Well if you look at my trading journal on this site (just click on the red icon under my information on the left) you will see my trading style and how I proceed with trades. My journal has been going since February and I am up 7% so far with some ups and downs along the way.
The objectives are not like day trading, scalping or even swing trades as I see it...it would be interesting if other long term traders agree. To start you want to create a portfolio of stocks that individually may rise and fall but in the main move the value of the portfolio in a positive direction.
This fantasy portfolio is rather small at a start of $100,000.00... while this may seem like a lot of money to a newbie.... trust me when I say it is quite small if you want to make a living from this. In my real situation I have 4 portfolios...one standard margin account, 2 types tax free accounts and one USA dollar account. If I had only $100,000 to work with the object would be to build that account to at least $500,000 before taking money out to live on...the more the better.
I cannot speak for all long term traders but I have never "blown" an account. But then I studied TA for 20 years before I started and now have retired and the income from my investments is 90% of my income. On average I make 7-10% AFTER I subtract all expenses...food, clothing, shelter, entertainment etc...does that mean I made money every year...nopes...in the crash of 2008-2009 I lost 45% of my holdings ON PAPER...I did not sell my stocks for the most part and lived off of money market mutual funds that I had set aside on good days in the event of a crash...wise or lucky I am not sure but it worked and those paper losses reduced March 2009 to the point where I made 35% by the end of 2009 and 27% at the end of 2010...but since then I am back to the 7-10%.
the long term trader's mindset is different that the shorter term trader... At least from my perspective I look for stocks which are in recovery or marching strongly forward. I look for breakouts in my charts and set mini-objectives in the resistance/support levels I find...each time a level is reached I will evaluate whether I want to continue the hold or not.
I factor in Fundamental Analysis in also as I want to in general invest in companies that have low debt/good operating revenue/make money...that is often my initial screening
Anyway, I don't want to hijack this thread but if you have questions about my approach go to my journal thread and I will answer them....
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I voted for "I don't scalp." I day trade, and I am seldom in a trade for as long as an hour, and I am looking for the equivalent of 4-5 or so ES points (not ticks) -- 16 to 20 ticks -- but would be very content getting less, and doing it two or three times a day.
To me, that is not "scalping" -- scalping, to me, is what the PATS traders are looking to do, get 1 point (4 ticks) out of ES, and do it 6 to 10 times a day. But I understand that longer-term traders may regard any kind of multiple trades a day, or any short-duration trades, as scalping.
When I first started out in trading (this was a long time ago, now), "scalping" was taking advantage of the spread between bid and ask -- buy the bid, sell the ask. (Basically, screw the retail market order trader who sells the bid, buys the ask.) I'm not sure how these guys did this, even then, but it took 100's of trades, and either being on the floor, or being an "upstairs" trader, or, later, having electronic access which others did not have, and tiny transaction costs. You can see FT71' s story for that. Nearly impossible then, totally impossible today (possibly except for true HFT shops) with the tight spreads and near-universal use of electronic trading.
So, I would say that in general, scalping is just trading in almost the shortest timeframe that is currently possible.... and by that definition, the majority of traders on futures.io (formerly BMT) are not scalpers.
But from the viewpoint of a multi-day swing trader, what I just said is ridiculous, and almost all of them are.
And by the way, if the poll had asked, "Why do you day trade?" -- a different question, to me -- I would have said that I believe the profit opportunities are greater, and yes, I also understand that the risk is higher. Nothing is free. (Which is the appeal it has to gamblers, and dreamers, and why it is hard to make it work.)
And no, I'm not real good at it yet (I'm new to this short-term stuff), but that would be another poll, wouldn't it?
Last edited by bobwest; July 27th, 2014 at 08:55 AM.
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OK, sorry to be peppering this thread with posts, but I just noticed that, as of now, the second-highest vote tally (after "I don't scalp") is "It's the lowest risk".
I am scratching my head over this. True, if you never carry a trade "overnight," you never face a big gap opening, or bad overnight news, etc. And as a short-term guy (now), I can see that... except for the fact that today, "overnight" is all of from 5:15 PM to 6:00 PM Eastern US time for equities contracts, and similarly for other contracts. There's no overnight risk because there's no "night" in "overnight" any more. (Weekends excepted.)
My view is that trading highly leveraged futures contracts with a short timeframe is very risky, and it's an inherent risk resulting from the choice of the vehicle, the leverage, and the short timeframe. The short timeframe could not be exploited without high leverage, and leverage can cut both ways, very quickly, and does.
One of the frequent posters on futures.io (formerly BMT) (I'll post who it is when I can find it) has a quote from Dr. Steenbarger in his signature, to the effect that the market must always ultimately reward risk. And it does. But only if you're one of the survivors, which is the big problem.
We know -- it's almost a cliché -- that most new businesses fail. There's a great deal of risk in starting up something new. You are saying that you can make it in a competitive market that already has a lot of established participants. When people wonder why most traders fail, I think it's the same answer, and it's very simple.
But some new ventures succeed, and I don't think just by chance (usually), and the same principle applies to trading. Risk has opportunity, but if anyone thinks there is opportunity with low risk, I have to disagree. There is such a thing as an edge, and it may shift the probabilities in your direction.... But this short-term trading, whatever you call it, is not less risky. The risk may be manageable, but it's part of being in the markets.
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