Day Trading or Position Trading?

these both are are really interactives. but i think day trading have more benefits and it for such longer time period. through it you can get high benefits and returns. it is such a successful technique and strategy at forex market.

Position Trading by far. The trades are further apart, giving forgiveness to Newer Traders. And the wins are big.

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!!!

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.

I totally agree with everything you said, but disagree whole heartedly with your disagreement!!! :wink:
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!

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 :slight_smile:

:57: 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.

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.

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.

I do some of both.

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.

Day trading the H1 charts here…so I’m hardly ever in trades for more than 24hrs at a time. Sometimes if I feel a trend might continue I leave a quarter of my position on an let it run.

Im not sure I’m getting it. Isn’t it that if you’re trading short term your risk is smaller than if you were trading long term?

I think your right but some can trade daily signals and still keep a tight stop. That is what I want to learn myself.

It is all relative. A tight stop on a 5 minute chart may only be a handful of pips. A tight stop on a daily, depending on your trading strategy, may be 50-100 pips. Position trading is looking at 3 months to a year or more. A tight stop is hundreds of pips, at the minimum.

The risk is calculated on the number of pips between entry and stop loss using a set percentage (2% for example). On a small timeframe you have, comparatively, only a few pips so your position size can be greater when risking a set percentage. On a large timeframe you have much wider stops and therefore more at risk if risk is calculated using the same set percentage so the position size is smaller.

A generally accepted position size calculation is: R/P=S
R=Risk Capital Percentage (2% of capital you are willing to risk on a trade, for example)
P= Pip dollar estimate (Standard lot 1 pip =$10, Mini 1 pip = $1, micro 1 pip =.10).
S= Size of position to trade

Day Trading is the best.

I prefer taking short term positions. Maybe positions that last for few hours to just several days.

jobbing the market just doesnt seem to work. You tend to lose your discipline.

It all depends on yourself. If you force yourself to trade in a way you’re not comfortable with you won’t succeed.

If you prefer to get in and out and not linger around in the market then you should go for day trading. It’s a more interactive and potentially stressful time where you’d have to keep an eye on the charts regularly through the course of the trade.

If you don’t mind staying in trades over days to months then you would go position trading. Generally these are less stressful as you have time to analyse your place in the market and act on it. You wouldn’t need to constantly look at the charts every minute but at least once a day. If you’re going to lose sleep worrying about leaving positions open overnight though then you might need to reconsider. One other thing to consider for position traders is rollover/interest differentials - these can add up over time.

For myself I’m a position trader (for now). Currently I have 27 open positions running and usually have between 10-30 positions runnning at all times. Rollover is hitting me for around 0.2-0.3% of total capital per day so I have to overcome that cost each day to run a profit.