Daytrading - How to make a profit

[acouch]

next stage..

trying for 836.30

 

[>Apocalypto<]

This is a day trading system I am learning at the moment.

Its called Floor Trader System.

you buy off retracements in a trend.

see chart with some entrys

 

[Trembling Hand]

Hi all

I am an intraday spi trader. I'm posting what I’m looking to trade pre-open and then updates during the day on a blog. Been at it full time (trading that is) for 2 years if that means anything??

You can check out what I'm doing at...


http://tremblinghandtrader.typepad.com/

 

[VSntchr]

Re: Daytrading- How to make a profit

A. to 2/ Depends on the trader. Some people yes, some people no. In my case, I like having my option strategies and swing trades as it takes the pressure off the daytrades. Psychologically, if I were relying only on daytrading, I don't think I would enjoy that pressure.

But some daytraders are the other way round. The income from daytrading takes the pressure off their long term decisions.

As usual, It's all a matter of individual psychology.

A few points about what I post:

1/ I don't want to be the guru here. So please, other daytraders add your thoughts, methods, criticisms etc. Don't leave me on my own here!

Reaaaally old thread that I stumbled across. Some good content in here.
I agree with WayneL on the point about having multiple strategies to take the pressure off. Personally I am in the camp of having my longer term strategies take the pressure of my daytrades.
If I don't have many longer term (3+ day) positions, and I find myself chasing the next price sensitive announcement to ensure a good result for the day/week - I know I am not in a good place.

I now have a few main strategies that I trade and the average hold times are as follows:
Trend Following: 19.8 days
Mean Reversion (reversals): 12 days
Mean Reversion (pairs): 6 days
Day Trades: 0.9 days (intraday exit counted as 0)
Scalp: 0 - All Intraday.

As many have said before, trading is a business. I prefer my business to have more than one product in case that product goes (temporarily) out of fashion.

Looking at some of the charts posted in the thread way back in 2006/7 it is clear how much more active the local market was. Looks like the GFC really torpedoed the volume.


Also think I may have found TH first post

Hi all
I am an intraday spi trader. I'm posting what I’m looking to trade pre-open and then updates during the day on a blog. Been at it full time (trading that is) for 2 years if that means anything??
You can check out what I'm doing at...
http://tremblinghandtrader.typepad.com/

 

[VSntchr]

Another topic that was broached earlier in the thread is one that I have been pondering and playing around with a bit lately; regarding number of positions.

The key constraints are:
- Capital
- Trader focus/attention span
- Availability of suitable trades

I think that it's very easy to find enough trades. Capital is also a problem that has an obvious solution to overcome by the trader.
The sticking point comes with the limited resource that is focus. Too many positions and trade management will suffer: spikes will be missed, exits might become slow etc etc. Also too many positions may result in an excessive dilution of risk per trade. However the equity curve will likely be smooth and the trader stress levels will be lower due to no single trade being overly important.

Not enough positions as a result of looking at too narrow of a universe, not trading enough strategies to cover different market phases would perhaps give a more bumpy equity curve. There would also be more stress on each individual outcome as it is more significant - however the trader has much more focus per trade and will be in a better position to optimise trade management.

I think that based on the pros/cons of both sides that is clearly a balancing act and finding the suitable area for each trader will come with personal preference and experience over time. Finding where the focus is begins to be stretched, where the equity curve reaches a desired level of "smoothness" and where stress is at a reasonable level. It is also worth considering that at some point, lower quality trades may be entering the portfolio and impacting total return and that the same or better returns could be achieved with less activity. This is superior due to less work, lower commissions and more available focus.

 

[skc]

Not enough positions as a result of looking at too narrow of a universe, not trading enough strategies to cover different market phases would perhaps give a more bumpy equity curve. There would also be more stress on each individual outcome as it is more significant - however the trader has much more focus per trade and will be in a better position to optimise trade management.

I think that based on the pros/cons of both sides that is clearly a balancing act and finding the suitable area for each trader will come with personal preference and experience over time. Finding where the focus is begins to be stretched, where the equity curve reaches a desired level of "smoothness" and where stress is at a reasonable level. It is also worth considering that at some point, lower quality trades may be entering the portfolio and impacting total return and that the same or better returns could be achieved with less activity. This is superior due to less work, lower commissions and more available focus.

Interesting points. I have been thinking much about the issue of focus as well... it is the one scarce resource that is hard to expand. I do tend to trade a lot of names - think 40-50 at any one time. Clearly I can't watch them all tick by tick, but I often think of it as my day's portfolio.... so if the overall account P&L heads in the right direction then you may not need to optimise every tick.

There can also be benefits to not watching something that closely. With pairs, for example, unless you are near the entry/exit signal or there are news, it's probably OK to not watch too much the detailed action at play.

With news plays... I tend to size a position quite big in the beginning. If I am right, take some off the table 10-20minutes later and run the rest. This means a fair bit of attention in the beginning but the remaining could be held 2-5 days... which again you won't need to check every tick.

What is always a struggle is on open... and particularly around reporting season. You have a list of 10-12 companies that you think their reports are market-moving. You then have 15-20 companies from the previous day or two that reported and should have plenty of moves in them. It's hard to watch and trade everything. Sometimes the difference between a good and average week is whether you happened to pick the right ones to watch closely.

So if anyone has good tips and tricks... do share them here

Also think I may have found TH first post

He sounded like a well mannered young man

 

[Wysiwyg]

Re: Daytrading- How to make a profit

Mean Reversion (reversals): 12 days
Mean Reversion (pairs): 6 days

Just wondering how you define the mean or "average" for price to possibly revert toward?

 

[Gringotts Bank]

He sounded like a well mannered young man

Almost saintly.

 

[VSntchr]

Re: Daytrading- How to make a profit

Just wondering how you define the mean or "average" for price to possibly revert toward?

Well for my pairs trading it is based on rolling mean of price ratio between the two stocks.

For the other system it is much more discretionary and may involve something simple like buying a pullback at a support level and aiming for a reversal back up to specified level that meets the required RR.

 

[cynic]

Almost saintly.

Did he revert to mean?

 

[Gringotts Bank]

Did he revert to mean?

Hehe, the original ATR - average true rougue. Last time he was on, we got along quite well.

 

[Wysiwyg]

Re: Daytrading- How to make a profit

For the other system it is much more discretionary and may involve something simple like buying a pullback at a support level and aiming for a reversal back up to specified level that meets the required RR.

Okay thanks. The closest definition to how I mainly trade is reversals trading. That is long or short a price direction change with no regard for whatever the past average price (is calculated??) with more attention to trend these days.

 

[Gringotts Bank]

Hard to get a smooth Eq curve for breakout/momentum systems, but 2015-16 turned out to be a very good year for this type of approach. Previous years were not so smooth. [backtest only] Wouldn't it be great if you could just hand it to someone to trade for you?