Day Trading vs. Swing Trading vs. Position Trading

I honestly do understand that there is a difference in strategy Trading between the 15 Min to 1Hr Chart {Scalping} and the Daily to Monthly Charts.
Have you thought about these differences?
If so, you will have already figured out which pairs to currently Scalp, Swing and Position Trade

Those who got severely burned by the recent downfall of the currency market must be position traders, which tells you that position trading can be more risky and tend to make bigger losses. Position traders generally hold onto a position for a long time even if it turns into a losing one hoping to reverse, but often times they have to close their accounts before it reverses the reverse.

It depends on how you trade. I consider myself a position trader and I use trail stops. I make good money when I'm right and spend time waiting for profits to accumulate ... and lose small when the market crash, no matter how bad it crashed (thanks to liquidity).

position or swing i dont know. but what i do know is that when gas prices in minnesota change every thursday at 8pm the usd/can change with the direction of the price of gas.

No doubt there were some, watch the financial papers next few weeks for amusing stories of collapsed hedge funds, there will probably be a few that guessed the wrong way. But if you look carefully you'll generally find they are run by BSD's (a rude term for a certain type of guy whose testosterone levels greatly outrank his IQ) and so have been trading naked with other people's money and are also young enough to have never had to deal with a certain amount of volatility in the market. The other group will be composed of folks just too bright for their britches, like the old LTCM.

OTOH most who are willing to hold positions for a longer time frame tend to make sure that they always have adequate hedges in place (if they are big) or use stop losses if, like myself, their trades are too small to have any effect on the market as a whole. (A big trader trying to unload a large position quickly is essentially committing financial suicide). There's other factors that also greatly reduce one's risk - for example, analyzing not just the price, but more importantly average relative return rate over various time periods (the rate of change in price divided by the price itself). For example, I use several, ranging from a week to two months, and scale in or out as that changes. Also things like the number of deviations the price is from the various trend lines, which gives you a measure of the likelihood of a counter trend.

From that POV collapses like the recent one while not predictable have been expected; you'll note for the last couple of days just prior the markets have been choppy and not trending up or down in any significant way, and any reasonable indicator should pick that up as a sign that risk is high and profitability expectations are low - i.e., stay out of the market, especially if one is as lazy as I am....

I've uploaded a gif (it's a bit large for plotting here) for a typical example, from the EUR/JPY. Sorry if it's a bit complicated (lots of lines), but it's not hard to actually read. The various thick colored lines are averaging filters of (roughly) one week, two weeks, four weeks, and eight weeks; you'll see just prior to the break on the pair how tangled the lines are (i.e. uncertain), and how after the break they clearly separate at different speeds and mostly lie well outside the price line. I use 4 as that's the maximum positions I will take on a pair. The current return rates range from about 120%/year to 250%/year, obviously unsupportable for any length of time but all good for now. They are also generally running at or outside the second deviation line (indicated by a paired thin solid line and a dashed thin line), which as long as that holds is indicative of lots of potential profit, as the mean reversion tendency is still being beaten by the trend strength. As the rates slow or turn up, one scales out, so that by the time they start looking flattish, one should be out completely.

One also has to note that the biggest position traders are not going to blanch over a 4 or 5 or maybe even 10% drop (but then again they won't be highly geared either). Me, I'd blanche at getting caught out by a tiny fraction of that

Hmmm, I thought I was just sending the graph along as an attachment, but it's showing up on my screen. Hope it's not too wide for others, my regrets if it is. Someday I'll get this computer stuff figured out...

I am a full time position/swing trader. Position trading is swing trading the over all greater trend. Only take trades in the direction of positive interest.

While swing trading can make use of carefully planned s/l's. Position trading uses NO s/l's. I use hedging in place of s/l. Easy going trading. Like the obvious short opportunity I took at 1.3822 on euro$. Or the current long opportunity on $jpy at 118.80 range.

I still take intra day trades some times, but not very often. Durring intra day trading, you can step away to use the bath room and come back to see the market has jumped 50 pips, then returned to your entry, never moving back into profits again. Blink and you lost, hesitate and you lost.
Intra day scalping is the only way to go. But need an ecn to do so, and nervs of steel. Has the highest burn out rate.

edit: position/swing trading....by adding to winning positions, I can double tripple an account in just one trade opportunity.

Hope this help clarify

Dave

Here an example of adding to a winning position. Target range determined by wolf wave analysis.

Dave

You haven't factored in how long a position has been held. If a trader was long USD/JPY, AUD/JPY, NZD/JPY, GBP/JPY or EUR/JPY for the past four months they would have reaped a significant gain on their trades even with the recent downturn. I don't think you categorically say that positions traders stay in positions too long hoping for a reversal. That is entirely dependent on an individual's trading style and trading system. Furthermore with the recent reversal of these currency pairs smart position traders are in position to reap further gains by going short and just riding out the trend. The key as always is when to exit a trade to perserve one's profits.

Hi all, my first post and I guess it's a good introduction by saying what "division" I trade in. A warm greetings to all and may I add, this is a fantastic forum, deffinately a diamond.

If I had to label my trading it would be a mesh. I don't really take notice though whether it's intraday I'm doing/swing or position because I do whatever is required to make a profit. Working out a stop loss on analysis of previous price drops and trends.

Saying that though... I'm currently trading 30mins and 4hours but also testing fundamental/technical strategies on Daily/Monthly timeframes, specialising in GBP/USD. I create startegies according to what patterns I notice (not chart patterns as in triangles, head and shoulders etc. but patterns that show re-occurances in price action and I go from there).

Stop losses I generally find that 30 pip s/l for 30min timeframe, 50pip for 4H, 100 pip (sometimes 200) for Daily and 200 for weekly seem popular.
I know it also depends on your style but any others notice these averages too?

So once again as for what "type" of trader I am...I'm an insomniac trader hahaha

Damien,

Thank you for a very well written and logically laid out reply. Would that other posters here write and think so clearly.

I think these debates over time frames and styles are pointless, the markets are obviously fractal in nature and the same patterns play out on every level.
Mental discipline is the important factor and this is independent of time frame and/or trading method. Personally I find waiting for swing trades to develop more stressful, but that's just me. A bigger factor I find is that long term trading requires a greater level of prediction as opposed to reaction, I have found reaction to be more successful, setups are only points of interest.

It doesn't matter. If you have a system in place where you can interpret trends on all charts either is ok. With my personal system I trade on 1m, 5m, 15m, 30, 1hr, and 1d. I've actually been quite successful with my system. Develop your system.

My preffered method is position trading on the weekly charts, then swing trading the dalies and scalping the 4hr and 15 minute charts then finally Micro scalping the 1 minutes when its news time.


thats me



-FXC

this is the method i use. identifying proper trending reversal has not been easy. how do i differentiate minor trend reversal from major trend reversal?

You never answered your question, goldenalex!