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No Day Trading. Please, No Day Trading

A recent dialogue on Facebook:

Shankar: Does trend following work on intra-day as well?

Covel: No. But why would one want to trade intra-day?

Shankar: Frankly I don’t know…but what I wanted to ask was does it work even on a shorter time frame i.e 5 minute charts. It should work right?

Covel: No. But why would anyone try to trade 5 minute charts? There is no system that trades 5 minute charts. None. Anyone who says that there is… is suspect.

Shankar: Any trading is for generating more profits… is it?

Covel: Day trading is not for more profits.

Shankar: Very surprising…

Covel: It is a fantasy. Find me the track records of the great day traders to match the track records of the great trend followers. Let me save you the research: they don’t exist. Why is that surprising?

Shankar: Lots of strategies have been there. I am talking about an Indian contest. Surprising because lot of people keep talking about it.

Covel: There is nothing special about Indian markets. All markets are the same. Talk about it, yes. Talk. Many people talk about doing drugs. Does their talk force you to want to take drugs too?

Shankar: No.

Covel: Trust, but verify.

Shankar: Ok.

Covel: When you can verify day trading, let me know.

Shankar: Why would trend following not work on smaller time frames?

Covel: Why should they?

Shankar: The philosophy is the same right? There are going to be trends in the shorter time frame as well.

Covel: How is it the same to trade long term trends that exceed a year or longer … and that is the same as a 5 minute bar? I talk about these issues in my books extensively.

Shankar: As long as you are running the profits and cutting the losses.

Covel: Go find the proof for the 5 minute bar trend followers. I will wait!

Shankar: Ideally if the philosophy is the same, it should work on all time frames. Hey this is just a question out of inquisitiveness. I appreciate the work you have done. And let me tell you all traders badly need to know the work you have been doing.

Covel: Ideally? Why?

Shankar: I am talking about from the trend following philosophy point of view, also, if you do the back testing on the shorter time frames, you do get good results.

Covel: You get good results, really? Find me the real proof as asked. I will wait.

More on day trading here and here.

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Posted in Feedback, Holy Grails
2 comments on “No Day Trading. Please, No Day Trading
  1. Matt says:

    With trend following being a statistically driven method, its interesting that people believe that you can accumulate enough data to separate the signal of the trend from the noise of the tick-by-tick market movements. Add into this the logistical issues of dealing through a broker such as commissions, spread, and slippage and you’re just begging to give all your money away by trading on such a short time frame.

    The podcasts are fantastic, keep up the good work Mike.

  2. Jim Rohrbach says:

    The trend of the markets changes from time to time. You can’t predict those changes but you sure can identify them. I have been a market timer for over 40 years. Most people do not believe me when I say that because they have been trained to be “Buy and Hold” investors. I guess there are a lot of “get rich quick” people out there also.

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