have ever seen of avoiding a lot of work and a lot of stress. Prepare yourself for it, or if it is too hot, get out of the kitchen now!

Position Trading versus Intraday Trading

Not only must you decide whether to trade judgmentally or nonjudgmentally, you also must consider the time frame that best suits you. You need to be sure the time period you have chosen is best for the approach you are using.

With respect to applying the methodology this book (Trading with DiNapoli Levels) teaches, it is easy. Essentially you apply the same general criteria to a five-minute chart that you would apply to a monthly. Where you best belong is the tougher question.

My experience indicates that it is suicidal for a new trader, operating off the floor, to trade intraday. What is "new"? "New" refers to anyone trading actively for less than one year. If you are a part-time or casual trader, you had better give it three to five years before going to intraday trading. A better question, however, would be: What is "intraday"? My definition is that it describes the activities of a trader who is actively observing price action during the day and making decisions based on what appears to be unfolding at that time.

A daily-based (or above) trader may choose an entry or exit point to be acted on during the next day without being construed as being an intraday player.

What is a position player? The true answer is, it depends on perspective. To a floor trader, the five-minute trader is a position player. To a daily-based trader, a weekly-based trader is a position trader, and so on. For our purposes, however, we will consider a position trader as daily-based or above. As you drop the time frame, the decision-making time is compressed and the stress is increased. As you drop the time frame, the number of decisions increases radically. You have seven times the number of decisions going from daily- to hourly based, 12 times the number of decisions, going from hourly to five-minute. The opportunity is certainly accelerated, but I would not expect a sawy boxing promoter to put a promising newcomer into the ring with Mike Tyson, just to see if he could learn to handle the big time more quickly. After all, he might lose more than an ear in the process!

Five Disadvantages of Intraday Trading

1. You need experience-lots of it-with particular emphasis on order entry techniques and a thorough understanding of floor operations.

2. You need excellent brokerage and clearing services.

3. You have high overhead costs in software, quote delivery fees, equipment, and transaction costs.

4. So much of your time is taken up by the trading activity, you cannot make money doing anything else.

5. Stress levels increase dramatically.

Three Advantages of Intraday Trading

1. You can trade many more contracts with a given amount of capital.

2. You have many more trading opportunities than are available to a position trader.

3. If your trading capital is severely limited and you are otherwise qualified, you have trading opportunities that allow for much closer stops. Obviously, the typical range on a five-minute bar is smaller than the typical range of a daily bar. (This point is really a variation of item 1.)

/ an alternative

Given todays technology, there is a way to gain substantial benefits from a mix of the traditional paths. Here is how it works.

Get delayed intraday quotes from a quality vendor and have the capacity to display the bars graphically on an intraday basis. You can use, lets say 30- and 60-minute time frames, to help make daily-based decisions that can be acted on during the next day. The idea is to come home after work and make your decisions in the relative calm of the evening with the added accuracy and flexibility of intraday charting capability. You can set stops, entries, and such to be acted on during the next day. It may even be possible to set up some contingency orders, depending on your work environment and/or brokerage relationships. The advantages are substantial. You avoid the need for excellent brokerage services and a thorough understanding of floor operations. You avoid expensive software, on-line feeds, and equipment. You can make money doing something else. You can trade somewhat more contracts and have far greater opportunity than a traditional position player, and have closer stops. The analysis of your trading opportunities will be thorough. What is most important, however, is that you will operate with less stress than an intraday player, giving you an opportunity to grow into the trading experience rather than to be intimidated by its nature and seeming unpredictability.

Conclusion

Aspects of Judgmental Trading Techniques

1. You can benefit from an extremely flexible market approach.

2. You will have a highly flexible personal schedule.

3. You have the potential for dramatic gains (or losses) quickly.

4. You will have potentials for extremely favorable win/loss ratios.

5. There is an absolute necessity for strict personal management.

6. There is an absolute necessity for a separate and adequate trading environment.

7. Relatively small amounts of capital can be adequate to achieve your goals.

8. A focus on relatively few markets is not only acceptable, but also preferable.

Aspects of Nonjudgmental Trading Techniques

1. Poor win/loss ratios are the rule, not the exception.

2. Historical hypothetical testing techniques are typically badly flawed for a wide variety of reasons.

3. Most nonjudgmental systems ultimately fail; the aim is to attempt to use one while it is working.

4. Volatility breakout systems seem to best stand the test of time.

5. Multiple systems, traded over a wide variety of markets are necessary to smooth out the equity curve.

6. Relatively large amounts of capital are necessary for system and market diversification, as well as for the inevitable drawdowns.

7. If system and market diversification is achieved, large amounts of capital are employable.

8. Constant implementation of trading signals is essential (no breaks).

9. Locating adequate help to implement the system signals is a challenge in itself.

Aspects of Nonjudgmental and Judgmental Trading

1. An excellent lifestyle is attainable if trading goals are met.

2. Fulfillment, challenge, and discovery are possible outcomes of the trading experience.

3. Stress levels, if not properly managed, can lead to utter destruction of your psyche and physical self.

4. Financial ruin will accompany a frivolous or ill-advised approach.

5. The workload is awesome and unending; it must be properly managed.

6. You will have the potential to meet, and have as friends and colleagues, some of the best and brightest people on the planet.