Scalping

[EulerFourier]

And even then, it's tough because a lot of people are looking for the same thing.

Yes it's by no means a holy grail. It just puts you level on the playing field (and only if you have a TT quality platform and data), but you still have to anticipate and take on the risk.

 

[darkcider]

Yes it's by no means a holy grail. It just puts you level on the playing field (and only if you have a TT quality platform and data), but you still have to anticipate and take on the risk.

It's all a load of TITZ (Trading In The Zone). Like Douglas said, once you go into the market, "anything can happen"...and it usually bloody does. Order flow is no different, you are only trading micro conditions. As for being on a level playing field with the pros, i wouldn't kid yourself. Running the likes of TT on a normal internet connection just about renders it useless, especially if you are sat half way around the globe from your chosen exchange.

 

[x4x]

Why is it that when some people find a trading style that suits them they totally
disregard/rubbish all other styles. 'There is more than one way to skin a cat'.

Jack Schwager talks about this in this video, although I suppose the people he
interviewed could be wrong!! Winning Methods of the Market Wizard - Jack Schwagger - YouTube

Absolutely

 

[Cornix]

It's all a load of TITZ (Trading In The Zone). Like Douglas said, once you go into the market, "anything can happen"...and it usually bloody does. Order flow is no different, you are only trading micro conditions. As for being on a level playing field with the pros, i wouldn't kid yourself. Running the likes of TT on a normal internet connection just about renders it useless, especially if you are sat half way around the globe from your chosen exchange.

Yup. There's a reason HFT systems are usually co-located and their owners are ready to pay a lot of money for that.

 

[EulerFourier]

It's all a load of TITZ (Trading In The Zone). Like Douglas said, once you go into the market, "anything can happen"...and it usually bloody does. Order flow is no different, you are only trading micro conditions. As for being on a level playing field with the pros, i wouldn't kid yourself. Running the likes of TT on a normal internet connection just about renders it useless, especially if you are sat half way around the globe from your chosen exchange.

Generally, I agree with these statements.

Douglas says that the probability on the next trade is 50-50 no matter what because you can never know what will happen in the next moment. This is certainly true if you are trading the "micro conditions". For example, you could be sitting at a spot where you know if a big trader steps up and breaks the lows the market is going to move. However, he could step up and buy instead. The point of reading the market depth and order flow though is to make your risk as low a possible so you can use as much leverage as possible. No need to let the market run 2 or 3 points against you when you know you're wrong after a tick or two.

I'm not kidding myself, but I can see how you would think I was....I know if I ever start swinging size I'm going to have to be parked somewhere in downtown Chicago or nearby with a direct line, and ultimately a TT feed won't help me much if I'm paying $3+/RT. TT is still the best platform though, even for the retail trader.

 

[darkcider]

Generally, I agree with these statements.

Douglas says that the probability on the next trade is 50-50 no matter what because you can never know what will happen in the next moment. This is certainly true if you are trading the "micro conditions". For example, you could be sitting at a spot where you know if a big trader steps up and breaks the lows the market is going to move. However, he could step up and buy instead. The point of reading the market depth and order flow though is to make your risk as low a possible so you can use as much leverage as possible. No need to let the market run 2 or 3 points against you when you know you're wrong after a tick or two.

I'm not kidding myself, but I can see how you would think I was....I know if I ever start swinging size I'm going to have to be parked somewhere in downtown Chicago or nearby with a direct line, and ultimately a TT feed won't help me much if I'm paying $3+/RT. TT is still the best platform though, even for the retail trader.

It does get a little bit senseless, especially when someone is only using one contract. You mention $3 +/rt, i would say more like $4.50 + with all expenses considered, using X_Trader.

 

[DionysusToast]

True enough - scalps aren't a 50/50 probability either.

On some markets you can join the bid & offer and have a reasonable expectation of a fill.

If not, you give away 1 tick entering at market. On the same market, you might have the same issue on the exit.

If you join the bid on a long - with say 1000 contracts ahead of you. Then you need to have 1000 contracts to sell into that bid, then a few more sellers to get you filled and THEN you need those sellers to stop selling into that bid and for buyers to start moving it up.

That is some proposition right? You enter a trade with a requirement that enough selling occurs to fill you and then the selling stops and the market moves your way. That is some skill.

So - without that skill, you really need to enter at market and then be offside 1 tick on entry. If you give the trade 3 ticks of wiggle, you'll have eaten one of those ticks on entry. Of course, you can enter just as you think the offers will be consumed in which case, you'll be back onside again. To me, that must be easier than getting in with 'just the right amount of selling'.

This is no small obstacle to overcome.

You also pretty much need the same thing to happen on your exit which means...

To get 3 ticks, you need a 5 tick move your way.

On the ES, when you win 3 ticks you win $37.50 - $4.00 = $33.50
On the ES, when you lose 3 ticks you lose $37.50 + $4.00 = $41.50

So - the fees cause your winners to be $8 smaller than your losers. Your 3 tick winner needs a 5 tick move. Your 3 tick loser on a long requires the market to only tick down 2 bid/ask levels to stop you out.

I think the people that make money doing this have some very special skills, not to mention good commissions.

 

[Cornix]

To get 3 ticks, you need a 5 tick move your way.

On the ES, when you win 3 ticks you win $37.50 - $4.00 = $33.50
On the ES, when you lose 3 ticks you lose $37.50 + $4.00 = $41.50

So - the fees cause your winners to be $8 smaller than your losers. Your 3 tick winner needs a 5 tick move. Your 3 tick loser on a long requires the market to only tick down 2 bid/ask levels to stop you out.

I think the people that make money doing this have some very special skills, not to mention good commissions.

Guess that's why such strategies are more popular in relatively volatile markets, such as 6E or CL. 1 tick is a no biggie there, especially in CL, momentum is often strong enough to cover the cost of 1 tick + comm. and push your trade in the money right after the entry.

I focus on such trades mostly. If there's no momentum right after the entry, I usually just get out for a small loss, but when momentum exists (and it happens in more than 50% cases), typical profit is bigger than typical loss.

Don't think it's easier or harder than sitting on the bid/ask, just different skill.

 

[EulerFourier]

True enough - scalps aren't a 50/50 probability either.

On some markets you can join the bid & offer and have a reasonable expectation of a fill.

If not, you give away 1 tick entering at market. On the same market, you might have the same issue on the exit.

If you join the bid on a long - with say 1000 contracts ahead of you. Then you need to have 1000 contracts to sell into that bid, then a few more sellers to get you filled and THEN you need those sellers to stop selling into that bid and for buyers to start moving it up.

That is some proposition right? You enter a trade with a requirement that enough selling occurs to fill you and then the selling stops and the market moves your way. That is some skill.

So - without that skill, you really need to enter at market and then be offside 1 tick on entry. If you give the trade 3 ticks of wiggle, you'll have eaten one of those ticks on entry. Of course, you can enter just as you think the offers will be consumed in which case, you'll be back onside again. To me, that must be easier than getting in with 'just the right amount of selling'.

This is no small obstacle to overcome.

You also pretty much need the same thing to happen on your exit which means...

To get 3 ticks, you need a 5 tick move your way.

On the ES, when you win 3 ticks you win $37.50 - $4.00 = $33.50
On the ES, when you lose 3 ticks you lose $37.50 + $4.00 = $41.50

So - the fees cause your winners to be $8 smaller than your losers. Your 3 tick winner needs a 5 tick move. Your 3 tick loser on a long requires the market to only tick down 2 bid/ask levels to stop you out.

I think the people that make money doing this have some very special skills, not to mention good commissions.

Yeah it's not easy by any means! If you're scalping for a tick or two at a time you gotta be very selective with your entries and trade a bigger size without hesitation when you see the opportunity. Unless you are set up with all the perks - I read on a thread on another forum how FT71 would do 700-1000 rt/day paying something under $.20/rt (don't quote me on that). He wrote there was no way his strategy would work paying retail prices.

 

[DionysusToast]

I will admit, the only scalpers I have come across are trading treasuries.

The concept of scalping a volatile contract is mind boggling to me. I wouldn't even know what to look for.

My thoughts are that if you wait for a turn, you get a bad fill. If you try to get a short term turning point, you are going to give a wide stop.

Care to explain how this is executed in thin/volatile markets? I'm interested.

 

[Cornix]

I will admit, the only scalpers I have come across are trading treasuries.

The concept of scalping a volatile contract is mind boggling to me. I wouldn't even know what to look for.

My thoughts are that if you wait for a turn, you get a bad fill. If you try to get a short term turning point, you are going to give a wide stop.

Care to explain how this is executed in thin/volatile markets? I'm interested.

Simply, definition of "bad fill" in volatile markets is slightly different.

Slippage of 1 or even 2-3 ticks is also no biggie for CL traders (I trade 6E, but know a few successful CL scalpers/day traders). One lady, who's great in scalping CL, I once witnessed myself (we were on Skype with her), entered into the news, got 15 ticks of slippage against her on the entry, but still made 20 ticks of profit the next minute.

Targets are also typically wider, as well as the "wiggle room" allowed.

What I look for is momentum. Basically very primitive breakout trading. You enter on a stop order and if trade goes in your favor, great, if not, loss is small.

It would kill most in fixed income I guess, except the cases of "real" serious breakouts, which are relatively rare.

But in volatile markets even fake breakout very often allows you to at least move the stop-loss to break-even and enjoy the risk-free opportunity. And if the breakout fails immediately it's usually good trade in the opposite direction.

So shortly, all strategy is built around price levels. Probably can be done without charts, by using the DOM, T&S and simple numbers of H/L's of last few hours/days too if one prefers those tools for some reason.

But charts give me a good visual "feel" for market. Probably because my background is psychology, not physics or math.

P. S. I have posted links to my blog in this thread with examples of real trades and stop is not necessarily wide, when trading momentum, just takes some skill (as everywhere) to pick those entries, where momentum is most likely to explode.

 

[DionysusToast]

Do you have any trade vids of doing this in a volatile market - yours or someone elses?

 

[EulerFourier]

Forums - Market Depth patterns

Quite possibly the closest you will ever get to the holy grail. Some big time operators lay it all out!

 

[Cornix]

Do you have any trade vids of doing this in a volatile market - yours or someone elses?

No vids by myself yet, but sounds like a good idea to make some.

Not sure about someone else's videos about which I can say I trust those persons.

People from whom I learnt are not public persons who have sites/videos etc. They just showed me general principles and said "sink or swim".

 

[DionysusToast]

No vids by myself yet, but sounds like a good idea to make some.

Not sure about someone else's videos about which I can say I trust those persons.

People from whom I learnt are not public persons who have sites/videos etc. They just showed me general principles and said "sink or swim".

no problem.

I understand about other people's vids. Thought you might have seen something out there that suited your style.

There's a ton of vids on youtube - but not much useful stuff.

 

[DionysusToast]

Forums - Market Depth patterns

Quite possibly the closest you will ever get to the holy grail. Some big time operators lay it all out!

Aaah - FT71 - not seen this thread before.

Will have a read - thanks.

 

[Cornix]

Here is an example of live forex price action scalping trade I am still holding right now. Risk was 6 pips, profit potential is... Nobody knows exactly.

Forex price action - channel bounce and 2B - Cornix Forex

 

[The Leopard]

If you're scalping for a tick or two at a time you...

...are almost certainly wasting your time. The disadvantage that the retail punter at home labours under in an endeavour like that is crushing, and very, very, very few are going to be able to overcome it.

Unless they can buy the right software I suppose .

 

[EulerFourier]

...are almost certainly wasting your time. The disadvantage that the retail punter at home labours under in an endeavour like that is crushing, and very, very, very few are going to be able to overcome it.

Unless they can buy the right software I suppose .

No, you're not wasting your time if you're scalping for a tick or two in ZN, ZB, GBL, GBM where the margins and vol are low. You could probably come up with a decent strategy in ES aswell. For CL, DAX etc your going to have some trouble.

When I talk about software I'm not talking about the next greatest elliot wave calculator, I'm talking about fast execution software. The retail guy has a chance with a decent internet connection and good data.

 

[The Leopard]

No, you're not wasting your time if you're scalping for a tick or two in ZN, ZB, GBL, GBM where the margins and vol are low. You could probably come up with a decent strategy in ES aswell. For CL, DAX etc your going to have some trouble.

If you really think it's the best way for you, well good luck with it.

When I talk about software I'm not talking about the next greatest elliot wave calculator, I'm talking about fast execution software. The retail guy has a chance with a decent internet connection and good data.

I think you're getting confused.