THE GREAT ESCAPE - IS DAYTRADING THE ANSWER?
"THE TRADER"

I guess most of us are attracted to the idea of daytrading because it opens up a lot of possibilities. The usual - freedom, flexibility, financial independence and control. At last, we have an opportunity to give the boss the flick and take charge of our own destiny and income producing capacity. But is daytrading all that it is cracked up to be?

We have all read the many articles and surveys that point to the fact that most daytraders lose money! But lets disregard this because Dave and myself have both proven that it is possible to make regular and significant profits in daytrading. Unfortunately, while we may have solved one problem there are still others outside our control.

The biggest problem is the time commitment. " So what?" I hear you say - "If I had a regular job I would still have to report for duty for around 8 hours per day. At least this way I get to work in my pajamas and don't have the hassle of peak hour commuting." Can't argue with this, but day-trading does bring on its own peculiar set of stresses and strains.

True, it does get you away from all those horrible, unreliable people with their messed up personalities. The ones that have little regard for the sensitivities of numero uno. Who needs them anyway! As time goes on, we get less and less interested in people and their many inadequacies and retreat into our secure little world of computer screens and emails. The perfect escape - or is it?

Now that we are Day Traders, when people talk to us we only half listen because our minds are far away on the e-mini chart. Most people talk rubbish anyway. We superciliously look down on their idle prattlings knowing fully well that there is a higher purpose in life and we are the only ones connected to the heartbeat of the markets.

Pretty soon, we get disconnected from partner and family and our presence becomes resemblant to that of the lodger in the manor. For those that are not single, I might leave the rest of this part of the story to your imagination. Some of us might not wish to go there.

Being glued to a screen and earning income with a few mouse clicks can seem like fun at first, but before too long the novelty wears off. A million candles later, one gets sick of looking at charts. "Never!" says the chart junkie. Does boredom produce stress? You better believe it! Many Daytraders, including the successful ones, suffer from early burn out and finally seek refuge in teaching, broking, software design and other related occupations. Does this signify defeat or capitulation on their part? I don't think so; maybe it's a last grab at sanity?

So, tell me - what was our original objective? Most of us would agree it was financial independence and a better quality of life. But somewhere along the line, this objective lost its way and finally mutated into daytrading. Daytrading, which was originally intended to be the means to achieve the end suddenly, became the end. So, what's the problem - surely, a simple solution would be to take lots of breaks and holidays. Yes, possibly, but we do get used to bringing in a regular income and most Daytraders can't stay too far away from a "market" fix.

So, I offer you another solution.

Split your business into two parts - one directed at short-term daytrading or scalping and the other longer term position trading. But most of us do this anyway. We all have a little dabble in the stocks or options from time to time. What's new about this notion?

I know, I know. What I am suggesting, though, is a more serious and absorbing "end of day" approach to trading the Futures and Currency markets. It provides the fix and also the ongoing income. We can still be trading when we are not daytrading. It makes it easier to take that break or reduce our overall time commitment. Our position trades can also act as a lifesaver when we have that bad day at the office with our daytrades. In contrast with daytrading, position trading can be a lot less stressful and at times a lot more lucrative. What? You mean more money than daytrading? No way!

Well, allow me to give you a few examples to illustrate my point. Take a look at the attached chart for March Soybeans.

The trades between 12/18/00 (the high) and 01/26/01 (current close) are as follows:

So, in a period of little over a month we have made $7,250 with possibly a bit more to come from our open position. Not convinced?

OK. So that was a fluke, but lets have a look at our friend Crude. This contract I would be less likely to pyramid because it is a little less trendy and also more costly to get wrong. So lets just take single trades as per the attached chart which covers the period from the swing low of Nov 3 to Jan 26, roughly two months.

Another fluke! But maybe by now I have your interest. OK, so lets have a look at a couple of currencies (again as per attached charts).

Unfortunately, we only got four bites out of Jap Yen (disgusting from day trader's point of view) for a total of a mere 911 points or $11,387! The Swiss Franc was less disappointing with a result of 1525 points or $19,062 over the last couple of months (refer chart). Of course, these results may have been improved if we traded more than one contract.

So, are we saying that using position trading we could have pulled out a total of $47,589 over the last couple of months? I have never been good at arithmetic but I think the answer is - "Yes."

Mind you, this is no comparison to what most of us Daytraders made during the same period - or is it? Hands up all you daytraders who had results similar or better than this.... Hello??

Still reckon that daytrading is the only way to go?

Again, this is only four markets and we could conceivably do better if we traded more than just these few. The problem is we might have to extend the time spent on our analysis from just a few minutes a day to possibly an hour per day. B...i...g time investment. If we got really serious, we might even have to give up two hours per day i.e. only if we turned up our MP3 music and had a few extra glasses of wine while we did our analysis (my style of trading). What a sacrifice!

OK, so where am I going with all this?

I think a lot of us have been duped by all the hype and razza matazz of daytrading, so much so, that position trading has become hugely undervalued and daytrading has become highly overrated. I think its time to redress the balance. We may be conning ourselves. True - daytrading does allow us to use smaller stops and therefore limit risk, but all those ins and outs can drive you around the twist. More often than not, we miss out on all the long runs, which is where the big money is.

People sometimes say to me that I don't sound like a daytrader!! Maybe, that's because I have two separate compartments in my brain - two distinct mindsets. One for position trading and one for daytrading. Both operate simultaneously and often act in total contradiction to one another. It is quite common for me to take a daytrade on a 5-minute currency chart that is completely opposite to my position on the longer time frame. As a daytrader I am simply trying is take a bite out of the days action. This does not mean I want to jeopardize my position on the longer time frame. I might for instance take a long looking for a 50% Fibonacci retracement, when in fact my position trading already has me short on the Daily time frame. Can you see how this might work?

Am I nuts to work this way? I don't think so. As highlighted above there is a lot of money to be gained from capturing the big long-term moves and I am not going to let my intraday activities screw up my thinking on this. As far as I am concerned, they might as well be two completely different markets.

End of day position trading offers a lot less stress. Sure, there is quite a bit of tension when we enter our first position, but as soon as we are in the black we can loosen up and let our profits run, adding additional contracts as we go. Daytrading on the other hand keeps one constantly in a state of high tension. Pay very, very close attention to this last point because I cannot emphasize it enough. Think of what this tension is doing to your insides. Think of what your insides are doing to you.

SUMMARY

End of Day trading offers the following "lost and forgotten" benefits and advantages:

Opportunity to capture most of the big moves Regular breaks, and much less time in front of the screen Diversification of investment Greater development of expertise from trading multiple markets

What's the catch? The catch is that markets don't trend like this all the time. So it becomes important to pick the turns or reversal points and hang on for the ride without getting our stops knocked out. I can show you how to pick these turning points when you attend our seminars.

THE PERFECT MARRIAGE

No, I am not talking about your romantic prospects. Nor am I saying that you should give up daytrading. But, wouldn't it be great if we could have the best of both worlds? We want the profits from daytrading but not the stress that goes with it. We want to be able to enjoy our lives without being chained to a computer.

For some time now, I have been searching for the ideal combination. A service that will take care of the daytrading responsibilities and allow me to focus more time on leisure activities. Unfortunately, most commodity and stock market trading systems out there have small profits and big drawdowns. What we need is a trading system to provide regular returns without the big risks.

I have been working hard to present you with this type of opportunity. You will also be given the opportunity at the seminar to purchase software so that you can trade this amazing trading method yourselves.

We look forward to feedback concerning your preferences but as yet, no firm decisions have been made regarding the best way to meet your trading wants and needs.

Editor's Note: The Trader included a series of charts with this article. However, we are unable to include them here, as they are very large graphics files, which would take far too long for you to download. Therefore, we will be posting his impressive charts at the Paid Members Only area of our webtrading site in the futute. We will also be distributing these valuable charts at our upcoming trading seminars.

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