Day Trading or Position Trading? - Page 3
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  1. #21
    Join Date
    Jun 2011
    Posts
    182
    Quote Originally Posted by fxturtle

    I'll use your example:

    1. trading capital is 1,000
    2. 1% of capital risked per trade i.e. $10 per trade
    3. When stop loss is 50 pips, the loss should be $10 only
    4. Your position size should be two micro lots ($0.20 cents per pip) = 50 pips x 0.20 = $10 dollar loss
    5. Conclusion, no need for higher capital requirement, what people need is PATIENCE to grow their capital.
    True but how far can patience be tested,
    I have done what you say with position sizing,
    It gets disheartening after you have a couple of hundred pip move for a few dollars profit to keep RR OK.
    So a bigger start out capital helps the emotional side of things.
    At least profit looks better even if it is the same percent wise.
    That keeps you trading to the plan!!!

  2. #22
    Join Date
    Jul 2012
    Location
    Right here, right now
    Posts
    282
    first, i disagree that "trading xxxx style requires more capital that trading yyyy style". no matter what you trade and how long you keep your trade, you have to adjust your position size accordingly. the shorter your expected trade duration the larger the position you can take given the same balance. you shouldn't be looking to earn PIPS, you should be looking to earn PERCENT INCREASE IN EQUITY. on short term, you need to make that happen with 20-50 pips so each pip has to be worth X. on long term, you need to make that same gain happen with 100-300 pips, so each pip has to be worth Y (which is less than X).

    having said all that - pick the style that matches your own personality. if you're an impatient mofo, swings are gonna drive you bonkers. if you're very analytical, scalping / momentum is gonna freak you out.

    personally, i'm more in the scalp / momentum / day trade camp. my trades last anywhere from a few minutes up to 3hrs (that's a loooong trade for me). typically my "personality comfort zone" is between 5min and 30min. yours might be 5~30 DAYS.

  3. #23
    Join Date
    Dec 2011
    Posts
    344
    Quote Originally Posted by SoundOfLight View Post
    first, i disagree that "trading xxxx style requires more capital that trading yyyy style". no matter what you trade and how long you keep your trade, you have to adjust your position size accordingly. the shorter your expected trade duration the larger the position you can take given the same balance. you shouldn't be looking to earn PIPS, you should be looking to earn PERCENT INCREASE IN EQUITY. on short term, you need to make that happen with 20-50 pips so each pip has to be worth X. on long term, you need to make that same gain happen with 100-300 pips, so each pip has to be worth Y (which is less than X).

    having said all that - pick the style that matches your own personality. if you're an impatient mofo, swings are gonna drive you bonkers. if you're very analytical, scalping / momentum is gonna freak you out.

    personally, i'm more in the scalp / momentum / day trade camp. my trades last anywhere from a few minutes up to 3hrs (that's a loooong trade for me). typically my "personality comfort zone" is between 5min and 30min. yours might be 5~30 DAYS.
    A perfect answer in my opinion.My comfort zone is 30min-2days.

  4. #24
    Join Date
    Jun 2011
    Posts
    182
    Quote Originally Posted by SoundOfLight View Post
    first, i disagree that "trading xxxx style requires more capital that trading yyyy style". no matter what you trade and how long you keep your trade, you have to adjust your position size accordingly. the shorter your expected trade duration the larger the position you can take given the same balance. you shouldn't be looking to earn PIPS, you should be looking to earn PERCENT INCREASE IN EQUITY. on short term, you need to make that happen with 20-50 pips so each pip has to be worth X. on long term, you need to make that same gain happen with 100-300 pips, so each pip has to be worth Y (which is less than X).

    having said all that - pick the style that matches your own personality. if you're an impatient mofo, swings are gonna drive you bonkers. if you're very analytical, scalping / momentum is gonna freak you out.

    personally, i'm more in the scalp / momentum / day trade camp. my trades last anywhere from a few minutes up to 3hrs (that's a loooong trade for me). typically my "personality comfort zone" is between 5min and 30min. yours might be 5~30 DAYS.
    I totally agree with everything you said, but disagree whole heartedly with your disagreement!!!
    Isn't Forex wonderful,that 2 people can share the exact same thought on one thing but see it in a
    totally different way!

    As I said earlier I think the difference is the emotional one, not the technical one with a small starting
    balance (as a position trader) I myself don't trade position, but gave it ago with a small balance when i was just starting out
    Trading.

    We need to agree to disagree or this may go on for some time!
    Last edited by OOPs; 08-01-2012 at 11:33 AM.

  5. #25
    I think anytime the question of Daytrading or Position Swing Trading is posed, there will always be a disagreement.

    To me, this is like asking someone Democrat or Republican, which party is the best, and then invite 20 people to the room. Watch what happens ;D

    Position and Day Trading are completely night and day in technique, thought process, and trade process.

    I prefer Position, and no I will not tell you Dem or Rep

  6. #26
    Join Date
    Oct 2012
    Posts
    1
    Great insight, Tony.
    Scalping can be amazing and provides instant results, but my stats tell me it is not working for me.
    Trading the news works better for scalping.
    Planned trades take more time and offer more insights in the long run.
    Quote Originally Posted by TonyIommich View Post
    My experience in FX has told me that short term day trading is probably the toughest place to succeed in, you have to really be selective and know your setups very well. Also, once volatility shrinks its very tough to eek out a respectable profit. I was doing pretty well when the Vix was in the 40's, then once it shrank at the beginning of this year I was totally lost, the market was just indecipherable.

    A professional FX trader told me that short term scalping style strategies are very difficult to sustain these days because of all the competition from the algorithmic trading crowd. You have accomplished PhDs in math, top programmers, and experienced traders that team together and compete against you. They see things in the market that you can't see on the chart (for example, they can compare multiple markets in a heartbeat and use sophisticated math equations to determine price relationships).

    While quants compete on all time frames, the playing field is more even on longer term moves because at that point, they really can't beat you on speed for analysis. If you get in 3 pips higher than they it won't make a big difference if you're both going for a 50 pip move (and they have higher fixed costs to cover).

  7. #27
    Join Date
    Jun 2012
    Location
    USA
    Posts
    28
    Quote Originally Posted by KooliBooli View Post
    It would be interesting to see who here day trades and who position trades.

    I personally am an avid day trader but I've been noticing that there are some really nice profits to be made in longer term trading.

    What are some of the benefits/negatives for trading long term. It would be nice to see both sides of the fence
    I sort of compromise and Swing trade. Day trading is fast action and exciting, for me though personally I tend to overtrade. Most times when day trading, you have this expectation that you have to get in at least 1 trade so you end up making a trade that should have never happened.

    Sticking to the theme of the thread, if I had to choose just 1 of the 2, I'd go with position trade. I just have more time to plan my entry, to do a more complete analysis. Chances are that reading the trend is also easier on a monthly chart. Unlike shorter time frames, when a pair is consolidating which is where you get killed on trades, on Daily, weekly and monthly charts, when a pair is consolidating, it's pretty clear to see, less guess work.

    I'll just adjust the position, size down for the big stops, not a big deal.

  8. #28
    Join Date
    Sep 2012
    Posts
    547
    Quote Originally Posted by SoundOfLight View Post
    first, i disagree that "trading xxxx style requires more capital that trading yyyy style". no matter what you trade and how long you keep your trade, you have to adjust your position size accordingly. the shorter your expected trade duration the larger the position you can take given the same balance. you shouldn't be looking to earn PIPS, you should be looking to earn PERCENT INCREASE IN EQUITY. on short term, you need to make that happen with 20-50 pips so each pip has to be worth X. on long term, you need to make that same gain happen with 100-300 pips, so each pip has to be worth Y (which is less than X).

    having said all that - pick the style that matches your own personality. if you're an impatient mofo, swings are gonna drive you bonkers. if you're very analytical, scalping / momentum is gonna freak you out.

    personally, i'm more in the scalp / momentum / day trade camp. my trades last anywhere from a few minutes up to 3hrs (that's a loooong trade for me). typically my "personality comfort zone" is between 5min and 30min. yours might be 5~30 DAYS.
    You just explained exactly why position trading trading requires more capital when you said: "the shorter your expected trade duration the larger the position you can take..."

    The opposite is also true. The longer your expected trade duration the smaller the position you can take. In reality, currencies do not move in price a great deal against each other, anywhere from a fraction of a percent to just a handful of percentage points (and that is usually over the course of a year!). You need incredible amounts of capital to take advantage of these moves which is why incredibly high leverage is available in Forex.

    If you attempt position trading with $100 and use no leverage then after a year you may earn a return on investment of a few percent. Again, the value of currencies move against each other everyday but only a tiny fraction of a percent. If you position trade $100 with max leverage then you are pushing (in the US) 50 times that amount. One down bar on the weekly chart and your account is blown because you have amplified any down moves against you by the same magnitude of 50. If your stops are tight enough to prevent blowing your account then you are underfunded to position trade because the many stops will chew the account up to pieces.

    If you have limited capital then you need a smaller time frame to trade Forex (because a trader can withstand multiple 10 pip stops on high leverage in small times frames whereas one or two multi-hundred pip stops are account killers on high time frames because of that very same leverage) or you need another trading vehicle altogether (position trading micro-caps, for example, if you are dead-set on position trading with limited capital). You get maximum bang for your buck that way.

    You also said: "pick the style that matches your own personality." In general terms I agree but that is just a bit over-simplistic. You need to match your trading capital, style of trading and goals to not only the correct time frame but also the correct the market. Forex is the wrong market for position trading on limited capital.

    Trading capital also falls under an unrelated adage that everyone has heard before: size matters.

  9. #29
    I do some of both.

  10. #30
    Join Date
    Apr 2012
    Posts
    383
    To be frank, Day trading.

    Day trading allows me to eat, poop, and sleep. And, occasionally, fart.
    Day trading at its best. For me that is.

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