Scalping Futures

[k p]

They pick a spot and do very large size.

This part is key... but how to pick that spot? A week ago I was following the posts of Eddiemorra who was posting calls in the ES thread where he knew a guy who made magical calls... all posted in real time! NoDoji even commented that she understood these traders, but when I plotted them in this post here... the rationale behind them escapes me.

http://www.elitetrader.com/et/index.php?threads/did-sla-ever-work.293932/page-8#post-4172008

So when you get to the level where you can pick a spot with a really tight stop and trust your method enough to trade some serious size, well then, you have made it!

 

[EPrado]

"So when you get to the level where you can pick a spot with a really tight stop and trust your method enough to trade some serious size, well then, you have made it! "

Bingo.


As far as how to pick that spot? Gotta put a ton of time in, do some back testing, then have the confidence to stick with it in the long run. If you know that it works the hard part at times is staying on the path during draw downs. I have been doing this for a long time and even now at times during a draw down I'm like " Man.....I can't do anything right". But it's part of the game. Trading is a complete midf*ck at times. A week later I am like " This is the greatest job on the planet".

 

[k p]

"So when you get to the level where you can pick a spot with a really tight stop and trust your method enough to trade some serious size, well then, you have made it! "

Bingo.


As far as how to pick that spot? Gotta put a ton of time in, do some back testing, then have the confidence to stick with it in the long run. If you know that it works the hard part at times is staying on the path during draw downs. I have been doing this for a long time and even now at times during a draw down I'm like " Man.....I can't do anything right". But it's part of the game. Trading is a complete midf*ck at times. A week later I am like " This is the greatest job on the planet".

I agree about this being the greatest job... once you can see in your own account that it works.

I'm just amazed by the huge range of trading metrics. There was a great journal here years ago where a trader, geez, was putting on a trade with a 1:2 risk reward ratio, risking $200 to make $400 with a 50% win rate. Clearly this is quite a good edge, and on some days, he'd have 4 losses in a row... totally expected, and still go forward since he was sure about his 50% win rate overall.

But then you come across some posts where guys are catching these tops and bottoms in the ES with 2 or 3 point stops and targets easily 15 or 20 points away with a killer... greater than 75%, win rate. With a strategy like this, its easy to not get too worried about a couple of losses in a row since just one win will more than make up for it. But wow.. talk about having an almost unbelievable edge!

 

[Handle123]

I hear ya man. I don't have access to that kind of data. I talk to a handful of traders that have been doing it for a long time. Some of them are ES traders and do very very well. That being said they aren't scalpers that do 100 trades a day. They pick a spot and do very large size. But maybe 1-2 trades a day. Sitting there staring at an ES Dom can lead people to do a gazillion trades. I could see how a lot of people just get chopped up to death.

If you not leasing a seat, and have a couple losses in a row trading many contracts, it can wipe out a week's worth of trading. People think everyone is making a mint day trading and getting homerun trades, but overall, it is grinding it out and after fees, if you are averaging more than couple ticks a trade overall, you are doing very well. When you have to get out, stops are the worst to have cause you will actually cause slippage, ES is hard market to learn cause it jumps back and forth, but there is patterns of this and not getting all uncomfortable, you can hit bids or asks and often save a tick and no slippage if you just wait and why I try to get plus one tick on breakeven trades, this back/forth happens so often, why not take advantage. Breakeven is a loss of fees, go for that tick gives lunch. I tried many trades and many contracts years ago, by Wednesday I was wiped out and grumbier than now, but you do eventually discover patterns watching the DOME, but the getting out is always the worst part, HFT comes in and price is up 3-4 points before stops are filled or you manually getting out. Many years where broker was paid more than I made, really adds up. Best times to learn to scalp is lunch, sell high/buy low with trend.

 

[EPrado]

I agree about this being the greatest job... once you can see in your own account that it works.

I'm just amazed by the huge range of trading metrics. There was a great journal here years ago where a trader, geez, was putting on a trade with a 1:2 risk reward ratio, risking $200 to make $400 with a 50% win rate. Clearly this is quite a good edge, and on some days, he'd have 4 losses in a row... totally expected, and still go forward since he was sure about his 50% win rate overall.

But then you come across some posts where guys are catching these tops and bottoms in the ES with 2 or 3 point stops and targets easily 15 or 20 points away with a killer... greater than 75%, win rate. With a strategy like this, its easy to not get too worried about a couple of losses in a row since just one win will more than make up for it. But wow.. talk about having an almost unbelievable edge!

With a 1:2 risk:reward and a 50% win clip you can make a lot of money. Is a great edge. Once you realize losses are part of the game then you do what that guy did, just keep moving forwards. Not always easy, but you have to do it. Once you start over thinking things and trying to cherry pick trades you are done. Trust me. It's caused bumps in my road over the years.

As far as the guys who are making 15-20 ES winners. In this environment that definitely can be achieved. No doubt. But those same guys probably did not have much success (or nearly as much) before August of this year. When there is volatility you can do that. But when things slow down there is no chance of getting those kind of wins. If it stays like this, which I hope it does, then they are set. But if it slows down that strategy is no good. You hear about guys who made a fortune during 2008-2009. Then don't make money for 6 years. Now they are making money again. Tough to go through that kind of drought. Personally I'd rather trade a strategy that works in all types of markets, and make adjustments during extreme volatility. You can last a long time doing that. It's like in baseball. They guys who hit .300 play forever while the guys who bat .215 and hit a bunch of home runs for a short period have shorter careers.

 

[k p]

Personally I'd rather trade a strategy that works in all types of markets, and make adjustments during extreme volatility.

Agreed. Knowing when to stay out is also just as important as knowing when to put on size.

 

[EPrado]

If you not leasing a seat, and have a couple losses in a row trading many contracts, it can wipe out a week's worth of trading. People think everyone is making a mint day trading and getting homerun trades, but overall, it is grinding it out and after fees, if you are averaging more than couple ticks a trade overall, you are doing very well. When you have to get out, stops are the worst to have cause you will actually cause slippage, ES is hard market to learn cause it jumps back and forth, but there is patterns of this and not getting all uncomfortable, you can hit bids or asks and often save a tick and no slippage if you just wait and why I try to get plus one tick on breakeven trades, this back/forth happens so often, why not take advantage. Breakeven is a loss of fees, go for that tick gives lunch. I tried many trades and many contracts years ago, by Wednesday I was wiped out and grumbier than now, but you do eventually discover patterns watching the DOME, but the getting out is always the worst part, HFT comes in and price is up 3-4 points before stops are filled or you manually getting out. Many years where broker was paid more than I made, really adds up. Best times to learn to scalp is lunch, sell high/buy low with trend.

Yes if you are a scalper and do a ton of trades then your commissions will eat you up. In that case leasing a seat is a great idea. But I've never traded that way. Commissions never really matter much for me. I don't trade a ton each day. One tick slippage from time to time has no real effect on my P/L. Again, when you don't trade a lot not a huge deal.

You think slippage is bad in ES ? Try trading RBOB Gas or Heating oil Futures. Sometimes you have to send out a search party to find a bid to hit.

 

[EPrado]

Agreed. Knowing when to stay out is also just as important as knowing when to put on size.

Probably more important.

 

[Autodidact]

I'm just amazed by the huge range of trading metrics. There was a great journal here years ago where a trader, geez, was putting on a trade with a 1:2 risk reward ratio, risking $200 to make $400 with a 50% win rate. Clearly this is quite a good edge, and on some days, he'd have 4 losses in a row... totally expected, and still go forward since he was sure about his 50% win rate overall.

Many come to this business, unprepared and uneducated.

Let's use 50% probability as example.

Odds of 4 losses in a row.

6.25%

Odds of 5 losses in a row

3.12%

Odds of 6 losses in a row

1.56%

Yet most "traders" would probably fail to proceed as planned as these scenarios occur.

 

[Handle123]

"So when you get to the level where you can pick a spot with a really tight stop and trust your method enough to trade some serious size, well then, you have made it! "

Bingo.


As far as how to pick that spot? Gotta put a ton of time in, do some back testing, then have the confidence to stick with it in the long run. If you know that it works the hard part at times is staying on the path during draw downs. I have been doing this for a long time and even now at times during a draw down I'm like " Man.....I can't do anything right". But it's part of the game. Trading is a complete midf*ck at times. A week later I am like " This is the greatest job on the planet".

Too many traders do not break down swing lengths for past month and know when some swing lengths need to be ignored(high volatility). All swings start from a strong top or bottom, number of bars to left/right of that pivot top or bottom then to next swing bottom/top, I break down these into hours, first-second etc, so I know round about what to expect when market due for reversal. I believe only in 3 trending waves up/2 corrective waves down. When trading one minute bars, often times the last wave will be not what the books say of Elliott Wave and it will be larger. So if a Swing length is 8 points on average, I know that if there is three trending waves of approx. 10-12 points total. Why is it greater than 8 points? Because corrective waves retrace, so where the entry comes in can determine where you can expand normal targets OR take less than your target and when not to take a trade when too close to end of swing or use quicker time stop. Many don't learn much from profitable trades, like how long did it take to go 4,5,6...ticks so you can lock in 1,2 ticks and when a trade overstays it's welcome, new target is plus one tick. Trading well, study must come in before trend, exits, entries, money management, breaking down price and understanding divergences of volume. Lots of little things adds up to better trading.