Saturday, November 29, 2014

Swing Trading

Swing trades are trades which I intend to hold overnight and usually for 2-3 days with an expectation of a profit of 20-40 points depending on circumstances. This sort of trade is "long term" for me when contrasted with my usual day trades which might last only an hour or two.
In October 2011 I resumed swing trading in an account separate from my day trading account. I had spent most of the preceding several years day trading exclusively. I thought that I could explain how to swing trade using only the information contained in the daily bar chart, not the intraday  information upon which I rely for my day trading.
This effort proved to be little short of a disaster. By the end of 2012 I showed a per contract loss of  117.75 points on these swing trades, without a doubt the worst performance in any kind of trading I have ever experienced.
Sometimes the market hits you between the eyes with a big stick. When it does it is trying to get your attention, urging you to step back and reconsider your approach. In this case I concluded that my original premise, namely that I could ignore intraday information, was completely wrong.
I spent 2013 making some adjustments and reformulating my swing trading approach using intraday information. I resumed swing trading at mid-year and in three months showed a net loss per contract of only 7.75 points. A big improvement but still not where I wanted to be.
So I stopped again and resumed swing trading a second time in January 2014. As of February 28 I am up 38.60 points per contract for the year to date.
I will soon start posting monthly results for 2014 going forward. The will have the same format as my day trading results.
However the rates of return on swing trades will assume that one contract is traded per $15,000 of account equity (as opposed to one per 10k of equity for day trades) since overnight margins for the ES are nearly twice (about $4,500 per contract) day trading margins.
All results are reported net of $5 per contract round turn commission. Open trades are marked to the market at the end of the month.

2014:  monthly profit (loss); 2014 to date profit (loss) - swing trades only - day trades NOT included in these results

January : (6.20) ;  (6.20)

February : 53.25;  47.05

March : (4.45);  42.60

April : 4.15;  46.75

May : 9.05;  55.80

June : (3.10);  52.70

July : 4.35;  57.05

August : (2.70);  54.35

September: (26.60); 27.75

October: 26.35;  54.10

November: 27.60; 81.70

December: (13.25); 68.45  2014 percentage gain: 22.8%


This year I decided to move my day trading game up to the next level and was successful doing that. But this effort cost me my focus on swing trading. I missed many profitable swing trades my methods had identified because I was so focused on my 5 and 1 minute bar charts to the exclusion of everything else.
During 2015 I lost 33.25 points per contract on my swing trades, a percentage loss of 11.2%. At the end of October I was actually down twice that amount but I started regaining my swing trading focus in November and December, cutting the loss in half during the last two months of the year.
I am looking forward to a profitable 2016 with a better balance between my day trading and swing trading.

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