Day trading Vs Longer term holding FX

Which is better (i.e more profitable and carries "potentially" less risk, or can it be measured?)

Interested to hear opinions on this?

Day trading (m1 - h15) is the most profitable if you have an above average win-rate (65%+) and open/close trades frequently. (The logic behind this is that you can extract more profits out of a single swing; multiple trades on an up/down move as opposed to one swing-trade on a higher time frame.) This would be very taxing mentally and require your time in front of the screen. Learning how to trade like this can be brutal. Meaningful time learning/watching the charts will abundant (lots of price action during various trading sessions).

Longer-term trading (h4+) is very profitable as well. By far, less stressful than day trading. Managing trades can be done in a couple times a day in minutes.

Me personally, I began my journey (still journeying) on the h1 - h4 time frames. It was nice waking up to nice profits on the demo account. Stops placed ahead of time took me out of losers so I wouldn't compound them into bigger losers. For a time, it seemed like I knew how to trade. In short, one day, I found that not to be the case.

It took the convincing of some people to finally trade on a lower time frame (m1 - m15). In my early development and learning stage, I was told that anything below h1 was just noise, and that it was a waste of time. There was a bit of an adjustment period (learning how to place stops so that the spread wouldn't take it out), but I began to see just how fractal the market was. The caveat at trading at a lower time frame, is that win-rate is more emphasized, and risk-reward ratio rules are a bit different (from higher time frame trading).

The most compelling reason to trade the lower time frame, in my humble opinion, is the amount of learning one can achieve. Compare watching price action on a pair on say an h4 chart, and say a m5 chart. There's a whole lot of bars you can see on one chart versus the other, in the same span of time. With access to more bars in the same amount of time. You can meaningfully practice watching the market and observe price behavior. It's difficult to observe price on an h4 chart and retain the same train of thought and analysis 4 hours, 8 hours, 12 hours, 16 hours, and etc. later. Of course, the moves aren't quite the same between the charts, but they are indeed similar.

I hopes this makes sense. I'm by no means a trading god. Cheers.

Pete, i can tell you, trust me, during the last four years i have invested over $155k usd so far. In strategy developments.

The most hard thing is day trading! This one comes last! And it comes the HARD way.

Very few hobby traders, can day trade. These are the top hobby traders.

Do not even think to day trade! Weekly/monthly trading is hard enough to learn. Go after it first! In a demo! Never leave the demo, until consistent with weekly/monthly profits.

And Pete, leran to flip. Do not use SL! Flip instead!

Do not day trade! Not in the next 4-5 years, at least! Do not use SL, flip directions instead!

Day trading is far more difficult and stressful, though potentially more profitable because of the more frequent asset turnover. I have done both day trading and swing trading in both equities and FX. I am a profitable swing trader, but have not yet been a profitable day trader. I have been studying markets and trading for about 4 years now. Right now I am more comfortable swing trading. In my experience, I can tell you that it is probably better to start trading longer time frames first and here is why; It's not about more noise or less noise.. It's harder to over-trade when trading long term time frames, so you develop more patience and discipline to wait for proper set ups rather than forcing a trade. When trading lower time frames there is always a trade if you want there to be one because the candles develop so quickly that you can rationalize taking a mediocre setup, just to be in the market. You may even get bored and rationalize taking a dumb trade because you are sitting in front of the screen so long and nothing is happening. Revenge trading is the big risk here. I found myself trading much too often to be profitable. Remember, the lower the time frame, the more spread and commissions eat into your profit, so many trades and mistakes compound your losses. Less is more in trading. The less trades you can take the better generally speaking. Of course there are exceptions like with scalpers for example. The other issue is the time resistriction. If your strategy requires a large number of pips to profit, you will be limited based on your trading hours and the volatility levels that day. Once you shut down, you have cut off the position where ever it is and that can be bad depending on how much time it needs to reach your target. That means when you are day trading, your win rate matters much more and you need a higher one to succeed. Whereas with longer term trading you can easily find 10+ RR trades, you will likely not find these large risk to reward setups on lower time frames due to trends and price movements being smaller. Intra-day trends don't last as long period, so you will find difficulty as a trend follower for day trading. Lastly, when day trading, since you are constantly watching the screen you are obsessing over the market which is a great recipe for making dumb decisions, mistakes and over thinking. As a swing trader you can just set it and forget it and stop stressing and obsessing. Honestly, the cons of day trading outweigh the pros. The only reason to day trade is to make more money with less capital. That's it. It's not worth it for any other reason. It's stressful, time consuming, and riskier IMO.

Funny enough, THIS is my last hurdle, and I forgot to mention this. 100% agree with this. Do whatever suits you. Plenty of time to try/learn different styles of trading.

Daytrading, ftw.

Some good advice, I personally trade a longer term. Though would be interested in delving into intraday.

Just be sure to trade intraday during the active sessions. There's a deadzone between the close of New York and the open of Tokyo. A lot of learning opportunities in trading the London open. Almost always, you can find a good trade within the first 1.5 - 2 hours of the London session.

Interesting discussion.
A couple of years ago a member of FF addressed this question with a very convincing argument for daytrading over long term trading. I'll see if I can find it.
One issue is Risk management. If you stick with the adage that you should keep your risk (stop loss) at 1 or 2% then it really makes less sense to long term trade with a small account. Think about it. With a long term trade, and an account size of say $3,000. your risk (stop loss) is $30. with 100 pips. The trade will take days or even weeks to profit by $60. (with a 2:1 RR). With day trading the risk is the same $30., but your position size is much larger due to a much tighter stop maybe 12pips, and you still make your $60. in maybe a couple of hours instead of several days.
I personally think the stress level is about the same, and you are less tempted to "mess with the trade" on a shorter time frame day trade, partly because a stop out that you can recover the same day is easier to take than one that happens after several days and it takes several more days to recover.
-Just my opinion.

if you dont know how to trade it wont matter, daytrading or longterm. just find a way to be profitable and dont care about the rest

can't longer term swing trade for s***.
it's extremely stressful if you asked me. especially if you have some size on, seeing your pnl take wild up and down swings till your targets MAYBE hit.. no thanks.

don't know anyone being consistently profitable daytrading with less than 5 years of grinding on their back. once you have a winning strategy you still won't make much money. at this point you need your head right. humbling experience overall.

your safest bet is to just start offering online trading education if you need quick $.

MoneyZilla - I hope you're well

When you say flip the trade with no SL. Can you explain in more detail, please? I currently don't use SL. Then when the market goes against me I sometimes close the trade, double the pip amount and go in the opposite direction to claw back profit.

As you can tell, I'm new to Forex and would love to hear a more detailed strategy on flipping

Thanks

M

FLIP?

He probably means switching to the opposite order of a trade upon the close of it. Example: you're in a long trade, and the stop loss gets hit - go short immediately. Risky imo. Weakness to market chop. Perhaps a careful method of execution may prove profitable. Not for me, but may work for others.

Nothing wrong with wanting to try it out, but I would absolutely recommend that you are able to be profitable on higher time frames first. IMO, if you can't trade higher time frames, you certainly won't likely have success day trading.

Day Trading

- You get more opportunity to trade - a nicer way of putting 'overtrading'
- You take more risk and assume a higher chance of taking losses
- Risk more capital
- Pay more commission/spread
- Mediocre profit targets
- Optimal stop loss placement is difficult - at times you need a fairly big stop loss to absorb potential volatility, other times you need a tight stop loss to reduce potential loss.
- Bad risk reward ratio
- Major news often destroy your trades

The lower the time frame you trade at, the more difficult/worse it gets.

"The Trading Arena: Exchange Environment, Regulatory Agencies
Trading futures is much like any other career choice. First there is a basic, theoretical body of knowledge to master. A part of that is the applied learning, the nuts and bolts that one gets during an apprenticeship (doctors and lawyers practice and learn, so must futures traders). Futures traders study their models, but most fail to learn enough about the exchanges and the regulatory services.

The Exchange: A Private Organization
Members on the exchange trade for a living. Floor members either trade for themselves or fill paper for others (your brokerage firm, for instance); or they do both, trade for themselves and fill paper. Commercial members trade only for their institutions. A membership can cost a half-million dollars. There is money to be made on the floor. The unwary are liable to get plucked. Your job as an outsider, is to pay for services received only, to make sure you are treated properly within the rules and to generally protect yourself. The system tends to pit you against your broker--in the case of an error, who pays? Know the rules!

The Exchange: Path of a Trade
The longest path your order can take is: you =>broker =>trading desk =>floor =>pit =>floor =>trading desk => broker =>you.
An order passing through so many hands has an opportunity to get altered or lost, especially in trying times such as 'fast' markets.

The shortest path for your trade is:
you =>floor =>pit =>floor =>you This path is called going through the 'arb' desk; you often get your fill while still on the phone.

Regardless of how you enter your order, your trade is filled by a "floor member" who takes the opposite side. If your order eventually ends up offset by another public trader, that side too will have passed through the hands of a "floor trader". Floor traders do about sixty percent of a day's volume.

The Exchange: Filling Your Order
Orders are filled on the floor by open outcry, the auction process. Your order might not get filled at your price because there may not have been enough contracts offered at that price to fill all takers. Getting a worse price is called 'slip'. Normally, you will get a fill near your price because of exchange rules which govern the way floor traders do business with the public (members are held to these rules). However, your price may be hit and still you get an 'unable'. This can happen if you have an order for a price or better. Say it turns out that your price was the low of the day and you were buying. When the low was hit very few contracts were traded and yours was not one of them. Or it was a 'fast' market with violent price action. Then the brokers are 'not held'. Even then, there are rules your broker must follow. He must not fill someone ahead of you, if he has your order first.

The Exchange: The Initial Balance
On many occasions, most of the day's range will be covered during the first hour after the open. This comes in part because of the orders that came in after the close the previous day (resting orders). These are in the floor traders 'book'. The floor finds a way to trade as many of these resting orders as possible, by rotating price. It is said that the floor 'controls' the market during the initial balance. Obviously, you would like to avoid getting stopped out by a non-economic process. Whenever possible, you should place your orders after the open, and ideally, after the initial balance." - Jones

We (public/retail) are not floor traders. Our job as retail traders is not to take the other side of trade for the sake of providing liquidity to the market. The pricing & fee structure for "floor traders" allows them to profit from short time frame moves.

Steidlmayer & Dalton were both floor traders (members) Let's put this in the proper context..........

Quoting Jones........

"Advisory: The following material is primarily of use to day traders. Standard day trading using some sort of pattern recognition has generally not proved a successful way to trade. Typically, the trader is competing with the floor in picking profitable short time frame moves. The difficulty, in part, is: that the off-floor, non-member trader trading is delayed relative to the floor. That delay, plus the cost factor (members trade for $2, non-members for $20) creates large odds, a house advantage that is hard to beat.

Floor Member
Can trade in 2 seconds
Pays $2 commission
Can be profitable with $20 gain

Public Trader
Takes 2 minutes to trade
Pays $20 commission
Can only be profitable with $100 gain

It is the thesis of AMVA that the Public trader needs an edge, one that comes from superior knowledge. The Public day trader is helped by knowing what the commercials are doing, where balance exists, the market's volatility structure and other reference points from the Trader Control database. This is superior knowledge, but is it enough to overcome the huge odds in favor of the "floor members"?

Generally, no! We believe the Public day trader must be much more selective than his floor counterpart. The way we see to beat the odds is to not compete head to head. Trade the market structure, use market condition as a guide: trade breakouts, trade responsively. These are positioned trades that require the market to offer an opportunity. There are far fewer such trades than one can find through pattern recognition. But the odds are better. "- Jones

the retail trader is "competing" with the floor in picking profitable short time frame moves. The pricing & fee structure of being a "member" allows them to be profitable trading short intraday moves. If we were to trade the exact same trades as a floor trader who ended the day profitable, head to head, due to fees & pricing structure, we as non-members can end the day with a negative balance. Trying to compete head to head for the same short timeframe moves as floor traders is a losing strategy over time due to the retail fees & pricing structure. In order to beat the odds as a Public/Retail you cant employ the same methods of short timeframe trading used by floor traders with a house advantage

Different market participants, have different roles in the market. The floor traders job was to provide liquidity by taking the other side of your trade.

Four Types of Trading on the Floor: The Participants

Floor Members: These are the 'middlemen'. They do about sixty percent
of volume. They seek a well defined fair price, and hence are happiest
with balanced markets. Known as 'short timeframe traders', they are in
control during the initial balance, or approximately the first hour of
the trading day. Floor members end the day with no open trades. Floor
members are identified as Cti1 in the Liquidity Data Bank Report

Commercial Members: These are the 'businessmen' on the floor. They trade
for their institutions. They know value better than any other type of
trader. They are in control in balanced markets, where they buffer the
edges of the distribution. Commercials end the day either hedged or out
of the market. Commercial members are identified as Cti2 in the
Liquidity Data Bank Report

Off Floor Members: Members trading from screens outside the floor.
Otherwise very similar to Floor Members. Off floor members are identified
as Cti3 in the Liquidity Data Bank Report

The Public: (members trading for): Speculators, funds and all others
outside the first three types. (this is us as retail traders) This type takes both long and short term
positions in the market. Usually long timeframe traders, they dominate
the trends and drive prices away from the center (value) in balanced
markets. The Public ends the day with positions open, creating demand.
Members trading for the public are identified as Cti4 in the Liquidity
Data Bank Report

The Public is what Dalton refers to as OTF "other timeframe participants" or LTF Long Timeframe participant. We as Public/Retail traders, are the "other timeframe participants"

Why do OTF/LTF participants dominate trends, and drive markets? Because it is profitable. In order compete in the market against short timeframe traders with a house advantage, we as public/retail traders have to make more gains per trade due to the retail pricing structure .

Most Retail traders don't understand how Auction Markets operate. When Dalton wrote his book describing the auction market process, he did from the perspective of a floor trader with a house advantage. When describing OTF he almost describes them in a way that gives an impression it's an "Us vs. Them" mentality. Rightfully so, when the job of the floor trader is to provide liquidity to the market. The pricing structure allows for it. We as retail traders, are not Floor Traders. Why do you think "Big Money" drives the market and dominates trends, rather than dominate balanced markets? Because that's where the money is made. "Big Money" knows they/you can't make big money trading short/intraday timeframe moves. They are the same class of trader we are and have the same disadvantage when trying to compete head to head with floor traders with a house advantage, for short time frame moves.

Now lets jump into the here and now, floor traders are a thing of Past due to online trading. Most floor trading no longer exists. No overnight resting orders, there is no reason to rotate price first hour (Initial Balance) filling overnight resting orders. IB concept needs a market that has a daily open & close.

IB is a non-economic process used by floor traders who rotate price in order to fill resting overnight orders. A 24h FX market has no overnight resting orders.

In the past it was the floor trader who provided liquidity to the market by taking the other side of trades. They no longer exist. Now the intraday & day traders are providing the liquidity. The majority of day traders, with their indicators, misinformation, axioms , and lack of market understanding are virtually on the other side of every trade. They provide the fuel & liquidity for the OTF & LTF participants.

With the house advantage and fee structure of a floor trader, there was an opportunity to make a lot of money on small moves by taking the other side of the trade. Do the same thing with retail account and pricing structure, and trade for trade, those profits made by the floor trader, result in losses to those with a retail account over time. It's not complex, its math.

80-90% of retail traders lose. Maybe because greed allows them to believe they can make huge amounts of profits trading short timeframe moves if they can just find the right indicator settings, or learn to trade like professional floor traders. As long as retail traders believe that they can make huge profits from short timeframe moves using TA, rather than learning the way auction markets actually operate there will always be someone on the other side of the trade.

The retail pricing structure makes profiting from short term market moves like a "floor trader" difficult and a losing strategy over time....

https://www.forexfactory.com/showthr...51#post9170151

From what I've read, intraday day trading is considered more difficult than longer term trading but, I would rather day trade each day individually.

If you ask institutional traders, they'll nearly all tell you daytrading is better and safer.

If you ask retail traders, they'll nearly all tell you exactly the opposite.

Draw your own conclusions, bearing in mind your perceptions of the overall success-rates of each group, if you have any.

I have a related question.

Why do most retail traders opt for day trading/scalping instead of swing trading?