It has come to my attention in several threads that there is a real dichotomy on Elitetrader between those who scalp for a living and those who hold longer...
For the purposes of clarification, let's define scalping as trading stuff for 'small' profits (e.g. 1-3 points on the ES, 2-7 points on NQ, 5-20 cents on an NYSE stock) which may be predetermined objectives or may be a retrospective approximation of the average profit. Stop size for scalping would be roughly the same (perhaps slightly less) than profit size. The objective would be to have a high success rate (70%+) to ensure the scalping strategy had positive expectancy.
Let's define 'holding stuff intraday for more' as anything using longer term studies to catch a bigger trend, with or without a profit objective (classic techniques to run profits for the bigger picture trend is using a wide rolling stop or raising stops in accordance with the progressive formation of higher lows, in the case of longs). The objective here is to catch the occasional parabolic move... such multiple R trades are obtained a relatively small proportion of the time (say 30%).
It remains my view that long run $ expectancy of a successful scalper can be equivalent to the long run $ expectancy of a successful intraday trend trader. It is also my view, therefore, the the trader should expend some effort on identifying his psychological traits as a means of determining which strategy he is most compatible with (e.g. does the trader require a high frequency of wins --- positive reinforcement, is the trader more concerned about letting the big move get away without him or about the current profit in a trade retracing to nothing, can the trader handle large drawdown periods, does the trader need continuous action or is the trader capable of standing on the sidelines for considerable lengths of time, etc etc).
It would be interesting to get some raw numbers on scalping versus holding stuff for longer. It would also be interesting to find out how many of you are able to dynamically assess market conditions on an intraday basis and easily switch between the scalping and the trend trading methodologies. This latter category of person has, in my view, got a very interesting psychological make-up, somehow being capable of quickly resolving the diametrically opposed personality traits required in successful scalping versus successful trend trading.
Please only participate if you are actually making a living from trading a given style (a 'living' being defined as anything which enables you to trade full time and meet your life's expenses).
For the purposes of clarification, let's define scalping as trading stuff for 'small' profits (e.g. 1-3 points on the ES, 2-7 points on NQ, 5-20 cents on an NYSE stock) which may be predetermined objectives or may be a retrospective approximation of the average profit. Stop size for scalping would be roughly the same (perhaps slightly less) than profit size. The objective would be to have a high success rate (70%+) to ensure the scalping strategy had positive expectancy.
Let's define 'holding stuff intraday for more' as anything using longer term studies to catch a bigger trend, with or without a profit objective (classic techniques to run profits for the bigger picture trend is using a wide rolling stop or raising stops in accordance with the progressive formation of higher lows, in the case of longs). The objective here is to catch the occasional parabolic move... such multiple R trades are obtained a relatively small proportion of the time (say 30%).
It remains my view that long run $ expectancy of a successful scalper can be equivalent to the long run $ expectancy of a successful intraday trend trader. It is also my view, therefore, the the trader should expend some effort on identifying his psychological traits as a means of determining which strategy he is most compatible with (e.g. does the trader require a high frequency of wins --- positive reinforcement, is the trader more concerned about letting the big move get away without him or about the current profit in a trade retracing to nothing, can the trader handle large drawdown periods, does the trader need continuous action or is the trader capable of standing on the sidelines for considerable lengths of time, etc etc).
It would be interesting to get some raw numbers on scalping versus holding stuff for longer. It would also be interesting to find out how many of you are able to dynamically assess market conditions on an intraday basis and easily switch between the scalping and the trend trading methodologies. This latter category of person has, in my view, got a very interesting psychological make-up, somehow being capable of quickly resolving the diametrically opposed personality traits required in successful scalping versus successful trend trading.
Please only participate if you are actually making a living from trading a given style (a 'living' being defined as anything which enables you to trade full time and meet your life's expenses).
