Traders who make money year in year out on low timeframes (esp 5 min) are like rocking horse shit - you cant find a real one. if there is one on here that can show a consistent 10 months out of 12 profitable trading 5 minute charts i'll be very suprised.
As I mentioned above, I trade emini futures and my trades are taken off the 2, 3 and 5min charts. I have records that prove I can make money almost every single day. Definitely on a weekly basis and 100% on a monthly basis.
Since you've been in this business for 6yrs, I am a bit surprised to see your skepticism about short trading. It almost sounds that if you can't succeed or you don't even bother trading off shorter time frames, then nobody else can. I know for you and many other traders it's a pain in the butt to stare at charts all day long...I feel exactly the same way about longer term trading...it's a pain in the ass to do other things while I am in a position and must be patient and wait days or weeks for it to work out. Forget it. I even hate holding positions overnite, let alone days.
I also have the impression you are biased against short term traders, especially since you associate short-term trading with undercapitalized traders. I don't agree with you. Yes, there are lots of newbies with $500 accounts who are only allowed to trade shorter time frames due to overnight margin requirements, which for futures are much higher as opposed to daytrading margins.
However, there are many pros who daytrade with large accounts. I personally know a mini-S&P daytrader whose positions vary between 10-30 contracts per trade. That is some serious size for a private trader, it's the equivalent of $125-375 per tick.
In a few words, professional traders trade whatever fits their personality best. I am a very active person and I don't have the patience necessary for longer term trading, so I could never trade off daily charts. To me even 1hr feels like a lifetime while trading. I also couldn't sleep at night knowing that I have open positions left.
I am not making this up. I am saying this because I experienced it on my skin. And guess what? When I started trading FX as a newbie I read the very same things you're saying about longer time frames being better than shorter time frames, therefore I set up my charts off the 1hr, 4hr, 8hr and daily. My account was $10K, which is ok for starting out.
I believe one of the key turning points that led me to the winning side was changing trading style and finding my own niche sort'uv speak.
If we focus on FX only, I agree that smaller time frames are very tough to trade. I watch FOREX charts regularly during my trading day and I have the feeling it's a lot harder to make money on shorter time frames there.
I've never tried it though. One of the reasons it's a lot harder to trade off 5min charts in FOREX as opposed to index futures may be the different trading hrs.
Here is why. Let's say both a currency pair and an index future average 100 ticks per day. The main difference here is that in the currency pair those 100 ticks will be spread out over a 24hr time span whereas in the index future it'll be distributed over a 8hr period. That's exactly three times less for the same range. Furthermore, if you trade off the 5min chart you MUST be at the computer all the time. It's humanly impossible to be at the computer for 24hrs per day! This makes FX short term trading unappealing unless a trader decides to discretionally pick 8-10hrs and trade those. The problem is that you just never know when a currency pair moves and how much...maybe it'll move 30 ticks during Tokyo, 40 during London and another 30 during NY.
They pay analysts a fortune to try and predict the news and they get it right about as much as my cat so what chance have i got? none, so why bother? whatever the news is it won't effect my strategy which is wholly technical in nature.
The important thing about the news is not predicting them nor interpreting them. It's knowing something may happen at that time. News and fundamentals are what move the mkts, so if you see the dollar getting hammered right after 8.30am...mmm, it's likely because of some reports that just came out.
If you are a longer term trader, news have very little impact on your trading because I assume you make decisions at end of the day.
If you are a daytrader, news ARE EXTREMELY IMPORTANT. Heck, in the rare news-free days I usually cut my daily goal by 25-50% because there are no market movers and markets are likely to range.
To answer your last question, this is my 4th yr trading. I almost did it all: stocks, FX and futures. I must say that when I was trading stocks I wasn't really serious about it...I took it as a game and was one of the many lucky ones who rode some of the bull market before 2001. Mere luck back then.
I later decided to become a daytrader and got into FX for 1 and 1/2 yrs.
I've now been in futures for 1yr and I am very happy.
Soultrader, I didn't mean to criticize your points but rather to clarify what I interpreted as misconceptions and common places.
Cheers.