BSD and all
I am not talking about daytrading i said this before , only i am talking about scalping ...
As i said i am not against professional scalping but i want to show readers in this thread that scalping for some people not all , and investing is better in the long run if u r good at it ( richest men in the world r investors not scalpers )
Lower time frames r less predictable hold less logic and more minuplation and stop hunting,profit taking ... etc
If u r good at scalping good 4 u , but if u r good at investing and longer time frames u will be really rich its matter of time ..
I dont care if i can make 250 k monthly with a flat growth curve ( because of limited volumes at scalping ) .. i prefer to make 25 k monthly with upward growth curve , like what happened with Warren Buffett he started w normal amounts , but if he stuck to scalping trading, u will not find his name at forbes list even if he was a professional scalper ...
ps. i scalped alot at real account and contests , i made 100 trades daily but i found a 1 good long term trade better than 100 trades scalping , i am talking about myself only ...
Scalping will also allow higher profits in %age terms, and if you're trading a liquid instrument, you can get a decent size on.
Think of it like this - you give £20k to Buffet, and £20k to Rotter - who's going to be first to a million?
On the other hand, if you give them each £200M, who's going to be first to £10B?
Most people don't have £200M to play with, so for most situations, short term is more profitable than long term, all other things (e.g. trader ability) being equal.
Most people don't have £200M to play with, so for most situations, short term is more profitable than long term, all other things (e.g. trader ability) being equal.
But it is not equal , ok scalping faster money , longer time frames more money . ( ofcourse if u r good at what u r doing )
Elementary maths...
The shorter time frame you trade in the higher percentage returns you can achieve...
Which is why a scalper can make hundreds or even thousands of % return per year...
Of course the caveat - for the umpteenth time - is that such returns are not endlessly compoundable, but only due to eventual liquidity reasons.
But the amounts you can make via micro scalping still allow people like Rotter to make 50 mill in a year.
Now, if you move on and grow with your account size, you can then adapt and learn to compound those sums like say Mr Soros who started out with no more than 250K, and through trading somewhat longer timeframes you can then scale that up to a point where you can run billions with your day and swingtrading strategies.
Cohen whose firm routinely accounts for as much as 3% of the New York Stock Exchange's average daily trading, plus up to 1% of the NASDAQ's -- a total of at least 20 million shares a day runs Billions and daytrades and has outstanding annual returns.
Of course now your returns cannot be as high as earlier any longer, but you can still make returns in the good teens PER YEAR and even the odd 100 or so percent year running sums like that.
14. How about money management ideas for a new trader?
The key to trading is money management, and that entails keeping your risk and reward in balance. Our rule of thumb is that for every $1 you lose, you must make at least $2.00-$2.50. Put another way, for every $2.00 you make, you can't risk more than $1. To do that, you must keep your losses small and let your profits run. Plus, you have to know yourself and the kind of risk that you're comfortable with.
When I bring a new trader to the floor, I want to see him trade as many as 30 contracts a day, all one-lots. I want him to get used to buying and selling frequently, just for a scratch (or no profit, no loss). Same thing at the screen, get the feeling of buying and selling frequently. Get over being "trigger shy." And you have to know how to get out of position quickly, particularly if it goes against you. The hardest thing for most new traders is to get out of a losing position when the market turns against them.
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Yup tar that's the thing, when I scalp I do it the same way as when I swing trade, I keep my winners many times the size of my losers, but off of 1 min charts is the only difference.
I enter at places where I can place a pretty tight stop, so that when I do get a good winner that will more than make up for the previous losses.
I posted this earlier, this is how Bill Greenspan does it as an exchange member on the CME:
Mark Etzkorn: Can you describe how much you typically risk on a trade and how you take profits?
Bill Greenspan: Initially, I'll typically risk 50 points. That's enough heat. So, you have to go for at least a 250- to 350-point profit. As far as getting out, nobody ever went broke taking profits. But as a scalper, I try to facilitate the market. (That's actually half a point and two and a half to three and a half respectively, something that obviously isn't coded in granite but rather needs to be adjusted for volatility)
http://www.trade2win.com/boards/general-trading-chat/44624-55000-one-month-17.html#post572546
If there is a holy grail in trading then for me this is number one, cutting your losses short and letting your winners run. And the power of compounding then hands you the keys to the magic kingdom.
tar, basically whats best imo is to eyeball charts of various instruments and look at their daily ranges, stuff that has a big range and some smooth, trendy moves are where i would go, and that is really stuff that changes regularly, so you really need to keep updating your portfolio of core markets.
Tight stops ?
Have a look here at Maoxians "Dummy" trades (they are anything but...):
MaoXian.com -- Archive: By Category
tar, the way Maoxian does it from my earlier post is pretty much the way i do it.
The two ideas behind stops are that if breached it invalidates your trade, and it allows you to size your position, the distance from entry to stop loss translates into whatever you want to risk per trade, 1% or whatever.
If you look at €/$ and you would have sold the breakdown of just for the sake of argument the swing low @ 1.2840 at 12:15 CET then the stop would probably have gone a distance beyond the swing high at around 1.2880.
If you had sold the pullback @ 1.2860 at say 12:00 CET your sl would have been smaller, giving you a bigger bang for your buck because your position size would have been smaller.
Will your stops get run ?
Of course.
But who cares with risk / reward ratios like that.