I disagree with longer term trading being less stressful. I personally feel very stressed about holding positions over the weekend or interest rate news.
Day Trading vs. Swing Trading vs. Position Trading
- #23
- Jun 26, 2007 10:17am Jun 26, 2007 10:17am
Hi WTB,
Of course every trader will be different, and everybody has different stress triggers. Most traders seem to be scared of any type of significant pip drawdown .. in long term trading your positions are scaled a lot smaller than intraday (or even swing). For instance, your 20 pip intraday trade drawdown, which causes you little stress, might equal $20 .. similarly, my 300 pip position trade drawdown, which causes me little stress and will run for days (or weeks), might equal $20. What keeps the worry at bay for me is the realization that, given time, the long-term trend will reassert itself and my position(s) will eventually go positive. There will be a time, of course, where the trend reverses - and I will be ready for this.
For position trading, your stops & position sizing will take into account market news, etc. It would be very unlikely that a single piece of news would stop & reverse a significant trend (one that has been in place for years) .. these are the trends that I am trading. And weekends??? But a small, inconsequential blip in a seven year trend...
Take care,
D.
Of course every trader will be different, and everybody has different stress triggers. Most traders seem to be scared of any type of significant pip drawdown .. in long term trading your positions are scaled a lot smaller than intraday (or even swing). For instance, your 20 pip intraday trade drawdown, which causes you little stress, might equal $20 .. similarly, my 300 pip position trade drawdown, which causes me little stress and will run for days (or weeks), might equal $20. What keeps the worry at bay for me is the realization that, given time, the long-term trend will reassert itself and my position(s) will eventually go positive. There will be a time, of course, where the trend reverses - and I will be ready for this.
For position trading, your stops & position sizing will take into account market news, etc. It would be very unlikely that a single piece of news would stop & reverse a significant trend (one that has been in place for years) .. these are the trends that I am trading. And weekends??? But a small, inconsequential blip in a seven year trend...
Take care,
D.
I disagree with longer term trading being less stressful. I personally feel very stressed about holding positions over the weekend or interest rate news.
- #30
- Jun 29, 2007 7:55pm Jun 29, 2007 7:55pm
Hi Awsl,
Basically you will be holding a position for weeks or months at a time - just like WTB says it is a 'Buy & Hold' method. These types of systems will follow the long-term trend, so it is important to find a pair that has been in a very strong trend for numerous years (use weekly/monthly charts for this).
As for a system??? Hmmm...
Look on the daily charts - enter a position in the direction of the trend on dips (up or down depending upon trend) & hold for 30 days. After 30 days exit position as soon as the CCI 20 crosses beyond the 100/-100 line (but only if it is in profit).
As for particulars of s/l, etc... you will have to figure that out depending upon your money & trade management. Just remember that with increased timeframe & positioning comes both longer and increased amount of drawdown. This is just a fact of trading this way - get over this and with proper MM you will be well on your way to profit.
Will this work?? Look at the charts - you tell me
D.
Basically you will be holding a position for weeks or months at a time - just like WTB says it is a 'Buy & Hold' method. These types of systems will follow the long-term trend, so it is important to find a pair that has been in a very strong trend for numerous years (use weekly/monthly charts for this).
As for a system??? Hmmm...
Look on the daily charts - enter a position in the direction of the trend on dips (up or down depending upon trend) & hold for 30 days. After 30 days exit position as soon as the CCI 20 crosses beyond the 100/-100 line (but only if it is in profit).
As for particulars of s/l, etc... you will have to figure that out depending upon your money & trade management. Just remember that with increased timeframe & positioning comes both longer and increased amount of drawdown. This is just a fact of trading this way - get over this and with proper MM you will be well on your way to profit.
Will this work?? Look at the charts - you tell me
D.
can someone give an example of Position Trading, or reference to that type of technique which is position trading?
- #31
- Jun 29, 2007 8:13pm Jun 29, 2007 8:13pm
- | Joined Feb 2007 | Status: Small is beautifull | 1,368 Posts
- #39
- Jul 27, 2007 4:33pm Jul 27, 2007 4:33pm
- Joined Sep 2006 | Status: ... | 8,112 Posts
Hi Daemien
Very thoughtful and comprehensive summary, IMHO.
Here are my thoughts (basically in total agreement).
The shorter the turnaround time:
Very thoughtful and comprehensive summary, IMHO.
Here are my thoughts (basically in total agreement).
The shorter the turnaround time:
- More frequent compounding (accelerates progress toward either financial freedom, or ruin)
- Accelerated statistical confidence (build up database of wins and losses more quickly - very important!)
- Accelerated learning experience (more practise with mechanics and emotions involved in trade management)
- Accelerated expectancy: greater number of trials (trades) gives edge more frequent opportunity to prevail
- Smaller, and more frequent, steps = smoother equity curve (very important if trading is primary income, i.e. whether any "n"-loss sequence = no income for a day, or several weeks)
- Less equity (margin) tied up to generate the same annual (i.e. rate of) income; also means that lower amount need actually be deposited with broker, hence less exposure should broker go belly up (e.g. Refco)
- Greater number of opportunities = Less temptation to overtrade
- Greater number of trades = Less time to agonize; and less likelihood of getting emotionally involved with individual trades
- Greater likelihood of getting flustered, resulting in incomplete/inaccurate analysis, and order entry errors
- Lower overall tolerance for errors and unexpected outages
- Longer term fundamentals are less significant
- Higher relative (spread) costs - hugely underestimated, IMHO [see note below], and are also incurred more frequently
- Higher randomness in price movement (significance also underestimated, IMHO)
- Greater relative effect of news announcement "spikes"
- Greater relative effect of gaps and spikes, both overnight and generally (perhaps applies more to equities than forex)
- Less opportunity to collect positive carry
- Greater opportunity for broker manipulation (easier for broker to justify/hide a 2 pip "cheat" than a 20 pip "cheat")
- Lifestyle constraint: more time required to monitor trades (i.e. more difficult to work around a regular job)
Cheers
David
[Note: In trying to catch 50 pip moves, 2 pips is 2.5%. Casinos make a fortune out of a that kind of edge. Moreover, even though the target might be 50 pips, the average result (tallying up both wins and losses) might be +5 pips. In that context, a 2 pip spread is huge.
Myth: trading longer term moves is more expensive, because the stoploss must be placed further away from entry. This is incorrect: the ratio of reward/risk is exactly the same; simply trade smaller lot sizes. Longer term is actually less expensive due to lower relative costs (generates same return per $ at risk, but at a slower rate).]