The Un/importance of "context" when Scalping

[lastninja2 10]

Hi,

 

I'm aware that there are a few experienced guys lurking on these forums and I'd very much like to hear their thoughts on this:

 

Basically, I am troubled as to how relevant the market "context", as I call it, is to a pure scalper.

By pure scalping, I refer to using a mix of limit and market orders to take 1 or 2 ticks from the market. I keep my eyes transfixed on the price ladder for the vast majority of the day; I have no particular bias from one moment to the next, as far as I am concerned - anything can happen at any moment... a long, a short, it makes no matter.

If the momentum happens to be to the upside, I'll be watching the offers to see how they behave when someone starts to lift them... if the offer looks to be running scared, I might lift it myself to contribute to that upwards momentum. If my timing is right, that price will go bid immediately, and I will essentially be onside immediately.

If I lift the offer and it does not go bid, I am ready to bail on the trade for a 1 tick loss, 2 ticks would be upsetting. 3 and 4 ticks, a real headache.

 

All that said, both the market profile and traditional charts throw up some interesting cues as to what price might do next: sometimes price bounces off the prior day low. Sometimes it blasts right through. Sometimes that level might be the prior day point of control. Whatever.

Sometimes price will form short-term support and resistance. Sometimes price will bounce off a market profile buying tail. Sometimes price will run clean through a set of single prints.

...

Should a pure scalper care?

Am I being too narrow minded in just focussing on the interaction of the inside bid, offer and executed trades, while essentially ignoring whatever price level we happen to be at?

So long as I trade in the overall direction of the market, I'm not going to get caught out on a stop run. If anything, I might inadvertently stumble in to a string of stops while simply trying to scalp out 1 tick.

 

Really tired, hope this made some sense.

 

Thanks for any and all input.

[SIUYA 11]

" Should a pure scalper care?" about context.

 

Basically I would say yes - and you just gave the context of what you are trying to do in your description of how you do it.

Context like everything is relative to what you are trying to capture.

When I talk about context its larger time frame, right down to trying to read the intraday stuff, but its context as to how I see it and context as to how I apply it.

eg; bear market...., i like to run shorts over a long term, however i may still trade some longs but due to the context of when i try and put them on, i will likely look to take profits quickly.

 

I think in your case, at a guess it just increases the probabilities of getting more trades right than wrong, and the real focus for you is such things as minimizing costs.

[TheNegotiator 13]

LN2,

 

Yeah you were kinda subconsciously defining context there. If you take a long because momentum is there and you time your trade so that you get onside a few pretty much instantly, why are you choosing to do so at that specific point? You might see that volume/delta accelerating (without capitulating) through obvious resistance after earlier having failed to continue either at or below key support, as lending enough support to the idea that you could well nick a tick or two with your ninja-like order flow skills . I have found that the more you think through and try to understand what you do (successfully or otherwise), the better placed you are to make consistent decisions. If for example, you were to remain a scalper, yet thoroughly take on board the concept of auction principles, I believe it's possible to really increase your win:loss. Possibly even push the scalp a couple of extra ticks in many cases.

[lastninja2 10]

When I mentioned there were a few experienced guys floating around the forums, I was hoping to get replies exactly as above.

Thanks a lot, its helped to clarify my thoughts on the matter.

 

If i recall correclty, Negotiator, you replied to a thread of mine about scalping (market vs limit orders) a while ago, and pointed out the importance of execution speed/costs. Fortunately I am ideally positioned now to trade in such a very short-term manner... really feel as though I'm making progress towards finding my own trading style (never mind developing the relevant skills) - it has taken a very long time and still just one of the first steps.

[TheNegotiator 13]

When I mentioned there were a few experienced guys floating around the forums, I was hoping to get replies exactly as above.

Thanks a lot, its helped to clarify my thoughts on the matter.

 

If i recall correclty, Negotiator, you replied to a thread of mine about scalping (market vs limit orders) a while ago, and pointed out the importance of execution speed/costs. Fortunately I am ideally positioned now to trade in such a very short-term manner... really feel as though I'm making progress towards finding my own trading style (never mind developing the relevant skills) - it has taken a very long time and still just one of the first steps.

 

Excellent. Just keep working away and be as professional as you can and of course if you ever have any questions, you know where to come

[gosu 10]

Hi,* * *

 

What do you trade???

[lastninja2 10]

FESX. Arguably a bit slow to scalp in this manner - but i see numerous opportunities (or so i think) every day, and its a safer market when you are starting out IMO

[aster9 10]

I have found scalping best with using limits of 2. Since one cant always 'close' the trade. I also dont go in 'deep' water when the market is very volatile.

Basically buy up on the way up and down on the way down. Using two accounts if necessary.

I trade the indices. The DAX and Wall St where there is a one spread.