Trading styles

FTMO Trader Scouting

zxcvbnm

New Member
Hello I'd like to read your opinion on the following questions :
1. Is day trading the best trading style for a beginner ?
2. In your experience which trading style can achieve the highest profit in the long run ?
 

jack

Administrator
Staff member
Firstly, hello and welcome!

Hello I'd like to read your opinion on the following questions :
1. Is day trading the best trading style for a beginner ?
2. In your experience which trading style can achieve the highest profit in the long run ?

1) I wouldn't say it's the "best" in general. It could be the best for you given any number of factors, but like anything there's huge trade-offs when you drill down to day trading over swing trading or position trading.

Day trading is considered a very 'active' style of trading. The time and focus you'd need to put into shorter timeframes (like day trading,) is far greater than someone who's just working an investment portfolio (more passive,) and only checks up on their trades once every few weeks.

Then there's the increase in noise, whip moves, etc... that are experienced as you go lower in timeframe. The significance of a sharp move on a minute based chart is greatly reduced vs the significance of a sharp move on a daily chart.. for instance. You'll have to deal with far greater amounts of price noise and unclear moves when day trading. Some traders actually want this (they build strategies around noise, mostly mean reversion based,) but for a novice this can be quite frustrating to deal with.

Then there's greater commission / spread costs.. You're simply going to pay a metric shitload more in transaction fees when day trading vs holding for longer periods.

On the other hand, typically day traders don't hold positions overnight, they don't have risk on while they sleep. This can be a benefit.

Day traders also end up spending more time practicing how to quickly let go of losers, as that's a paramount component to trading well on short timeframes. That is to say, the total transactions you do is quite a bit higher, so you have more opportunities to get positive and negative feedback for your actions while trading. This means you'll either learn quickly, or burn your cash quickly if you're stubborn. If you are approaching trading like someone who practices a sport, by cutting out styles / habits that are not returning the results you desire, and repeating the methods that are working for you, then the screen time and frequency of trades while day trading can be a 'crash course' of sorts...

So yeah, no "best" place to start for a novice, just trade offs.

2) This is a bad approach to picking a trading style.

It's easier for me to list the styles where I have zero examples of people making a consistent living from using them... but on the 'highest profit in the long run sense' that's gonna entirely depend on how one measures 'profit'** and market factors.

For example, we've seen a huge uptick in volatility since the pandemic started. There were "styles" that returned mediocre results back during the post credit crisis and pre-Trump presidency which, now, are huge winners. And there are other styles that made bank even a few months ago (covid related biotech pre-market runs, or currency bets on countries as various spending programs were being announced,) which now are duds. There is no 'long run'...

A trader's job isn't to do the same exact thing over and over for 50+ years. A trader is only as good as their ability to adapt to the fluid market as it changes. Perhaps they have an approach that works best seasonally.. perhaps they have a few styles that they apply as observe changes in the market... but the moment you stop learning and adapting, your career as a trader takes on a short shelf life.

Even old school traders who say they've traded the same setup for decades don't realize their approach has shifted over the years.. it can even be an unconscious thing. Some people can't even articulate how their strategy works, as they think it's just their gut feeling, but unconsciously they are relying on exposure to years worth of watching the markets evolve.. years and years of screen time.. patters burned in their memory.. etc.. .

Anyway.. hope that helps.
 
FTMO Trader Scouting
Top