Scalping is risky ?
- Thread starter JimmyChoo
- Start date
which trading strategy is profitable , it depends on your money management , so develop ur money management and bring more profit by strategy.
Yes scalping is risky:
To maximize few ticks, trading a larger size is essential: This is not forgiving.
I "give" +15% of my gross profits to my brokers.
Only 20% of my trades are limit orders, all others are market orders: I scalp the NQ future and I estimate that the slippage eats more than 15% of my gross profits.
Markets change all the time: To be able to adapt, discretionary is required.
The emotional impact is important (at least to me).
So, the odds are incredibly against scalpers.
No scalping is not risky:
Liquidity is your friend.
Don't fear or compete with HFTs, they actually amplify patterns (I am not talking about head and shoulders..)
I am in control and I always use a (large) stop, just in case: This stop is arbitrary at 1/2 of my daily loss limit and it is almost never touched.
Being in the market for few seconds or minutes removes all kind of black swan event.
No overnight positions, at least regarding my scalping activity.
My maximum daily net loss is not negotiable.
To maximize few ticks, trading a larger size is essential: This is not forgiving.
I "give" +15% of my gross profits to my brokers.
Only 20% of my trades are limit orders, all others are market orders: I scalp the NQ future and I estimate that the slippage eats more than 15% of my gross profits.
Markets change all the time: To be able to adapt, discretionary is required.
The emotional impact is important (at least to me).
So, the odds are incredibly against scalpers.
No scalping is not risky:
Liquidity is your friend.
Don't fear or compete with HFTs, they actually amplify patterns (I am not talking about head and shoulders..)
I am in control and I always use a (large) stop, just in case: This stop is arbitrary at 1/2 of my daily loss limit and it is almost never touched.
Being in the market for few seconds or minutes removes all kind of black swan event.
No overnight positions, at least regarding my scalping activity.
My maximum daily net loss is not negotiable.
Bull market is bailing you out. What then when the bear comes back .... eventually lol?
The average duration of my scalp trades is less than 1 minute. Bull or bear has nothing to do with scalping.
Liquidity and volatility on the other hand, help a lot.
its a best reply from all there is.
lot of information and practical.
and you also said:-
"This stop is arbitrary at 1/2 of my daily loss limit a ......"
So am I to assume your stop is miniiiiiiiiiiiscule or you trade yuuuuuge size?
If the latter most refer to stop size per contract, not cumulative.
Hi Sun,
For every trade, my stop is at 50 ticks, which is $250 per contract. So my daily stop limit (cumulative loss) is at $500 per contract. This 50 tick stop is almost never hit: I just act before.
This stop doesn't just stay on my trading platform, and it is here to give me confidence if anything goes wrong (power outage, internet, software, hardware failure, etc.)... And that happens.
My next step (in few weeks?) will be to bring my hard stop at 1/3 of my daily loss limit and still being able not to use it.
I scalp for few ticks, depending on the situation, and I can do that just once a day or a lot more.
So I need to have a high win rate %, which I think is always required for successful scalping.
CannonTrading_Ilan
Sponsor
Joe Easton is a senior broker with Cannon and had the following to share:
Scalping is considered short term trading. This could be thousands of times per day or 1 or two times per day, the definition is more about the period of time in the trade. Typically scalping is is for smaller risk and smaller reward. In my experience, it is better to take a scalping type entry (1 or 2 attempts with small risk 1-3 pts) with a longer term exit strategy. This is the "be patient with winners and impatient with losers" . Having a longer term and larger exit strategy will reduce overloading and increase possibility of trades that can make up for many losses.
Also can help reduce transaction costs.
Scalping is considered short term trading. This could be thousands of times per day or 1 or two times per day, the definition is more about the period of time in the trade. Typically scalping is is for smaller risk and smaller reward. In my experience, it is better to take a scalping type entry (1 or 2 attempts with small risk 1-3 pts) with a longer term exit strategy. This is the "be patient with winners and impatient with losers" . Having a longer term and larger exit strategy will reduce overloading and increase possibility of trades that can make up for many losses.
Also can help reduce transaction costs.