trading friends to have a go

 

[Chartsy]

How the hell anyone can day trade forex better than they can swing it is beyond me!

 

[Big_P]

I trade Indices, fx, stocks (cfd) commodities. (Wheat and soya). My stops are dependant on the the market and my entry level. For instance, a few Weeks ago I was short the DAX @ 7261 I had my stop 7460 I was looking at exiting at the 7060. luckily events went my way and I closed out at 5900. People may say day trading is the key and position trading is risky but last week with 25 contracts and the move that went my way - I beg to differ. I have had these big moves a good number of times, once you win big, you begin to appreciate the power of position trading and start looking at the bigger picture.

Look at it this way, when a football match is being played who see's the overall structure of the game better, the player on the field or the manager on the touch line?

One thing I would stress, I am a more bearish than Bullish. I sleep well as a bear trader, the biggest and most volatile moves are bearish.

Regardless of the advantages of position trading over day trading, people would continue day trade. One reason aside from the fear factor is that it's a psychological thing, people need to see money coming everyday or regularly to give them some sense of satisfaction.

I wont be trading again till November, the markets right now are not conducive for my style of position trading, I need things to settle down. It might be a good time for my day trading friends to have a go

If I'd just done that trade on the Dax, I don't think I'd be bothering till November either!

1,361 tick move/ 25 Euro tick / 25 contracts =

 

[Mao]

Is it just me, or is day trading so much harder than trading using medium to long-term trading systems?

It certainly seems that way to me I wrote about the reasons why here. The reasons I think it is so difficult are these -
1. The effects of randomness are so much greater on short term time frames.
2. The effects of the spread. The costs of trading are huge.
3. Winners aren't given a chance to grow larger than the losers; this means that even more pressure is put on the trader to win far more often than they lose.


Would you say that, in your experience, this is accurate?

I would suggest focusing on big % and vol gainers / losers, looking for a good entry via retrace and breakout bars, with tight stop, keep it simple......

 

[Successful_Trader]

I personally make most of my money trading intra-day... I've been burnt more than once by leaving a position overnight... after the second time, I risked a third and made the most modest profit (about $50)... for such a sleepless night it's not worth it. I like my sleep and try to limit risks, so stick with intra-day when you're most vigilant.. This isn't to mention the steeper initial/night margins, too.

 

[Jason101]

ST, I think you are talking about a different thing. I think you are talking about a trending intraday trade being run into an overnight position rather than a consistent swing or position trading strategy.

 

[Black Swan]

Position trading is a far more risky proposition than trading intra-day. There's far too much complexity and potential events which can occur which a trader can't realistically account for somewhere down the line. You might get lucky and be on the right side of things, but i'd rather not leave it to chance.

Disagree to this 1000%...

 

[Masquerade]

Disagree to this 1000%...

How can you account for such complexity over such a long period of time with so many unknowns and possibilities? Or is it just a case of hoping it evens out long run? I'd rather not play that game and not speculate on what will be 2 months down the line from opening a position. Information is key and that's obviously something you have even less of when you have positions you're exposed to for long periods of time. We should be friends btw.

 

[Mao]

Not much complexity - if we'talking stocks....if its going up or down, and preferably strongly... find a good entry / stop....maybe at retracement....news already out .....no risk of overnight news or economic shocks...risk removed EOD by closing position or carring some if strong trend into close.