Scalping for 4 ticks; mangement?

[Turveyd]

4ticks is over to fast to move the sl, trail might work better, 3 pips then reverse vets you out - 1.


It's never easy sadly

 

[SPT]

Thanks guys, I am reading every posts that you guys are posting. I didn't expect this many replies. I really appreciate it!

I am still thinking what to do next week over this weekend.

 

[SPT]

I've looked into to this for many years. I've come to the conclusion that once you find a strategy that works, it all goes out the window once markets gets choppy again. In other words, we are wasting our time. This whole website is nothing but a marketing machine financially fueled by brokers and a bunch of wannabes. If it there was really a way to constantly profit daytrading, then we would hear about hedge funds killing it every single year. They employ the brightest of the brightest, they have the capital to afford the best computers out there, but we never hear of them doubling their money every year, they actually also have losing years, yet we are so naive to think we will find a way to constantly make money with this. Geez, even the turtle traders gave up once trends started becoming less frequent, and they were the legends ! The only few successful traders that really made it are the ones that had an edge back in the day because only a few people had charts, a computer and Level 2. Now everyone is looking at the same thing therefore that edge is long gone. While it does not sound sexy at all, Bogle is damn right when he says we should just "buy the damn index" for the long run LOL. After all, Buffett made it without placing a single daytrade in his entire life.

That is quite pessimistic!

I still believe that scalping is very doable because at least there are hedgers who do not really care about losing money in the market. Therefore, I believe that there are still dumb money or do not care money out there that I can somehow capitalize on. Feel free to criticize =)

thanks for your comment!

 

[SPT]

Hi SPT,

I wanted to offer a couple of thoughts about your questions and offer some ways to think about your questions from a different perspective.

Scalping 4 ticks in the ES with a 4 tick stop is possible, but I think you'll find over the long term your profits will be either so razor thin that it's not worth the effort or eaten up by commission and the occasional slippage when you have to cross the book on a stop out.

In essence, this 1 Risk: 1 Return approach (1R trades) makes for a method which requires you to have a better than 50% win rate. That's easy, right? Well, not so much.

Think about that 1:1R system in the extreme. 1 tick. What's your sense of the win rate? I propose to you that it's less than 50%. Here's why: when the -1 tick gets hit (even with a 1 lot) your Stop Loss will trigger. But on the upside, when your +1 tick gets hit, you have to wait in line for a fill. To fix that, you'd need to move your stop to 2 ticks. Now you have a 0.5R system. That will require a 75% win rate to break even before commissions and slippage. Not easy.

The 4 ticks wide scalp give you more room than that example in the extreme, but it's still not simply a matter of doing better than 50/50. You have to do much better than that. So this approach will rely a lot, if not entirely, on your ability to pick those 4 tick turns. In a fast ES market, like we've seen two weeks ago, that's going to fall into the noise as the book snaps back and forth.

How do you feel about your ability to pick those 4 tick turns? You are putting a lot of pressure on yourself for high accuracy as a trader. Why not give yourself a little bit of margin and look for higher R trades like a 1.5R (6T target, 4T stop) or even 2R?

Moving your stoploss to 2 ticks once the market has moved 2 ticks in your favor is like taking a new trade, or you could think of it like resetting your current trade. This one is a 2 tick target with a 4 tick stop (0.5R system again). Not good because you now need a 75% success rate to break even on that adjusted trade. Do you think that the 2 tick move in your direction makes it *much* more likely to continue 2 more? While it will depend on the current volatility, that's really the question you need to ask when you ratchet your stop.

You made me think a lot. Thanks for your comment!

 

[Turveyd]

That is quite pessimistic!

I still believe that scalping is very doable because at least there are hedgers who do not really care about losing money in the market. Therefore, I believe that there are still dumb money or do not care money out there that I can somehow capitalize on. Feel free to criticize =)

thanks for your comment!

Scalping is FINE, no worries at all, fixed SL tricky, obviously need an SL don't get me wrong, but fixed, errrrm got to have wiggle room to adapt.

TP wise, don't like fixed TP at all, don't even like setting TP as I always HOPE for a big move and wouldn't want to cut it short I guess, maybe it's a better way, looks like my setup could get you 6-8ticks easy as.

 

[MrFuture]

That is quite pessimistic!

I still believe that scalping is very doable because at least there are hedgers who do not really care about losing money in the market. Therefore, I believe that there are still dumb money or do not care money out there that I can somehow capitalize on. Feel free to criticize =)

thanks for your comment!

It might sound pessimistic, however ask yourself how many times you felt the need to tweak your strategy, how many times you thought you found the perfect parameters, just to see the market moving in a completely different fashion all of a sudden, forcing you to come back here looking yet again for answers. Truth is, no one can keep beating the mkt in the long term, and as a result not matter which strategy you implement, you will always find yourself back to the drawing board having to make changes for the 100th time. Problem is, by the time you are back to the drawing board it means you went through quite a few losses, otherwise there would be no need to implement new changes.

Just think....how many threads were started in this very website throughout the years with people presenting their winning strategy, followed by the first few pages of the thread full of excited people commenting on how cool the strategy is.....but then you see the pages that follow full of new tweaks and "filters" that people come up with to improve the strategy.......just to then seeing the thread dying miserably as soon as people realize that the strategy does not work in the long run ? Countless of threads ended up like that, and not only here, but on all active trading forums.

That is when you have to ask yourself, what if there is no way, what if I am just wasting my time looking for something that does not exist? Why is it that most prop trading firms are shutting down? Why is it that the brightest minds on Wall St still have losing years and all they can wish for is returning a few % points over what the market does? Why is it that Steve Cohen himself, who was once the master of trading ES intraday, admitted that today's mkt noise makes it impossible to trade it intraday profitably? And yet here we are, on an internet forum, claiming we will somehow find out a way?

I work in finance and deal on a daily basis with trading desks all over the US. I speak to traders from the best firms out there, who have access to the best technology/information and are bright as hell, and yet I still have to find anyone who tells me that active trading can be profitable for the long run. It is a mirage, an illusion pushed by the very same brokers that sponsor this website to generate commissions. That is all, and we all know it.

Just my two cents. Best of luck in your pursuit.

 

[Turveyd]

It might sound pessimistic, however ask yourself how many times you felt the need to tweak your strategy, how many times you thought you found the perfect parameters, just to see the market moving in a completely different fashion all of a sudden, forcing you to come back here looking yet again for answers. Truth is, no one can keep beating the mkt in the long term, and as a result not matter which strategy you implement, you will always find yourself back to the drawing board having to make changes for the 100th time. Problem is, by the time you are back to the drawing board it means you went through quite a few losses, otherwise there would be no need to implement new changes.

Just think....how many threads were started in this very website throughout the years with people presenting their winning strategy, followed by the first few pages of the thread full of excited people commenting on how cool the strategy is.....but then you see the pages that follow full of new tweaks and "filters" that people come up with to improve the strategy.......just to then seeing the thread dying miserably as soon as people realize that the strategy does not work in the long run ? Countless of threads ended up like that, and not only here, but on all active trading forums.

That is when you have to ask yourself, what if there is no way, what if I am just wasting my time looking for something that does not exist? Why is it that most prop trading firms are shutting down? Why is it that the brightest minds on Wall St still have losing years and all they can wish for is returning a few % points over what the market does? Why is it that Steve Cohen himself, who was once the master of trading ES intraday, admitted that today's mkt noise makes it impossible to trade it intraday profitably? And yet here we are, on an internet forum, claiming we will somehow find out a way?

I work in finance and deal on a daily basis with trading desks all over the US. I speak to traders from the best firms out there, who have access to the best technology/information and are bright as hell, and yet I still have to find anyone who tells me that active trading can be profitable for the long run. It is a mirage, an illusion pushed by the very same brokers that sponsor this website to generate commissions. That is all, and we all know it.

Just my two cents. Best of luck in your pursuit.

Although I don't trade ES, I will admit it's taken me YEARS to find a long lasting method, that doesn't fail 2 days later, it's a right PAIN in the arseeeee I can tell you, so your right, BUT I've been profitable for a while ( not set the world on fire profitable yet ), so I'm still working on it and myself to get to that point.

The Noise and taking advantage of it, was my last variable ( brain wave in this thread interestingly ), noise is quick, take your eye off the screen and the entry is long gone, hesitate and gone.

Limit orders, towards the extremes of what noise can do, is the solution, once you've worked out what the expected level of movement general noise makes.

0.03% market deviation, is pretty common across all markets, if you buy towards the low of that, you can likely sell towards the high easy, if the market has a direction then only buy the Low's if up.

There is your scalp answer, if you can make that work, well that's upto you!

 

[SunTrader]

Go to Vegas, get drunk, have a story to tell. Maybe.

Rather than concerning yourself with what SL for a 4 tick scalp - against some of the best of the best traders in the world.

 

[SPT]

Scalping is FINE, no worries at all, fixed SL tricky, obviously need an SL don't get me wrong, but fixed, errrrm got to have wiggle room to adapt.

TP wise, don't like fixed TP at all, don't even like setting TP as I always HOPE for a big move and wouldn't want to cut it short I guess, maybe it's a better way, looks like my setup could get you 6-8ticks easy as.

I would love to get 6 ~ 8 ticks, but sometimes it goes up like 5 ticks and turn around and hit my SL, which pissed me off. I do not know a way to tell when short term trend has stopped completely or not.

 

[SPT]

Go to Vegas, get drunk, have a story to tell. Maybe.

Rather than concerning yourself with what SL for a 4 tick scalp - against some of the best of the best traders in the world.

I love Vegas. Thanks