Scalping and Trading

A

AllenZ

This thread is my way to attempt to help newer traders who are looking to trade the mini's. I am not here to give setups, just to offer some help if you are struggling or getting started, by aiding in the process of planning your trades or at least developing your style. If you don't want or need help, fantastic, I just see many new traders approaching this game in a destructive way and would like to start a thread that is simply meant to help. Most of you know I run a chatroom and I am not here to recruit, I am offering FREE advice take it or leave it. I really just hate to see people loosing money.

Many of you that know of me can agree I usually tell the complete truth. Something I always try to do is figure out what results i expect out of a trading system or method of trading. With scalping the NQ's especially I think you put yourself at a great disadvantage. Let me start by stating what I think I am seeing.

Most of you that attempt to scalp for 1-3 points tend to trade about 8-12 times a day and make an average of 1.5 points on gains and same for losses. Most of you don't use T/A which makes sense because I don't think you can use T/A for small moves like this ( my opinion ). I only say this to help as i have been trading the minis for almost a year and although i consider myself a good scalper ( when I do it, usually just to keep myself amused ) all in all, I break about even when I scalp. I do FAR better when I concentrate on medium sized moves of 6-12 points.

Here are some suggestions:

1. Develop a trading plan.
2. Do the math. If it aint profitable, fix it. ( I will help if you need it )
3. Make sure your plan fits your personality.
4. Don't let your account size dictate your trading plan.

Once again this thread is only meant to help traders that are struggling or just starting out, although I hope some of the more experienced traders around here can offer some help or advice also. If you want some proof that i know at least a little about what i am saying you can check my posted performance on the website or I will even post a few trading statements if you like.

AllenZ
 
Allen,
I have never traded the QQQs and have a quick question for you - do the Qs lag the futures or is it also a leading indicator for stocks? Also, does the uptick rule apply for the Qs?
Thanks.
 
Allen--

I pretty much agree with you but let me explain my position. Looks like in the minis, there are 2-3 times per day that a trade in the right direction can be extremely profitable. Of course picking those exact spots is what separates the men from the boys. What I try to do is enter positions in which this might occur, then to get out if it doesn't pan out. There are three things that prevent me from holding longer.

1. Account size. Prevents me from taking on a little more risk for a little more gain.

2. Not wanting to lose what profit I do have. Once again that old adage of letting winners run creeps in.

3. The few times I have opened the stops up, I've gotten burned, which in turn makes it harder to do the next time.

Another curious thing that has popped up is the days in which my charting has been down, I've had my biggest gains. Go figure.

Like I said I agree with your points, but until an account has been built up beyond a certain level, preservation weighs heavily in every decision being made. Looking forward to your reply.
 
Trader88-

The QQQ and the futures trade pretty much in lock step except for fast markets when they can lag by a few seconds or so.

There is no uptick rule.

Bronx-

1. As far as account size goes you look to have 5k+ so even if you widened stops to 4-6 points you would only be risking 2% or less on a trade which is within decent parameters.

2. Never let prior profit or loss dictate your next trade. Trading is a game of averages and probability and the more you can stay consistent in risk and profit the more you will see that the long run goal may necessitate sometimes taking a trade or risk that puts in jeopardy your current profits. Personally I take an entry whenever it sets up no matter what I am up or down on the day unless I have hit my days loss limit. I am not a big believer in letting wins run and cutting losses quick it doesn't fit my personal trading method but is a good theory and sounds great.

3. when you open up stops you must do it for a period of time and not on a trade by trade basis. If you open a stop up on a trade randomly then you wont really be giving the theory a try. Now i am not saying you must have wider stops, I am just saying make sure what you are doing is sound as far as a plan and that it makes sense if done over a long period of time. Do the math and if your system works AWESOME, if not, then adjust.

Allenz
 
For what its worth, I've been tracking my NQ emini points earned by time period during the day and have come up with the following table (April-May 2002):


TIMES %
6:30-7:20 38%
7:20-8:20 5%
8:20-9:30 19%
9:30-10:30 4%
10:30-1:00 34%

The timeframe is West coast obviously, and considers only the entry time for the trade. The middle of the day has many small losses with occasional big wins that make it profitable overall, but most days the middle of the day is unprofitable for my trend system. This isn't a scalp system, but more of a trailing loss approach. It goes for 5-20 points gains. For scalping there is obviously more points per minute to be had at the beginning and end of day as well.
 
"I am not a big believer in letting wins run and cutting losses quick it doesn't fit my personal trading method but is a good theory and sounds great."


LOL. I love it. This is heresy you infidel!
 
Originally posted by AllenZ




2. Never let prior profit or loss dictate your next trade. Trading is a game of averages and probability and the more you can stay consistent in risk and profit the more you will see that the long run goal may necessitate sometimes taking a trade or risk that puts in jeopardy your current profits. Personally I take an entry whenever it sets up no matter what I am up or down on the day unless I have hit my days loss limit. Allenz
More...

I wholeheartedly, completely, and unequivocally agree with this. Now, if I could just practice it.
Thank you for responding.
 
Originally posted by AllenZ
Here are some suggestions:

1. Develop a trading plan.
2. Do the math. If it aint profitable, fix it. ( I will help if you need it )
3. Make sure your plan fits your personality.
4. Don't let your account size dictate your trading plan.
More...

What do some do to remove EXCESS profits from accounts which can become intoxicating and promote taking on too much risk?
Some possiblities:

1)Daily wire out
2)Weekly wire out
3)Monthly Wire out
4)Do nothing, let account grow but don't increase risk/size just due to increasing account size?
5)Do nothing , let account grow and increase size accordingly

Net
 
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