Different Trading approach?

[RunTrade]

Quote from TruthTeller:

Anytime you can gain the risk benefits of diversification, you should take it. Your take on the strategy is to reduce diversification, which is not a good idea.

correct. But reducing diversification in this case (scalping) does not move the risk up nearly as much as the rewards. Diversification also limits max profits.

Do you agree with the statement that the fewer trades that are made, the winners:losers should be greater? (from the larger amount of focus on each trade)



RT

 

[TruthTeller]

Quote from RunTrade:

correct. But reducing diversification in this case (scalping) does not move the risk up nearly as much as the rewards. Diversification also limits max profits.

Do you agree with the statement that the fewer trades that are made, the winners:losers should be greater? (from the larger amount of focus on each trade)

RT

No, that's a lame idea. You're assuming (dangerously) that those trades you elect to take, are, for some reason, going to be more profitable than those you elected not to take. By that logic, why not pick the one most promising trade (by whatever standards you use), and put 100% of your capital to work?

 

[Steve Tvardek]

Yes, you are right. It does depend on each person. Which is to say, some know and see more profit opportunities than others do. There is a difference between "overtrading" and doing high volume. If I could only see a few certain setups as high risk/reward, then I would only try and trade those very few setups. However, during the course of the day, I see maybe 30-50 good profit opportunities (I am just ballparking, I have never sat down and figured this # out). I rarely overtrade, I am very disciplined so for me its usually not a problem. In Oct and Nov for example, I was averaging 100k+ shares a day but I netted out 27k and 22k respectively. This month, I am probably avg 40-70k shares a day b/c I havent seen as many good opps. I am only up around 8k this month (plus took 5 days off). As long as you can adjust, you are fine. Plus, overtrading for the most part, is seen in hindsight. Most traders dont take trades that they dont think will be to their benefit.

I think the idea of trading 4-5 trades a day would work much better for futures or etfs such as the SPY and QQQQ. The liquidity is there to "load up" on only the best setups. You catch a few 10-15 cent moves in the SPY with 30k shares each day, and you are making a sick living.

Quote from RunTrade:

I understand that viewpoint, Steve. I believe that the more you chase after every potential profitable opportunity, that you start to overtrade (as you can see i believe many do) and your max potential profits slide. I would like to say that overtrading is a different point for each person...for me it may be 4or5 a day, for the next guy, 8 or 10. But I believe anything over a couple dozen begins to be hazardous for long run potential. There is a certain point, where after X trades in a day, you would have been just as better off trading only the few best entries you found that day. And I think many traders surpass that "x".


RT

 

[RunTrade]

Quote from TruthTeller:

No, that's a lame idea. You're assuming (dangerously) that those trades you elect to take, are, for some reason, going to be more profitable than those you elected not to take. By that logic, why not pick the one most promising trade (by whatever standards you use), and put 100% of your capital to work?

you are right...my whole point is that i am assuming the trades which I elect to take are going to be more profitable than those I elected not to take. The reason is because I can wait for better/more signals and (by the standards i use) have a higher probability of success. Also, I am NOT attempting to look for the best (most profitable) trade of the day. I am simply looking for the highest probability situations in favor of a profit. I try and not get greedy, but rather consistant.

I appreciate your opinion, but you simply restated my idea in an oversummarized statement


RT


PS: please explain why you believe it to be dangerous

 

[RunTrade]

Quote from Steve Tvardek:

Yes, you are right. It does depend on each person. Which is to say, some know and see more profit opportunities than others do. There is a difference between "overtrading" and doing high volume. If I could only see a few certain setups as high risk/reward, then I would only try and trade those very few setups. However, during the course of the day, I see maybe 30-50 good profit opportunities (I am just ballparking, I have never sat down and figured this # out). I rarely overtrade, I am very disciplined so for me its usually not a problem. In Oct and Nov for example, I was averaging 100k+ shares a day but I netted out 27k and 22k respectively. This month, I am probably avg 40-70k shares a day b/c I havent seen as many good opps. I am only up around 8k this month (plus took 5 days off). As long as you can adjust, you are fine. Plus, overtrading for the most part, is seen in hindsight. Most traders dont take trades that they dont think will be to their benefit.

I think the idea of trading 4-5 trades a day would work much better for futures or etfs such as the SPY and QQQQ. The liquidity is there to "load up" on only the best setups. You catch a few 10-15 cent moves in the SPY with 30k shares each day, and you are making a sick living.

Steve,

First, let me tell you that I respect you for your success in the market and have become aware of your vast experience.

You, my friend, are an exception to this idea since you have been experienced enough to follow the basic rules and succeed. In this approach, I am referring to the people who open and close many more trades each day than you with less experience/knowledge (aka what I consider the majority of scalpers). You have been able to slowly step up your managable number of trades each day and not overtrade.


Also, the SPY and QQQQ are indeed good examples of what I am intending to do.



RT

 

[Ebo]

Finally some that figured it out!

I agree with Steve about waiting for a "set up and piling it on".

Scalping for tics 50 X a day is a loser's game.
Very few hyperactive scalpers last.

 

[RunTrade]

Quote from Ebo:

Finally some that figured it out!

I agree with Steve about waiting for a "set up and piling it on".

Scalping for tics 50 X a day is a loser's game.
Very few hyperactive scalpers last.

glad to see i'm not the only one with this view.


may i ask of your typical trades/day as a scalper?



RT

 

[FuturesTrader71]

Quote from Ebo:

[...]Scalping for tics 50 X a day is a loser's game.
Very few hyperactive scalpers last.

I would refrain from making such broad statements on a site that has all kinds of traders on it. Scalping is only a loser's game to those who don't know how to do it and succeed. Scalping is also a broad term that describes guys trading for pennies and those trading several different markets/products/stocks for more than that.

As far as how few hyperactive scalpers lasting, I would ask you: how long a time defines the word "last"? How is this in relation to guys who trade 5x per day... how long do they last?

It is better to keep an open mind and be receptive to all ideas. This gives one the chance to consider all aspects and use those ideas that work for him.

Something to consider.

 

[RunTrade]

Quote from FuturesTrader71:

I would refrain from making such broad statements on a site that has all kinds of traders on it. Scalping is only a loser's game to those who don't know how to do it and succeed. Scalping is also a broad term that describes guys trading for pennies and those trading several different markets/products/stocks for more than that.

in defense of Ebo, I don't think that was much of a "broad" statement. He did not say scalping is a loser's game. His opinion was of scalpers who scalpe 50x or more each day find it hard to maintain a profit in the long game. He never questioned the term scalping and I am confused why you think that he did.


RT

 

[FuturesTrader71]

Quote from RunTrade:

in defense of Ebo, I don't think that was much of a "broad" statement. He did not say scalping is a loser's game. His opinion was of scalpers who scalpe 50x or more each day find it hard to maintain a profit in the long game. He never questioned the term scalping and I am confused why you think that he did.


RT

Like I said, the term is broad because scalping can happen more than 50x a day. In fact, there are guys out there who make more than 2000 trading decisions per day. My point is that this doesn't make them "losers" or "winners" it just is. I scalp futures a heck of a lot more times per day than 50 and neither I nor anyone in my group is a "loser".

My point was that it is not wise to make such generalizations. My reply to his post was specific in that aspect. Such statements about any trading style, instrument, method, etc are counterproductive to the poster and not very useful for the readers. Everyone is entitled to an opinion, of course, I'm just saying that it is better to keep an open mind.