Scalping Futures

dtm165

Newbie
4 0
Hi, I am new to futures trading and was wondering if it is possible to profit on 1 tick of trading. My TOS platform charges $7 in commissions and the /es gross profit is 12.50. I guess my question is that if in most cases if I enter in at the /es at 1870.00 with a buy limit and set a sell limit at 1870.25 if I will be filled.

I talked to TOS and they said due to various market situations real money trading is not like paper money trading, as paper money gives you instantaneous fills.

Anyone with experience can tell me how it's really like?

Dan
 

tar

Legendary member
10,443 1,313
Hi, I am new to futures trading and was wondering if it is possible to profit on 1 tick of trading. My TOS platform charges $7 in commissions and the /es gross profit is 12.50. I guess my question is that if in most cases if I enter in at the /es at 1870.00 with a buy limit and set a sell limit at 1870.25 if I will be filled.

I talked to TOS and they said due to various market situations real money trading is not like paper money trading, as paper money gives you instantaneous fills.

Anyone with experience can tell me how it's really like?

Dan

Most of the time you wont get your ES limit order filled until it trades through your level "bid becomes the ask / ask becomes the bid" , many orders are infront of yours ...
 

gerryg

Established member
900 7
I think if you increase your leverage to 1:5000.. You can be in profit even in 1 tick move..
 

PieterSteidelmayer

Well-known member
283 54
Hi, I am new to futures trading and was wondering if it is possible to profit on 1 tick of trading.
There is a dire misunderstanding in the retail trading world about scalping. It's tough enough with institutional advantage of both operational and infrastructural aspects, support, training, experience, a bank of quants and a risk management team. For the under-equipped, unskilled, inexperienced, under-capitalized retail trader it's a short road to total loss.

Scalping is not a few pips or a few points - it's for infinitesimally small fractions of a pip or thousandths of a cent which for retail traders will be massively outweighed by the spreads and costs. It's quite impossible.
 
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dtm165

Newbie
4 0
There is a dire misunderstanding in the retail trading world about scalping. It's tough enough with institutional advantage of both operational and infrastructural aspects, support, training, experience, a bank of quants and a risk management team. For the under-equipped, unskilled, inexperienced, under-capitalized retail trader it's a short road to total loss.

Scalping is not a few pips or a few points - it's for infinitesimally small fractions of a pip or thousandths of a cent which for retail traders will be massively outweighed by the spreads and costs. It's quite impossible.

Well, that's a negative view on it. There are so many youtube videos with people scalping and day trading. Not only futures but in stocks. Futures are the same exact thing as trading stocks like the /ES trades exactly like the S&P just with more leverage. To day trade stocks that equals 1 future contract is about $93,000. I just thought about trading futures and am interested in hearing from a retail trader who does this successfully part time or full time to tell me how it's like. I don't know you or your background so I can't follow your opinion.
 

PieterSteidelmayer

Well-known member
283 54
Well, that's a negative view on it.
It’s only negative because it isn’t what you want to hear. It is however the reality of the situation.

I don't know you or your background so I can't follow your opinion.
And you’ll know the background and the people who give support to your somewhat prejudiced hypothesis will you? You’re following a well-worn track to failure so you’ll have plenty of company to commiserate with. Perhaps you can all get together and make youtube videos with your spare time as you’ll have plenty of that.
 

dtm165

Newbie
4 0
It’s only negative because it isn’t what you want to hear. It is however the reality of the situation.

And you’ll know the background and the people who give support to your somewhat prejudiced hypothesis will you? You’re following a well-worn track to failure so you’ll have plenty of company to commiserate with. Perhaps you can all get together and make youtube videos with your spare time as you’ll have plenty of that.

This forum sucks, I just joined yesterday to learn and people put people down. I don't know you, so I don't know how smart you are either, you could be dumb as a brick, whatever it is I'll never find out from you, so joining this and asking questions is pointless. I'm going to ask my brokerage firm.

P.S - I'm not new to day trading, have 5 years of experience in stocks and have long term investments from 2010, so don't judge people and assume everything if you don't know them.
 
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timsk

Legendary member
7,604 2,377
This forum sucks, I just joined yesterday to learn and people put people down.
Hi dtm165,
Welcome to T2W.

I'm sorry you feel that the 'forum sucks' based on the replies that you happen not to like from just one of our 300,000+ members! Try and keep an open mind and accept that you may well get answers to your questions that you don't like or weren't expecting.

PieterSteidelmayer's posts are blunt and no effort has been made to break bad news softly. However, as an ex-futures trader I'm afraid to say he's right. If you're going to scalp the ES for a tick or two at a time, you'll need to be set up to do it. This means finding a bespoke futures broker who charges a realistic round trip commission. You should easily be able to get to under $5.00. At $7.00 per r/t, the commissions alone will kill you. You'll need a high spec' computer and a lightning fast internet connection. Next, you'll need a trading platform with a DoM ladder. X Trader (by Trading Technologies) is probably the best known. If you don't know how to do it, you'll then have to learn how to read the order flow. Some clever folk say it isn't rocket science. Personally, I think it's phenomenally difficult and failed miserable in my attempts to do it!

That's just a taster, I can go into more detail if you'd like me to. Essentially, doing what you're wanting to do is the domain of institutional traders or very experienced retail traders who have had training at a prop' firm or paid for tuition from a city pro'. Of course, it's not for me to advise you against going down this route if you're sure it's what you want to do. Just be aware it's probably one of the toughest options for retail traders - if not the toughest. I know lots of ES traders here on T2W, but none of them (to the best of my knowledge) attempt to scalp it for a tick or two at a time.
;)
Tim.
 
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PieterSteidelmayer

Well-known member
283 54
Hi dtm165,
Welcome to T2W.

I'm sorry you feel that the 'forum sucks' based on the replies that you happen not to like from just one of our 300,000+ members! Try and keep an open mind and accept that you may well get answers to your questions that you don't like or weren't expecting.

PieterSteidelmayer's posts are blunt and no effort has been made to break bad news softly. However, as an ex-futures trader I'm afraid to say he's right. If you're going to scalp the ES for a tick or two at a time, you'll need to be set up to do it. This means finding a bespoke futures broker who charges a realistic round trip commission. You should easily be able to get to under $5.00. At $7.00 per r/t, the commissions alone will kill you. You'll need a high spec' computer and a lightning fast internet connection. Next, you'll need a trading platform with a DoM ladder. X Trader (by Trading Technologies) is probably the best known. If you don't know how to do it, you'll then have to learn how to read the order flow. Some clever folk say it isn't rocket science. Personally, I think it's phenomenally difficult and failed miserable in my attempts to do it!

That's just a taster, I can go into more detail if you'd like me to. Essentially, doing what you're wanting to do is the domain of institutional traders or very experienced retail traders who have had training at a prop' firm or paid for tuition from a city pro'. Of course, it's not for me to advise you against going down this route if you're sure it's what you want to do. Just be aware it's probably one of the toughest options for retail traders - if not the toughest. I know lots of ES traders here on T2W, but none of them (to the best of my knowledge) attempt to scalp it for a tick or two at a time.
;)
Tim.
Hopefully the young buck will find your sugar-coated pill easier to swallow. I admire your patience in spelling it out in such detail and at such length. Hopefully your softer manner will be more to his liking and the message will hit home.

Blunt? Moi?

You and I obviously come from the same stable so you are well aware out there in the real world you don't get treated like a child. If he can't take the soft knocks in this place then god help him.
 

PieterSteidelmayer

Well-known member
283 54
This forum sucks, I just joined yesterday to learn and people put people down. I don't know you, so I don't know how smart you are either, you could be dumb as a brick, whatever it is I'll never find out from you, so joining this and asking questions is pointless. I'm going to ask my brokerage firm.

P.S - I'm not new to day trading, have 5 years of experience in stocks and have long term investments from 2010, so don't judge people and assume everything if you don't know them.
Look chappie, I don't give a rats - I was just trying to help you by answering your question honestly and directly. I have experience in the area you're interested in, I know how it works which is why I know you are not going to make it work.

If you had a truly open mind you'd take on board all the advice you asked for, from me from anyone else: you'd consider it, evaluate it, test it and make a decision. But you appear blinkered to only accept views which match your aspirations.

If you think you've had a tough time here then wait till you start trying to scalp futures on a retail platform.

You're going to ask your brokerage firm? LOL. That's like asking a pusher if it's a good idea to do drugs.
 

OrderFlowDashPro

Member
76 9
True scalping the bid/ask spread is probably not in the domain of the retail trader. But, many traders do find it possible to profitably trade several times per day "in and out". I call this target trading but many call it scalping but they aren't scalping for ticks but usually at least several ticks to points. One way, I like to define this is how many bars do you hold a trade for. It is very possible to "scalp" for several ticks to a few points per trade.

A lot of traders what one might call associate related ideas but that doesn't mean that they have to be associated. I find disassociating closely associated ideas to be quite valuable in my thinking. For example

Low latency trading is associated with high volume trading but it doesn't have to be
Low risk "scalp trading" is associated with, also, high volume trading but it doesn't have to be
Swing trading is associated with big/wide stops but it doesn't have to be
"scalp" trading with low/risk or tight stop
High frequency trading is associated with both low latency and high volume trading
Algorithmic is associated with high frequency trading
Discretionary trading is associated with non algorithmic trading
Day trading is associated with fast trading

And here's a big one,

Tape reading is associated with frequent trading and fast trading but it doesn't have to be


Its very possible to tape read for only a few trades per day. As said, if you attempt scalping you will want good software and cheap commissions. IB offers futures for 89 cent per contract (+exchange) and one can find even better rates. Don't underestimate commissions cost because they become a huge factor as you shoot for less then 1 point ($50) in the ES. We offer a highly specialized tape reading program to help traders "read the tape" and the "level 2" which many active traders find extremely valuable.

If you do want to scalp, you'll want to look for instruments that have a large tick size while also having good liquidity. The tick size on ES is $12.50. I suspect there are better instruments. As an experienced tape reader who's built my own custom software, I'm doubtful that it is possible to do truly scalp "in and out" hundreds of times with the intent to only capture the spread. What may be possible though is to take very low risk trades at key inflection points. It might be possible to take these trades with large size with very small profit targets. Its not the way I trade. Another variation that may be possible, is to trade these same inflection points for larger trend trades.

So, just because bid/ask spread scalping is out doesn't mean you can't be successful with a very active "scalpy" trading style. From TICK size, it looks like bonds are best suited.
 
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dtm165

Newbie
4 0
Futures

Alright, Alright, maybe I was a bit too sensitive on the comment. I get it. I figured if Futures are that risky, and since the /ES behave almost like the SPY, I'll try day trading stocks. Since I don't have $93,000 to experience that leverage, I will just use the minimum of $25,000 - make it $27,000. I was reading some of the articles on day trading before, and yes, most day traders lose money, so I'll test myself for 6 months. I'm sure I'll make mistakes but I'll learn from them, and I can look at the /ES as a guided tool to tell me where the S&P will go in the next few minutes (as well as the indicators).

I'm taking this day trading thing as most traders lose money. And since my current job has excellent, flexible, hours I can practice many times during the week. I figured that I have all the time in world to figure this out. I can't picture a method that I will lose if I keep practicing and practicing for many months until it becomes right. Thank you all for your detailed responses. I didn't expect that. Happy Trading :)
 

DionysusToast

Legendary member
5,963 1,501
scalping means different things to different people. It generally means shorter term trading - everyone has their own idea of what that means.

You wont be able to scalp the bid/offer as you wont get filled. If you could - the $7 per r/t on TOS would require you to have too lofty a goal in terms of win rate.

Even with commissions half that, you are still looking @ 25% of your 1 tick profit going away in commissions. Do the math on the win rate you'd need with a $3.50 commission always looking for 1 tick.

For 1 tick trades - you would be better off with US Treasuries - $2 commission and up to $31 and change per tick changes the dynamics.
 
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OrderFlowDashPro

Member
76 9
I'd also like add/explain that with scalping, the goal would be to capture 1 tick or scratch. But, you have to understand that there is something called queue priority which means that your orders are likely to be in the back of the queue which means that when you get filled, you will almost certainly take 1 tick heat. The times when the market doesn't trade through the limit book, those times that are best to capture the spread, you will be unlikely to get filled. You can try to scalp for a few ticks with market orders anticipating the market to quickly lift in your favor, reading the tape and an acute understanding of order flow may help with that.

DTM, first, I'm not so sure that stocks are better with only a 25k account. If you lose, you'll quickly run into the PDT rule and your limited to 4x margin. I haven't traded stocks so I can't say but its probably not enough leverage without going prop. Without enough leverage, you can't capitalize on the micro intraday movements and without cheapest commissions then its going to be hard to turn a profit.

I would highly advise you find a mentor. There are some of us who are talented at markets and some aren't but most any trader who is even at the semi-professional level has spent not months but years learning their craft.

I think you are on the right track with thinking about relationships like ES/SPY but the ES will not tell you where the SPY is going in next few minutes. The arbitrage difference is like 10/1000ths of a second You may still be able to watch it as a trading guide but it won't lead "by minutes".
 
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