Is "Buy bid, sell ask" practical?
- Thread starter 0008
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With 720 posts to your name, I can guarantee that you've been using it for a while now.
How long will you wait to get out when you click the the bid and get filled long?
Michael B.
P.S. I am not being a smarta** but you must be prepared for this. If you win 25 times per day that is 6.25 point *50.00= $312.50- $120.00 in commish = $192.50. It would take one loss of 3.75 points to wipe out one days work. So it is better to define a mental or mechanical stop in the unlikely event you miss your fill.
Michael B.
P.S. I am not being a smarta** but you must be prepared for this. If you win 25 times per day that is 6.25 point *50.00= $312.50- $120.00 in commish = $192.50. It would take one loss of 3.75 points to wipe out one days work. So it is better to define a mental or mechanical stop in the unlikely event you miss your fill.
If you're talking about "scalping" for a tick...then it wouldn't seem
practical to me. The reason is commissions...
Even with $4.80 RT, we're fighting a losing battle. Every time we
make a tick, we pocket $7.70 cents (per contract). Every time we lose a tick, we're out $17.30 cents.
So, lets
say we get the first 5 scalps, that's $38.50, then the next trade
gets away and we lose 2 ticks, that's $34.60.
Seems to me, a tough if not impossible endeavor, unless you're
a floor broker who pays something like 20 cents a ticket.
(Scalping the ES)
practical to me. The reason is commissions...
Even with $4.80 RT, we're fighting a losing battle. Every time we
make a tick, we pocket $7.70 cents (per contract). Every time we lose a tick, we're out $17.30 cents.
So, lets
say we get the first 5 scalps, that's $38.50, then the next trade
gets away and we lose 2 ticks, that's $34.60.
Seems to me, a tough if not impossible endeavor, unless you're
a floor broker who pays something like 20 cents a ticket.
(Scalping the ES)
Breakout, I think your assumption that this chap will get away with only 2 ticks loss is a little bit agressive ! It happens almost every day that a big order by somebody moves the eMini and Nsdq Futures market by 7-8 ticks (before coming back to its equilibrium level).
In my opinion, playing the market maker is a dangerous game. It may give the illusion to work because you have a large win%, everything is in the commussion rate and slippage, slippage must be evaluated very carefully. Since 1 tick will make the difference between life and death.
In my opinion, playing the market maker is a dangerous game. It may give the illusion to work because you have a large win%, everything is in the commussion rate and slippage, slippage must be evaluated very carefully. Since 1 tick will make the difference between life and death.
From my experience, nowadays, it works better with larger spread, and or less active Naz stocks.
When trading in smaller timeframes, I put bids and offers slightly below and above the inside price, at support and resistance zones respectively.
Getting hit through these zones gives me an idea of how desperate the active side is. I learned a great deal about that during my experience making markets.
At the end of the day, there is an active and passive side in every transaction. If you need to be active, hit the bid or lift the offer. If you can afford to be passive, then work the order. Otherwise, don't spend too much time bidding or offering, the pursuit of saving a few pennies will cost you a lot of dollars.
Good luck!
When trading in smaller timeframes, I put bids and offers slightly below and above the inside price, at support and resistance zones respectively.
Getting hit through these zones gives me an idea of how desperate the active side is. I learned a great deal about that during my experience making markets.
At the end of the day, there is an active and passive side in every transaction. If you need to be active, hit the bid or lift the offer. If you can afford to be passive, then work the order. Otherwise, don't spend too much time bidding or offering, the pursuit of saving a few pennies will cost you a lot of dollars.
Good luck!
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008-trader;
Part of its personality,may buy bids[reversal];
most all my exits are market orders & many entrys are ''market''with much due diligence.
Many bull market months would by definition have many rising bid /ask prices;
aiming at trends measured in dollars more than pennies and be glad to take 75 pennies at a time also with market order exit.
SFO[Stocks,futures,Options magazine]] made a wise point this year, don;t be concerned with what the market maker makes ,concentrate on your plan,[paraphrase]
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''In all labor there is profit''-Solomon,trader king