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Earl Adamy wrote:
>
> Extreme high volitility can turn position traders (anyone who carries
> overnight) into a day trader (one who does not carry overnight). Within
> those two groups there are many variations of style and time frame, however
> the line in the sand is whether or not you carry overnight. If you carry
> overnight in these volitile markets, you must be prepared for 30+ point
> drawdowns in the S&P. If you day trade in these markets you can limit
> drawdowns to just a few points. Thus the drawdown risk of position trading
> in volitile markets can easily run 10 times the drawdown risk of day trading
> and one should probably have 10x the capital to position trade as to day
> trade. When markets are calm, I emphasize position trading and play more
> golf. When markets are eratic I emphasize day trading, work a lot harder,
> and play a lot less golf. Other than that, a set of charts is a set of
> charts and it's just not that difficult to switch between
> monthly/weekly/daily timeframes and daily/30min/5min timeframes. The major
> difference is that position traders have more time to consider action than
> do day traders.
>
> Earl
>
> >The list heard from a few "position traders" who insist they have an easier
> >time of things, letting trades ride overnight. Really, I think these
> >people are swing traders, staying in anywhere from an hour to 3 days.
> >
> >Is anyone earning a consistent living swing trading?
> >Does it take *that* much less of a psychological toll?
> >How do you deal with a period like the past couple months with markets
> >gapping every day, in either direction...
Earl:
You keep coming up with these great comments. Where do you get them
all?
I agree with your take on switching from day trading to position trading
and back again. But I must also add that once a position switches to a
daytrader the switch back is more difficult. One, more from a
psychological perspective, and two you have to again relearn the long
term aspect (character) of the particular market you are trading.
I for one was a position trader who switched to daytrading and have it
very difficult to back. Mostly because I guess I don't trust my old
methods in this new market. For example, when the S&P was 500/point we
used to have nice steady moves that were anywhere from 25 to 50 points.
That all went away when we went 250/point. There were no steady moves
of that magnitude. Oh, sure you have some good moves, but usually there
was a 50% retracement is the middle of the move, an advance back to old
highs or lows, another pull back and then you would have a
continuation. That is the nature of these markets today and so position
trading is very difficult from point of view. At least if you want to
eliminate the hugh drawdowns that can occur.
Lamont Cranston
"who knows what evil lurks"
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