Scalping

[maildigger 10]

I trade the ES but I'm not a scalper. I was wondering what kind of entry techniques scalpers use (tape reading, candlestick patterns,...)? Is profitable scalping possible with a risk/reward <1 ? Who has expierience with scalping (target 2-6 ticks) and wish to share his/her experience!

[walterw 10]

Mail : you want to check the "flip" trade thread, its mainly a scalping technique... so far works nice.... ES maybe has too small range to scalp, should you consider Russell or YM for this purposes... cheers Walter.

[brownsfan019 17]

Depending on how you trade, the EC (Euro FX) could be an option as well.

[The Bear 10]

  maildigger said:

I trade the ES but I'm not a scalper. I was wondering what kind of entry techniques scalpers use (tape reading, candlestick patterns,...)? Is profitable scalping possible with a risk/reward <1 ? Who has expierience with scalping (target 2-6 ticks) and wish to share his/her experience!

 

Hey..i'm an oil & gas scalper. I'm not sure if you said LESS THAN 1 or GREATER THAN 1 above...I'm not good at math. If you meant LESS THAN 1, yes it's possible, I do it all the time and make money at the end of the month.

 

I think it's hard to find people to tell you HOW to do it, because it's something you have to just do to learn. Nobody taught me how to scalp, I don't know if it's even possible to learn from someone. I'm sort of protective of my operations...even though I know it's silly and lame to be like this (maybe I have low self esteem?) I probably know nothing of value to you...but you may want to check my previous posts since I may have said stuff about it, and you could try messaging the guy Cooter - I think he's a grain scalper and his posts are somewhat interesting.

 

Scalping is very demanding and cut throat, and if you are wrong, your losses grow out of control very quick. I think I recall experiencing 10 losing trades in a row...step carefully or the commissions & losses will chew away at your account very fast....like termites.

 

That being said I think you should consider it. Start off as small as you possibly can.

 

>Who has expierience with scalping (target 2-6 ticks)

I may be wrong, but scalping I don't think is about how many ticks, it's about the hold time. Someone maybe trading off a 2-min chart going for 6 ticks over a span of minutes, but I don't consider this scalping.

 

I feel the gambling element is somewhat higher in scalping. I risk alot more to make small quick gains. It's very close to gambling in my opinion. I think scalping originated from local floor speculators (commodity exchange floor gamblers)...but it's possible as a public speculator to do it in almost any market...thanks to direct access trading.

 

Send me a message in the future if I can possibly help you.

[Guest cooter]

One thing I will note here is that the difference in my P/L has been mainly a switch from scalping for mere ticks to trading for full points.

 

When I was micro-scalping, I was stopped out way too often. But when I expanded my horizons, and started using full points as my increments, trading became much easier.

 

Another thing is ... don't be afraid or hesitant to incorporate new ideas into your trading plan. This very forum is a good example of technically solid trading methodologies that you can tweak and implement at your leisure.

 

If it works for you keep it. If it doesn't works, get rid it of it, and try something else. Evaluate your approach, including your entries and exits. Is your strategy actually valid to begin with? If not, you'll probably be on your way to blowing out your account in short order.

 

Good luck!

[walterw 10]

  cooter said:

One thing I will note here is that the difference in my P/L has been mainly a switch from scalping for mere ticks to trading for full points.

 

When I was micro-scalping, I was stopped out way too often. But when I expanded my horizons, and started using full points as my increments, trading became much easier.

 

Another thing is ... don't be afraid or hesitant to incorporate new ideas into your trading plan. This very forum is a good example of technically solid trading methodologies that you can tweak and implement at your leisure.

 

If it works for you keep it. If it doesn't works, get rid it of it, and try something else. Evaluate your approach, including your entries and exits. Is your strategy actually valid to begin with? If not, you'll probably be on your way to blowing out your account in short order.

 

Good luck!

 

I am scalper by definition... now since I am on TL thanks to cooter, brown and others I have been expanding my horizon to make runners give me some special edge on my RRR... and be able to some times get out with some points... thanks guys for your inputs on all threads.... cheers Walter.

[wsam29 10]

Its kinda hard to scalp the ES when the levels are 1000 lot thick at times and the range it too tight.

 

Even when you scalp, you need to have a trading plan, don't shot from the hip because even if you're breaking even each trade, commissions will chew you apart and at the end of the day, all you have to show for is spent mental energy.

 

In the e-minis, if your trade takes more than 30 minutes, from my experience and stats, tends to be a losing trade.

 

All Trades /Winners/ Losers

Total Number of Trades 17 /13/ 4

 

Time Averages

Avg. Time in Trades 16 Mins 12 Mins 29 Mins

 

avg. time for my winners, 12 minutes, 10-11 tick targets

avg. time for my losers, 29 minutes, 20 tick stop.

 

Every trader would like their trade entry to be winning the moment they enter, the shorter time you're in, you reduce your risk and that's the whole key to scalping in my opinion.

 

Just like that line from "Rounder" "Get your money in when you have and hand and protect your chips when you don't."

[hanz 10]

do you guys scalp using the DOM?

[Soultrader 12]

Never seen anyone do it. I scalp off the tape.

[tim4 10]

  maildigger said:

I trade the ES but I'm not a scalper. I was wondering what kind of entry techniques scalpers use (tape reading, candlestick patterns,...)? Is profitable scalping possible with a risk/reward <1 ? Who has expierience with scalping (target 2-6 ticks) and wish to share his/her experience!

 

Hi Mail. I'm experimenting with ES, taking usually 4-8 ticks from each trade. My average loss is less than my average gain, and I run 55%+ on winrate. I hope to get better, but it's a start. I use price and time/sales only, mostly using limit orders against daily floor pivot levels. When the price is above support, for instance, and seems to be staying in the channel under the next up pivot line,I'll enter a buy limit order just above the support line. It's a pretty standard way of trading, and many times I'll get filled long on the bid and sell at the ask, so slippage is controlled to some degree.

 

It's certainly not a very sophisticated method, but I haven't been able to make oscillating indicators work reliably. They lag so much that the move is half over by the time I can get in.

 

The distance between floor pivot levels and their midpoints is usually about 2 points, so that's my typical range of profits except when the tape indicates more trend strength at the pivot. Losses are usually stopped at 4 points, which is easy to calculate because the stop loss point is just on the other side of the pivot line.

 

Like to hear from anyone using this simple S/R method.

[Guest Fulcrum]

  hanz said:

do you guys scalp using the DOM?

 

 

I use the DOM acv ratio in combination with my felton trading MACD and Stochastic signals. At S/R price levels the acv ratio of 2:1 can "announce" some great areas to catch price reversal pivots with tight entries to the reversal pivot low or high.

[jperl 11]

  maildigger said:

I trade the ES but I'm not a scalper. I was wondering what kind of entry techniques scalpers use (tape reading, candlestick patterns,...)? Is profitable scalping possible with a risk/reward <1 ? Who has expierience with scalping (target 2-6 ticks) and wish to share his/her experience!

 

Check out the [thread=2322]"Trading with Market Statistics"[/thread] threads. There you will find a description of one scalping technique with a video of the technique.

[Guest TRex]

In general, scalping ES is not a long term profitable strategy. By scalping, I mean a 1-3 tick profit goal per trade. The reasons are simple: most scalping systems have a negative risk/reward ratio and the more you trade, the more the odds work against you as you grind your equity down. This is a result of the extreme difficulty to trade a scalping method in a consistent way. Constant tweaking and emotional interaction are hard to overcome even for the seasoned professional who attempts to scalp in an electronic market.

 

We advise traders to trade less often and more profitably by taking an intraday position trade as early as possible (pre-market if possible), scaling out, making your goal, and calling it a day at the office so to speak. Should the first and second trade result in a stopout, then the goal of the next trade(s) is to recover the loss (and start fresh psychologically and financially) and then look for a position trade if the market will give it to you. The old adage "less is more" is most applicable in trading in terms of trades taken.

[brownsfan019 17]

You know what might be even easier? Just follow the tradingzoo guy - check out the performance! Since May, they have only had one down day and that was nothing! Talk about a winning streak. http://www.tradingzoo.com/performance.php

 

Wow! That's impressive!

 

:shocked:

 

I mean, for 6 grand, you can get that back in one or two days since they apparently hardly ever lose.

 

[Guest Fulcrum]

Heck....put the $6,000 on the Browns in regular season game 1 with Quinn at the helm and you will get???

[Guest Fulcrum]

$12,000 .... LOL! :beer:

[brownsfan019 17]

  Fulcrum said:

Heck....put the $6,000 on the Browns in regular season game 1 with Quinn at the helm and you will get???

 

Quinny is starting just yet. Frye has been named the starter and the situation will be reviewed week-to-week. In other words, your time in Cleveland is numbered Charlie.

[Guest TRex]

  brownsfan019 said:

You know what might be even easier? Just follow the tradingzoo guy - check out the performance! Since May, they have only had one down day and that was nothing! Talk about a winning streak. http://www.tradingzoo.com/performance.php

 

Wow! That's impressive!

 

:shocked:

 

I mean, for 6 grand, you can get that back in one or two days since they apparently hardly ever lose.

 

As a point of clarification, since brownsfan brought it up, the trades taken in the performance section are those of the moderator and president, Sam Baum (aka MP). We teach traders to become independent and not rely on a mentor after they become proficient. Frankly, I wouldn't advise anyone to join any educational service if their objective was to simply follow the trades of the teacher blindly like a parrot. What happens if the teacher meets a tragic death and then no longer calls trades. The student who hasn't learned anything and can't stand on his two feet is out of business.

[Soultrader 12]

  TRex said:

As a point of clarification, since brownsfan brought it up, the trades taken in the performance section are those of the moderator and president, Sam Baum (aka MP). We teach traders to become independent and not rely on a mentor after they become proficient. Frankly, I wouldn't advise anyone to join any educational service if their objective was to simply follow the trades of the teacher blindly like a parrot. What happens if the teacher meets a tragic death and then no longer calls trades. The student who hasn't learned anything and can't stand on his two feet is out of business.

 

I strongly agree. Careful attention must also be applied when learning another traders setups. This is because there are so many filters a trader can apply in deciding whether to take the setup or stand aside while the one following these setups have no clue. Intuition, market analysis, tape, volume, etc... Alot of information that gets processed inside a day traders mind can not be explained in full out words at times. I think educational programs and mentorships are great for developing traders because they can receive exposure on how a professional trader thinks, sees, and trades. Ive taken a few mentorships myself but most importantly is the traders ability to learn, absorb, adjust, and create his own style of trading and understanding of the market.

 

Regarding scalping, I think this is a necessary skill in certain market conditions. While intraday position trading is my priority, I do try to scalp the market using a smaller position size by reading tape and the price ladder. Im definitely not an expert in scalping techniques so am very interested in hearing more about this technique from good scalpers. What determines your entry? Exit? When do you cut your losses? etc...

[Nick1984 10]

I've been taking position trades on an intraday basis on the YM when I can identify momentun conditions but in cyclical days I'm trying to take scalps more and more often but I really need to work on developing a scalping strategy.

 

If we are just grinding the day away in a cyclical motion i just bracket the price action and scalp off the extremes. The first time price reaches a channel border I will automatically fade that position going for 5 quick YM points with a stop loss of 5 points (1:1 RRR). The subsequent 2nd or 3rd times price touches that chanel boundary without breaking through I have found that the moves tend to loose strength so these are higher probability fades.

 

Position sizing in scalping is the hardest part to master I think and that is what is going to kill you if you mess it up. I think when scalping you really need to keep it as simple as possible. Walter's "flip" trade is a great scalping technique that I use with some variation on a 55t chart or an 89t chart.

 

I'd like to hear more about the mentality of the scalper who goes in every day with a view of making 20 YM points per contract over X amount of trades. Why they choose this trading system over say a higher probability intraday position trade that has a high chance of getting +10 therefore reducing the amount of trades and thus commissions paid?

[Guest Fulcrum]

Nick1984,

 

 

I always go into my scalping with the mindset that I WILL achieve my daily profit goals and as a result I do about 90% of the time (and the days I do not is usually when I shut down early for the day and take care of other business).

 

One thing that really helped me to move towards my new proper mindset is a book suggested to me from someone at Felton Trading that I read. I read the book and WOW, I had immediate positive impact with the way I started to conduct my career as a trader (felton is also about to add a psychology curriculum to their course called trading with intent)

[namstrader 10]

Fulcrum,

 

what is the name of the book may I ask?

[Blu-Ray 10]

  namstrader said:

Fulcrum,

 

what is the name of the book may I ask?

 

Any Joy ??

 

 

Cheers

 

Blu-Ray

[Guest Fulcrum]

Yes....it was "Law of Attraction" by Michael Losier. Excellent read to build a proper psychological foundation in which to operate from on a daily basis..the techniques had an immediate impact for me to build constructive daily operational habits.

[Soultrader 12]

Here are some of my thoughts on scalping. I am sure other traders have different criteria regarding entries and exits. Scalping is extremely advanced form of trading in which one must be able to execute in a blink of an eye and be very good at "feeling" momentum of price action, reading order flow whether it be tape or Level 2.

 

In my scalping, entries are purely made on momentum and as the ask or bid starts to get thin. If I am going long, I want to hit the ask before it disapears and becomes the bid. This 1 tick is critical to my profit target as I am only looking to get 2-3 ticks of a trade. (Nikkei tick is huge)

 

The entry is the easiest part in my opinion. The exit is the hardest. This is because a scalper must exit based on his entry. In other words, a 3-5 tick stop for a 2-3 tick profit target does not make any sense. Which is why if Im scalping there are no hard stops in place. If momentum drops instantly I am out at break even or even -1 tick. This is why I want to get in on the ask as it thins out so if I sense that Im wrong, I can hit the bid (formerly the ask) and get out at break even. Now for those who are still new to trading, intraday position trading is a much easier technique. Of course, there is not guaranatee of a good intraday swing as the markets may just chop or reverse, etc... Most new traders will never be able to pull the trigger to cut their losses when scalping and will bigger losses compared to their scalp wins.

 

So how do you know when youre wrong? The best I can describe this is experience in the market you trade. Understanding how fast price tends to move in momentum, what you would consider large lots, tape, etc...