Scalping

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EulerFourier

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Jan 23, 2009
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#21
There may be no T&S, DoM or Order Book on FX... But this goes for everyone else as well!
Everyone else except the broker.....

^ I don't see how that would be an issue. The broker gives you a price, and he must honour that price if he's to receive business.

At least, that's how I see it.
That's just not how it works. Their business comes from uninformed new traders and there are a constant, steady stream of them.

You can make money scalping the futures markets, but only if you have the right broker, the right software, the right data and you know which markets to scalp and which to stay away from.
 

EulerFourier

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Jan 23, 2009
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#23
It is said there is no available order book or depth for spot forex so what is this?

OrderBookFX | Real-Time Forex Market Depth

If they would just send me the damn email so I could get the seven day free trial.
I suppose Friday was not the best day to submit the request.
I posted in the thread you made on this software that it is another scam. It is. So what if their book says the market is bid for 100 at 25. Hit the bid with 101 and see if the price changes. It will not.
 
Feb 22, 2012
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#24
It is said there is no available order book or depth for spot forex so what is this?

OrderBookFX | Real-Time Forex Market Depth

If they would just send me the damn email so I could get the seven day free trial.
I suppose Friday was not the best day to submit the request.
What is this? A load of boll0cks.
 
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VielGeld

Well-known member
Jul 27, 2011
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#25
Everyone else except the broker.....

[...]

That's just not how it works. Their business comes from uninformed new traders and there are a constant, steady stream of them.

You can make money scalping the futures markets, but only if you have the right broker, the right software, the right data and you know which markets to scalp and which to stay away from.
I see this often that brokers somehow purposely stop-hunt. I have yet to see any evidence of it. Yes, I've seen those videos of MT4 having embedded broker options to push prices around, but all that proves is that their software has these options, not that they've used it.

Nonetheless, I use Oanda whom I've researched and found nothing substantial against them. As far as I can tell, they are honest dealers, allow scalping, and my experience with them has been nothing but positive so far.

Not to say that you might not be right; just saying that my experience has been the opposite of being fleeced by dishonest bucket shops and have yet to see any tangible evidence saying otherwise.
 

DionysusToast

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#26
There may be no T&S, DoM or Order Book on FX... But this goes for everyone else as well!

I agree, trading futures would probably be a better idea in the long run. But for now, I don't have the capital for futures, and scalping by chart isn't that difficult once you get used to it, imo. You might enter more BE trades as a result, but it's hardly impossible to scalp FX.
The trouble is - you won't have b/e trades, you'll give the spread on each one of them. The spread will eat away at your account and your tiny targets mean that the spread will force you to aim for a ridiculous hit-rate in a market that doesn't give you sufficient information to trade off.

You being under-capitalised is not something the markets care about. You should either aim to trade as best you can or not at all. The markets are not kind places. Taking a second best approach to scalping because of your account size will guarantee you a smaller account.

In reality I don't think it's possible to be under-capitalised. There's markets you can scalp with a $2 r/t and a $31.25 tick size. You could aim for 1 tick trades in that market with an account less than $1000. I wouldn't recommend it but it sure beats Forex.

At this point, I think what you should focus on (but you won't) is understanding your place in the food chain, or even that there is a food chain, or even that you are on the menu.

There's a book that describes is beautifully.

Tape Reading & Market Tactics by Humphery B Neill.

This book was written in the 30's. It has the best description I've ever read of the game of trading and the retailers place in that game. I know you won't believe me if I tell you that the markets are specifically engineered to separate you from your money - but maybe you'll believe this dead guy.

They ARE out to get you and if you don't go in armed to the teeth - you WILL be buying their dinner.


Take it this way. If you trade with the trend and/or in the direction of weakness, then you're putting chances on your side. Then you can check a low t/f for confirmation that a move is about to begin. It's not precise, but I've found it works for me so far.

Yes, the spread can be prohibitive, which is why I stick to Eur/Usd for US open and Eur/Jpy for Asian session. I go for anywhere between 5 - 15+ pips, so this is ok. Spreads of more than 2 can really amplify those losers, though, especially if you do the kind of leverage scalping implies.

In the future I might switch to an exchange-based vehicle for the order book advantage. For now, I've found currencies aren't too hard to wrap your head around.

(As an aside, I would wonder if futures are that much better than FX given how much trickery is involved in the order book... Sounds like there's as much guessing going on there as in FX!)
I'm confused. Two posts back you were asking for advice and saying you were gravitating towards this style. Now you are a successful forex scalper? Gravity must be quite strong where you are.

Trade with the trend? Check a lower Timeframe that a move is about to begin? How will any timeframe tell you that something is about to begin?

A change in order flow preceeds a change in price.

By the time you see it in a chart, the chance to scalp it has gone. You cannot apply position day trading rules to scalping.

As Leopard said – your chances are slim. Your competition is paying almost zero spread. If you trade futures, you will be paying $2-$4 per r/t and your competition will be paying 30c.

Scalping is a game, right now you don’t understand the rules of that game but you think you can make them up by throwing in a bunch of technical analysis like our man with his blog here. There is a lot of manipulation and that is your route to understanding how other people are playing the game.
 

VielGeld

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Jul 27, 2011
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#27
Lol, no, I'm not a successful scalper. The method I'm going with right now is just barely becoming consistent, but it has been marginally +ve for the past month... on demo. Take that as you will.

Anyway, I was asking open-ended advice since I knew I preferred some types of trades. As it turns out, they could be qualified as scalping so I figured I'd see if someone would give useful info. I do not use any TA at all in my trading, just what I see on naked charts in different time frames.

I'm also asking what my best alternative is if I prefer forex over futures and all FX brokers are scammers. I do not doubt any side of the argument, I just want to see what's what before being all "FX is a goddamn scam!!1!" or something when that might not be true.

Now, I'm not against trading futures, just a bit reluctant since I've spent the past couple months learning something that might turn out to be junk. What I learned is hardly useless, but I'll still have to make the switch to an order book type of trading style which might take time when I could test my idea out in FX first.

Anyway, that's my bit for tonight.
 

Cornix

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Jun 19, 2005
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#28
LOL

The main thing to understand about scalping, particularly as someone new to trading, is that it is a waste of time. You WILL lose money.

You have virtually no chance of competing at this level against professional traders. You WILL be slow, clumsy and inept in comparison. You will have NO edge and you WILL be at a disadvantage.

Very few retail punters make it as traders and the number out of this small number who do so via scalping is tiny. I would be amazed if any of the well-meaning people giving you advice on this thread make a living from scalping.

There are far better ways for you to go if you wish to take trading seriously.
Yes, I agree that for a trading newbies, scalping is probably not the best way to start.

Trading is a skill, somewhat similar to driving skill or any other similar activity. You should start SLOW to learn to do things right and only after a lot of practice can you drive faster.

There's huge difference in stress level and decision making routine between swing trading and scalping with first being a lot easier.
 

Cornix

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#29
I'm well aware of that. As far as I know, market participants don't have access to that kind of information. It's like saying brokers know where the orders and volume is... Of course they know it.

Oh, some brokers provide access to their order book but I haven't had much evidence those things are practical for every day trading.
IMO, order book aka DOM is overvalued even on futures markets. No smart money is so stupid to just place limit orders and show everyone what they're going to do.

So most of DOM activity in liquid futures markets is flipping game anyway, the goal of which is attract the players to some side and likely open in the opposite side soon after that (as soon as they get the size they want to fill their real order, which is a market order in like 99% of time and nobody sees it until it gets executed).

So tape (T&S) has more value, but price/volume action on chart shows you the same information basically in a cute graphical way. That's why I say SCREEN TIME. :D

Moral of the rant: WATCH and LEARN. There are no shortcuts. Maybe with the exception of a good mentor or a prop firm which will teach you the exact tricks.
 
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VielGeld

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Jul 27, 2011
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#30
Yes, I agree that for a trading newbies, scalping is probably not the best way to start.

Trading is a skill, somewhat similar to driving skill or any other similar activity. You should start SLOW to learn to do things right and only after a lot of practice can you drive faster.

There's huge difference in stress level and decision making routine between swing trading and scalping with first being a lot easier.
Eh? If anything, I'd say newbies should start off with scalping.

Scalping, imo, is about market fundamentals. How do buyers and sellers interact at the most basic level of your market? If you can't figure this out, then how can you tell what's going on in higher time frames? It's not about the trading being faster or slower, or being able to make better decisions; it's about fundamentally understanding what really drives any market and how and why moves occur.

You simply cannot learn this as quickly swing or position trading because a scalper is always in the market, and as such picks up on subtleties way, way faster and learns much more quickly as a result. I think it's fine if you find out that scalping is not for you for whatever reason, but it should be the very first thing you learn since I can't see how you could operate on higher frames without this very basic knowledge.

Imo, position/swing/Buffet-style teaches you nothing about the market. Only being in there and trading the moves can you really pick up on what trading is all about.

Anyway, that's my opinion.
 

Cornix

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#31
Eh? If anything, I'd say newbies should start off with scalping.

Scalping, imo, is about market fundamentals. How do buyers and sellers interact at the most basic level of your market? If you can't figure this out, then how can you tell what's going on in higher time frames? It's not about the trading being faster or slower, or being able to make better decisions; it's about fundamentally understanding what really drives any market and how and why moves occur.

You simply cannot learn this as quickly swing or position trading because a scalper is always in the market, and as such picks up on subtleties way, way faster and learns much more quickly as a result. I think it's fine if you find out that scalping is not for you for whatever reason, but it should be the very first thing you learn since I can't see how you could operate on higher frames without this very basic knowledge.

Imo, position/swing/Buffet-style teaches you nothing about the market. Only being in there and trading the moves can you really pick up on what trading is all about.

Anyway, that's my opinion.
To know about the market and be able to trade flawlessly under the real bullets flying are two very different matters.

Scalping is MUCH harder activity than swing trading or furthermore, investing.

Believe me, I scalp FX for a few years already. :)
 

EulerFourier

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Jan 23, 2009
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#32
Scalping, imo, is about market fundamentals. How do buyers and sellers interact at the most basic level of your market? If you can't figure this out, then how can you tell what's going on in higher time frames? It's not about the trading being faster or slower, or being able to make better decisions; it's about fundamentally understanding what really drives any market and how and why moves occur.
You are absolutely correct and without knowing it you just made the case for ditching bucketshop fx "brokers" and trading on a real market.

How do buyers and sellers interact at the most basic level? Through volume.

Now, I'm not against trading futures, just a bit reluctant since I've spent the past couple months learning something that might turn out to be junk. What I learned is hardly useless, but I'll still have to make the switch to an order book type of trading style which might take time when I could test my idea out in FX first.
Look, I was there. For a long time. When you are ready to get serious with trading check out these guys: Home
 

DionysusToast

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Dec 6, 2009
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#33
IMO, order book aka DOM is overvalued even on futures markets. No smart money is so stupid to just place limit orders and show everyone what they're going to do.
Duh - ya think? :p

That is the whole point. If you want to build a large long position, you need less astute traders to sell. Otherwise, you will show your hand. If you want to long 20k contracts, then you have to finesse your way into that position. To do this, you need people to sell.

When this large position is being built 99% of traders will be looking at what they think is a weak market and selling into it. More informed traders who understand the game will be joining in long for the ride.

That is why the game is somewhat counter-intuitive. That is also why you need to get trained so you know what to look for.

So most of DOM activity in liquid futures markets is flipping game anyway, the goal of which is attract the players to some side and likely open in the opposite side soon after that (as soon as they get the size they want to fill their real order, which is a market order in like 99% of time and nobody sees it until it gets executed).

So tape (T&S) has more value, but price/volume action on chart shows you the same information basically in a cute graphical way. That's why I say SCREEN TIME. :D

Moral of the rant: WATCH and LEARN. There are no shortcuts. Maybe with the exception of a good mentor or a prop firm which will teach you the exact tricks.
Flipping is only a part of what you see on the DOM/T&S. There are other subtle ways people build positions without the stacking of bids/offers.

On top of this, there are also times where there are no games but the order flow changes and it tips your hand that the current move/pullback is done. This is something that occurs with much higher frequency than the gameplay. Gameplay will occor at different points in different markets.

The fact is, the order flow changes before the price. You might for instance see lots of large sell market orders as you go down to a prior low. Selling may continue but you do not see the participation of large players any more. Retailers are still piling in, price is still moving down but participation of large traders has dried up.

Whichever way you look at it, the order flow changes will ALWAYS preceed the changes in price. The chart will ALWAYS give you a later entry. The order flow lets you drill down to a level of activity that cannot be seen on the charts.
 

Cornix

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#34
I agree that switch in the bid/ask volume precedes the change in price, just warned people that order flow is not as straight matter as many think.

That's the fact that most of institutions slowly scale in and out using market orders, which are only visible on T&S or a chart, using limits more as a game to attract liquidity.
 

DionysusToast

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#35
Eh? If anything, I'd say newbies should start off with scalping.

Scalping, imo, is about market fundamentals. How do buyers and sellers interact at the most basic level of your market? If you can't figure this out, then how can you tell what's going on in higher time frames? It's not about the trading being faster or slower, or being able to make better decisions; it's about fundamentally understanding what really drives any market and how and why moves occur.
I would agree with that. Or at least have a newbie focused on using scalping techniques to enter position day trades but cut them short as soon as they look like they are failing. That does need a little more attention to where the turning points are likely to be. Pure order book scalping without context would be very tough IMO.

It is about supply and demand. I use Cumulative Delta and I see someone here has posted up a link to Market Delta - it's all along similar lines - seeing actual buying/selling activity and guaging the change over time.

You simply cannot learn this as quickly swing or position trading because a scalper is always in the market, and as such picks up on subtleties way, way faster and learns much more quickly as a result. I think it's fine if you find out that scalping is not for you for whatever reason, but it should be the very first thing you learn since I can't see how you could operate on higher frames without this very basic knowledge.

Imo, position/swing/Buffet-style teaches you nothing about the market. Only being in there and trading the moves can you really pick up on what trading is all about.

Anyway, that's my opinion.
Scalpers aren't always in the market. A lot of time is spent twiddling your thumbs. Some people gravitate towards it because they want to be more active. This is a mistake IMO.
 

VielGeld

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Jul 27, 2011
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#36
^ Yeah, chasing the market isn't scalping. I just meant that someone actively watching and experimenting will gain knowledge at a much faster rate than with any other style.
 

Cornix

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#37
^ Yeah, chasing the market isn't scalping. I just meant that someone actively watching and experimenting will gain knowledge at a much faster rate than with any other style.
There's no real difference between scalping and anything else up to investing, real estate or say, Picasso works speculation. Principles of how any free market operates remain intact.

Supply/demand.
 

MoonRocket

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Oct 25, 2011
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#38
I posted in the thread you made on this software that it is another scam. It is. So what if their book says the market is bid for 100 at 25. Hit the bid with 101 and see if the price changes. It will not.
The point is..... I get to see where the big money is.
 
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Feb 22, 2012
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#39
This thread is a good reminder of why you need to be very careful when asking advice on forums.

Unfortunately, when you're asking it you don't know enough to realise how much garbage you're being fed.
 

DionysusToast

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#40
This thread is a good reminder of why you need to be very careful when asking advice on forums.

Unfortunately, when you're asking it you don't know enough to realise how much garbage you're being fed.
Why not step up and give some advice, then?

It's a discussion forum, posts like the one above add nothing and they sure don't show that you have anything to add yourself. They are as much noise as the posters you are mocking.

I do agree with the sentiment but it should be backed up with something of substance.

Otherwise, what you give is just noise. Lots of people on here have opinions but very few care to explain why they have that opinion.
 
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