The profitability really depends on the trader and his methods. But I guess you could put it that way if you look at Bill Lipsutchz's hedge fund. Bill is the guy from market wizards who Jack Schwager claimed to be the "Sultan of Currencies". His hedge fund, Hathersage ( go google it) has 2 different sections one which is a long term currency fund, and another which is a short term day trade kind of fund. His results really show the difference in profitability.
I look at it this way.
In a trade on longer tf's, I would take say 400 pips - im an average professional trader
on the shorter timeframes a really good trader might also take 400 pips.
the difference is that I pay 3 pips spread and the shorter one most lilely would pay something like 40 pips spread because of the entries / re-entries into that trade.
add to the fact the competence of the short term trader - to do this he HAS to be very good wheras on a longer term I dont have to be nearly as good.
I think the main reason that Vets go for longer timeframes is the burnout effect. trading a 5 min chart causes serious burnout and after so many years you look to do the same thing on a lonegr term - no burnout then.
for example today ive looked at charts for all of 10 minutes, been on the tredmill for an hour, played with my nintendo Wii for an hour, had some breakfast, paid the gardener and had a chat and read my newspaper. ive gone in two trades this morning - short eurusd and long nzdcad. each has an expectation of several hundred pips by the end of the week or a loss of less than 70 (on average)
Later i'm going out for lunch and a bit of shopping and then i'll be back for another look at the charts about 3pm.
In the meantime the 5 min trader will spend most of the day glued to a screen sweating trades for 10 pips here and there and getting a headache as he concentrates on one or two pairs. try doing it with 24 pairs - that's how many i trade longer term.
I don't suffer from burnout anymore - but i used to.
remember that every Vet has been through the same things. weve all traded from a one minute chart thinking we were king of the world.
The challenge is this - is there a 10 year trader on here that still trades five minute charts every day? my guess is not.
I do it now and again for fun and to 'scratch the trading itch' but no0t seriously and i doubt very much that any other longer term traders do.
I could be wrong of course - bring em on
In a trade on longer tf's, I would take say 400 pips - im an average professional trader
on the shorter timeframes a really good trader might also take 400 pips.
the difference is that I pay 3 pips spread and the shorter one most lilely would pay something like 40 pips spread because of the entries / re-entries into that trade.
add to the fact the competence of the short term trader - to do this he HAS to be very good wheras on a longer term I dont have to be nearly as good.
I think the main reason that Vets go for longer timeframes is the burnout effect. trading a 5 min chart causes serious burnout and after so many years you look to do the same thing on a lonegr term - no burnout then.
for example today ive looked at charts for all of 10 minutes, been on the tredmill for an hour, played with my nintendo Wii for an hour, had some breakfast, paid the gardener and had a chat and read my newspaper. ive gone in two trades this morning - short eurusd and long nzdcad. each has an expectation of several hundred pips by the end of the week or a loss of less than 70 (on average)
Later i'm going out for lunch and a bit of shopping and then i'll be back for another look at the charts about 3pm.
In the meantime the 5 min trader will spend most of the day glued to a screen sweating trades for 10 pips here and there and getting a headache as he concentrates on one or two pairs. try doing it with 24 pairs - that's how many i trade longer term.
I don't suffer from burnout anymore - but i used to.
remember that every Vet has been through the same things. weve all traded from a one minute chart thinking we were king of the world.
The challenge is this - is there a 10 year trader on here that still trades five minute charts every day? my guess is not.
I do it now and again for fun and to 'scratch the trading itch' but no0t seriously and i doubt very much that any other longer term traders do.
I could be wrong of course - bring em on
https://linktr.ee/Soultrader
Soultrader
Keep in mind that by trading lower timeframes you can do a lot more size than trading higher timeframes due to much smaller stops.
Lower timeframes also provide way more frequency, which means that if you have a real edge you are gonna get many more setups.
That is, IF YOU HAVE AN EDGE. Many traders don't have an edge and blow their accts trading smaller timeframes...
Guess what? Many long-term traders don't have an edge either and blow their accounts more slowly...but if you don't have an edge, sooner or later you are going to blow up...you just have to pick your poison.
I don't know any professional forex trader who trades successfully off the 5min chart. All pro traders I know are emini futures traders, and they all go for the smaller timeframes.
I am sure that if I still were trading FOREX, I would likely know some veteran daytrader.
Apart from this, I take pleasure in daytrading and I am not too sure that I'll move to higher timeframes many years from now. I enjoy it, it's that simple.
It sounds like you enjoy having lots of spare time for yourself and do many more things other than trading. It doesn't even sound like trading is a job to you.
I have a friend who trades FX and he's just like you. He hates to spend more than 20-30mins at the computer watching charts. He plays golf almost every day, goes shopping, etc...He's not a veteran though...he has the same yrs under the belt as me, yet he always laughs at how many hrs I spend glued to the screen.
As you can see, I think it's more of a personality difference rather than being a rookie, junior, senior or veteran.
Your argument about getting burned out is a valid one and deserves some thought.
Keep in mind that the more experience you gather, the easier and quicker you see things. Hence, I think a daytrader with 20+ yrs of experience doesn't have to sweat as much as a daytrader like myself.
Keep in mind that by trading lower timeframes you can do a lot more size than trading higher timeframes due to much smaller stops.
Lower timeframes also provide way more frequency, which means that if you have a real edge you are gonna get many more setups.
That is, IF YOU HAVE AN EDGE. Many traders don't have an edge and blow their accts trading smaller timeframes...
Guess what? Many long-term traders don't have an edge either and blow their accounts more slowly...but if you don't have an edge, sooner or later you are going to blow up...you just have to pick your poison.
I don't know any professional forex trader who trades successfully off the 5min chart. All pro traders I know are emini futures traders, and they all go for the smaller timeframes.
I am sure that if I still were trading FOREX, I would likely know some veteran daytrader.
Apart from this, I take pleasure in daytrading and I am not too sure that I'll move to higher timeframes many years from now. I enjoy it, it's that simple.
It sounds like you enjoy having lots of spare time for yourself and do many more things other than trading. It doesn't even sound like trading is a job to you.
I have a friend who trades FX and he's just like you. He hates to spend more than 20-30mins at the computer watching charts. He plays golf almost every day, goes shopping, etc...He's not a veteran though...he has the same yrs under the belt as me, yet he always laughs at how many hrs I spend glued to the screen.
As you can see, I think it's more of a personality difference rather than being a rookie, junior, senior or veteran.
Your argument about getting burned out is a valid one and deserves some thought.
Keep in mind that the more experience you gather, the easier and quicker you see things. Hence, I think a daytrader with 20+ yrs of experience doesn't have to sweat as much as a daytrader like myself.
- #84
- Oct 8, 2007 8:44am Oct 8, 2007 8:44am
- Joined Jul 2007 | Status: al zahr | 2,820 Posts
As you can see, I think it's more of a personality difference rather than being a rookie, junior, senior or veteran.
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- #87
- Oct 8, 2007 10:15am Oct 8, 2007 10:15am
- Joined May 2005 | Status: I am not your bro | 1,302 Posts
- #91
- Oct 8, 2007 10:51am Oct 8, 2007 10:51am
- Joined May 2005 | Status: I am not your bro | 1,302 Posts
- #93
- Oct 8, 2007 11:11am Oct 8, 2007 11:11am
- Joined May 2005 | Status: I am not your bro | 1,302 Posts
- #96
- Oct 8, 2007 12:01pm Oct 8, 2007 12:01pm
- Joined May 2005 | Status: I am not your bro | 1,302 Posts
As I said this battle leads nowhere. I am fairly certain there are Vets whose style is daytrading (thei comfortzone) and they are able to make this work for them. But what is daytrading actually on FX. How about initiating a trade at 22 pm GMT and close it at 4 am GMT the next day and cash in 60 pips profit (- the spread of course, say 3 pips). Are we talking about scalping (which is highly costly, IMHO in FX) or catching a 40 pips move in GU in 2-3 hours? Each to its own, what suits best his personality and other comfortzone.
Regards
Bullrock
As you said, to each his own. As long as we make money, we should all be happy.
What I was debating was the argument that daytrading FX is more costly than daytrading emini futures. After I did some quick math, I found out the difference is minimal.
IMO what makes daytrading FX unappealing is not the spread nor the vig, but rather the lengthy hrs. FX is a 24hr market and this makes it difficult for a daytrader to catch the whole daily range. This is the main reason I moved to emini futures.
Heck, FX is even tax-free in Italy so I would have loved to stay there if it weren't for the lengthy hrs.
Let's be fair and compare apples to apples. We'll use the USDCAD since the USD is the base currency on both futures and forex and they both have a contract size of $100,000 and since they are at parity it can't get much more equal than that. A tick value in futures is 0.0001 or $10 and a pip value in forex is also 0.0001 $10 (due to parity).
I'm showing the DEC CAD contract (CDZ07) trading 1.0136 @ 1.0137 for a spread of 1 tick. I'm showing spot 1.98688 @ 1.98718 or 3 pips.
The TradeStation commissions for the CD (including exchange fees) is $2.82 while the commissions for the USDCAD (spot) are 0.4 or $4
This leaves us with a nominal futures cost of $12.82 and a spot cost of $34 or 265% higher. That is why futures daytraders have an edge of forex daytraders. Is the USDCDAD liquid? Yeah, at this time of day it sure is.
Like you said the numbers don't lie.
Second, as I stated in my previous post, if you want to be a daytrader you NEED to choose the right instruments to daytrade and possibly shop for the best spread/commission plan available.
If you decide to trade USDCAD instead of EURUSD, you are giving up on 1-pip spread and 0.2 commission, a total of 1.2 pips. That wouldn't be very intelligent to do.
FOREX is also a tax-free market for many countries, and this advantage should also be incorporated into the comparison.
The example I made above between YM and EURUSD is a valid example and represents exactly what I used to trade vs what i am trading now.
That example showed there is not such a big difference between daytrading the two instruments.
Of course, we could come up with dozens of other different scenarios and I am sure we could both defend our arguments.
Anyways, I believe this thread should get back on topic. What is the topic of this thread anyway???
Oh yeah...1K traders presenting issues that prevent them from being more successful. Let's get back on track otherwise Soultrader is going to boot us from his thread.
- #99
- Oct 8, 2007 1:02pm Oct 8, 2007 1:02pm
- Joined May 2005 | Status: I am not your bro | 1,302 Posts
Anyways, I believe this thread should get back on topic. What is the topic of this thread anyway???