1 tick scalping strategies

This is a discussion on 1 tick scalping strategies within the First Steps forums, part of the Reception category; Chances are people looking for 1 tick will get it most of the time. That' the good news. The bad ...

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Old Aug 25, 2008, 11:56am   #16
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Chances are people looking for 1 tick will get it most of the time. That' the good news.

The bad news though is that when wrong chances are they'll lose 5 or 10 ticks.

Conclusion - You better find a strategy that wins 95% of the time otherwise the account will go down in value. And the chances of finding a strategy that wors 95% of the time OVER TIME are almost 0%.

Good luck anyway
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Old Aug 25, 2008, 12:17pm   #17
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Trying to scalp for 1 tick is, indeed, a bad idea.
I disagree with the above statement because I sit next to such a scalper and he consistently wins but he's very disciplined (except for his attitude since he is always swearing and its annoying since I have to sit next to him - I just put on my ipod)

One tick scalpers, more so than other traders (i believe), require a lot more discipline than other traders because as soon as they see the market (or similar market like the Gilts if one is trading the Bunds) go any way slightly against them, they will be ready to scratch the trade (even if it goes bid, offer straight away - then the swearing starts) or take that 1 tick loss max max max, a 2 tick loss is a disaster. A lazy scalper will only take 1 tick profit (never run his winners) and take the mother of all losses as slippage happens. Therefore, it requires such an intense amount of concentration that I am not sure I could do it for more than 4 hours a day, especially as US opens in the afternoon but then in more active markets I think one should be looking for 2 tick scalping opportunities.

Therefore, a good scalper will probably take 1 tick profit from 60% of trades, scratch 30%, 2 tick loss 5% and 3 tick loss 5% of the times. Over time that adds up.
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Old Aug 25, 2008, 1:48pm   #18
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RT, that sounds like one heck of a supercharged fast track to a full blown burnout what that scalper is doing there !
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Old Aug 25, 2008, 2:11pm   #19
 
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Originally Posted by RogueTrader888888 View Post
I disagree with the above statement because I sit next to such a scalper and he consistently wins but he's very disciplined (except for his attitude since he is always swearing and its annoying since I have to sit next to him - I just put on my ipod)

One tick scalpers, more so than other traders (i believe), require a lot more discipline than other traders because as soon as they see the market (or similar market like the Gilts if one is trading the Bunds) go any way slightly against them, they will be ready to scratch the trade (even if it goes bid, offer straight away - then the swearing starts) or take that 1 tick loss max max max, a 2 tick loss is a disaster. A lazy scalper will only take 1 tick profit (never run his winners) and take the mother of all losses as slippage happens. Therefore, it requires such an intense amount of concentration that I am not sure I could do it for more than 4 hours a day, especially as US opens in the afternoon but then in more active markets I think one should be looking for 2 tick scalping opportunities.

Therefore, a good scalper will probably take 1 tick profit from 60% of trades, scratch 30%, 2 tick loss 5% and 3 tick loss 5% of the times. Over time that adds up.
This is true, however probably unrealistic for most retail traders. With the figures quoted, an average trade will be 0.35 ticks ((0.6*1)+(0.3*0)-(0.05*2)-(0.05*3)). So if you pay half a tick per spin in commissions, you'll make a loss - basically you need the cheapest commissions possible, which makes this strategy unfeasable except for people trading in prop firms/arcades, and people doing a lot of volume.
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Old Aug 25, 2008, 2:28pm   #20
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If you know what you're doing scalping is an excellent way to make very consistent profits RELATIVELY stress free. As fifty2aces said, you need the best kit and lowest commissions.... and you have to know what your doing.
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Old Aug 26, 2008, 8:11pm   #21
 
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Here is a strategy I have employed in the US 10 Year T-Note. Define a decent support/resistance area on the chart and wait for the market to confirm by hitting it and rejecting. This needs to be done in a time of relatively low activity e.g. I do it before the US open or around US lunchtime. So lets say you are trying to buy 11600. Wait for the market to trade up a tick and then bid 11600 wth a 1 tick automatic stop. As soon as you get filled hit the offer. If you watch the size carefully you can try and time it so that you get a good place in the queue on the offer so that if the bid gets hit, you can get out easier. Otherwise there might be a problem if not enough size transacts at your offer once you are in. Anyway, lets say you are doing this on a 1 lot. Well, once you have done this twice in a row and taken 2 ticks out of the market you can do it on a 2 lot with no more added risk than you initially took. The very next trade you can do it on a 4 lot. Then you can do it on an 8 lot and repeat. Sometimes price will trade in a 1 tick range for a while and if you have a directional bias you can establish your huge size and then let it go and hope you have called the market to the tick.
Do you still trade this system?
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Old Aug 26, 2008, 9:12pm   #22
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Is it just me but do you find that after 5 pm or so the Bund becomes really thin and its easier to scalp for 1-2 ticks?
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Old Aug 26, 2008, 9:25pm   #23
 
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Is it just me but do you find that after 5 pm or so the Bund becomes really thin and its easier to scalp for 1-2 ticks?
IMO: If you are trading when the market is thin you are missing the whole idea of scalping.
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Old Aug 26, 2008, 9:29pm   #24
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IMO: If you are trading when the market is thin you are missing the whole idea of scalping.
Why?
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Old Aug 26, 2008, 9:30pm   #25
 
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Why?

Are you being serious?
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Old Aug 26, 2008, 9:44pm   #26
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Yeah, totaly. Surely the point of scalping is to take consistent high probability small winners. why does it matter if the market is thin or not . A tick is a tick whenever and is worth just as much.

Am not trying to be confrontational but am interested to know why you believe I would be missing the whole idea of scalping if trading when the market is thin.
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Old Aug 26, 2008, 10:00pm   #27
 
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Yeah, totaly. Surely the point of scalping is to take consistent high probability small winners. why does it matter if the market is thin or not . A tick is a tick whenever and is worth just as much.

Am not trying to be confrontational but am interested to know why you believe I would be missing the whole idea of scalping if trading when the market is thin.
OK.

Yes, you are absolutely correct, "the point of scalping is to take consistent high probability small winners". That is exactly the point, Ultra-low risk, Ultra-High probability trades. In order to do this you must be proficient at the task because the goal is to consistently achieve a better than 75% win rate with a tight stop. There are not many Ultra-low risk, Ultra-High probability trades in the average day and if anyone claims that there are then they are not doing it right.

When you are scalping for fractions of points you can't afford to have a bad fill and the time you are most likely to get a bad fill is in a thin market. What does it matter if you are only trading 1 lot you might ask? Well it might not matter much at that level. But the idea of scalping is to increase your profits by scaling up your trading unit as you become more confident and proficient at picking the Ultra-low risk, Ultra-High probability trades. When you start trading 100, 250, 500 lots, liquidity will be an issue in a thin market.
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Old Aug 27, 2008, 12:25am   #28
 
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Scalping: the act of losing it all in just one bad trade that looked like a routine one when opened. But suddenly, the following news flashed at the bottom of the computer screen:

"Carrier lost"

this is for those that have been around for a while and know what I am talking about. The rest will know some day...

Ron
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Old Aug 27, 2008, 3:30pm   #29
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Scalping: the act of losing it all in just one bad trade that looked like a routine one when opened. But suddenly, the following news flashed at the bottom of the computer screen:

"Carrier lost"

this is for those that have been around for a while and know what I am talking about. The rest will know some day...

Ron

Only if your method of scalping is taking small winners with big stops or you lack discipline.

And what does losing carriers have to do with anything?
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Old Aug 27, 2008, 3:37pm   #30
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Originally Posted by ronblack View Post
Scalping: the act of losing it all in just one bad trade that looked like a routine one when opened. But suddenly, the following news flashed at the bottom of the computer screen:

"Carrier lost"

this is for those that have been around for a while and know what I am talking about. The rest will know some day...

Ron
So... use a platform that lets you put your entry and exit trades in as a bundle? When the entry trade executes, stop-loss and profit target are put into the market as one-cancels-another orders and you're done, no?
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