Even chop has a trend relative to where price is in within a swing of longer timeframe, so if longer trend is up, on longs add another lot using exact same SL of scalps. Trend trades are "potluck" anyway, don't make sense to me to extend risk.
Scalping Vs. Runners
- Thread starter John9999
- Start date
Even chop has a trend relative to where price is in within a swing of longer timeframe, so if longer trend is up, on longs add another lot using exact same SL of scalps. Trend trades are "potluck" anyway, don't make sense to me to extend risk.
The method posted by djmartin back in 2017 that combines scalping with runners would have worked last week. I am too slow and rational to use it. I think it is a great method particularly in volatile markets. Here is the URL:
https://www.elitetrader.com/et/threads/the-mind-of-a-trader.292247/
https://www.elitetrader.com/et/threads/the-mind-of-a-trader.292247/
Yep, obviously don't chop trade against the trend, only with the trend.
Jumping on a trend too often turns into chop and chops you
Realising, Trading Chop with Trend if any, only when the loss is kept to a Min is what's making good money, giving up on the hero trades
What you're not taking into account are the losing trades. You're taking LARGE loses because you have your biggest bet on the very first entry. Your "runners" are going to force you to have A HIGHER AVERAGE WINNING PCT in order to compensate for your AVERAGE GAINS not being as high as they could by going all-out.
You need to reverse your thinking. If you feel you are near the beginning of a good trend, take a standard lot position, let the market move favorably in your direction. Let it have a reaction against you. So long as that reaction stays at least X ticks away from your last position, you can take ANOTHER POSITION IN YOUR FAVOR. You will be able to do this with 2-5 add-ons in a good trend. You simply don't let the most recent add-on encroach upon (or close through) your 2nd to last position. That is controlling your leverage so it doesn't cascade against you. In fact, you expect the last reaction to, at worst, give you a breakeven on your 2nd to last position.
If the market is going to move a total of X distance from your entry point then why are you willing to take your largest loss at the very beginning? It only makes sense from a math perspective if you are going all-in / all-out. If you want to trade 3 contracts max in a trade sequence and I do too, if you enter everything upfront then your loss is 3x what mine will be if I enter 1 lot initially and then add 2 more lots on the way to the same target. I will always take a 1x loss and you will always be taking 3x that amount. And for what? You have no greater certainty of the trend working out in your favor then I do.
[I use the above as an example of adding to a trend. Most of the time I go all-in / all-out within the context of a trend]
Your whole mindset is backwards. Your approach to taking losses on initial capital in a trade sequence is the wrong way to go.
------------------------
Tharp's "Trade Your Way To Financial Freedom", page 265 - What to Avoid
"There is one kind of exit that is designed to get rid of losses, but it
totally goes against the golden rule of trading of cut your losses
short and let your profit run. Instead, it produces large losses and
small profits. This type of exit is one in which you enter the market
with multiple contracts and then scale out with various exits. For
example, you might start with 300 shares and sell 100 of them when
you can break even on all 300 shares. You might then sell another
100 shares at a $500 profit and keep the last 100 shares for a huge
profit. Short-term traders use this type of strategy frequently On a
gut level, this sort of trading makes sense because you seem to be
“insuring” your profits. But if you step back from this sort of exit
and really study it, you’ll see how dangerous this type of trading is.
What you are actually doing with this sort of exit is practicing
reverse position sizing. You are making sure that you will have
multiple positions when you take your largest losses. In our exam
ple, you’d lose on all 300 shares. You are also making sure that you
only have a minimal-sized position when you make your largest
gain-100 shares in our example. It’s the perfect method for peo
ple with a strong bias to be right, but it doesn’t optimize profits or
even guarantee profits. Does it make sense now?"
OK, I understand what you are saying. I don't think we are talking about the same thing exactly. I agree with above for swing/trend trading (even some day trading). But if you are a scalper, you scalp. You do it with large size and small risk. Obviously, you need to have an edge where you are profitable doing it. So now you are doing your regular thing and reached your goal for the day. You can continue scalping but change it so that you leave some/more shares/contracts for runners which have lower odds of succeeding. You only let it ride if it's already at break even or better. If you are experiencing lots of losses on your entries while scalping, then you are obviously not doing a good job at it in the first place. I don't want to confuse things with adding to positions, because that's a different topic altogether, but what you describe makes sense to me.
Just me - it is very difficult for a legit scalper to let a winner run. And I scalped in the Bond Pit and I have scalped on the screen. If you are legitimately scalping, you are buying bids and selling offers. A true scalper gets taken out of a position way too early for it to be called a "runner".
Now, on occasion, when a market was really moving - let's say the market was selling off rapidly and the bid side of the DOM became very thin, I would step out and hit a bid and hold them. But that was not a common occurrence.
Technical indicators are by design and definition lagging. They sample a historical pool of past price or volume prints. You have no way of knowing if what you just bought or sold will be good for one tic or fifty tics. That's why indicators for market "choppiness" are next to useless for a scalper. By the time you get a signal in the affirmative - you've been sodomized. Repeatedly. For some time.
IMHO the only way for a scalper to have any sense that a trade may be good for more than a tic would be 'acquired art through experience'.
Now, on occasion, when a market was really moving - let's say the market was selling off rapidly and the bid side of the DOM became very thin, I would step out and hit a bid and hold them. But that was not a common occurrence.
Technical indicators are by design and definition lagging. They sample a historical pool of past price or volume prints. You have no way of knowing if what you just bought or sold will be good for one tic or fifty tics. That's why indicators for market "choppiness" are next to useless for a scalper. By the time you get a signal in the affirmative - you've been sodomized. Repeatedly. For some time.
IMHO the only way for a scalper to have any sense that a trade may be good for more than a tic would be 'acquired art through experience'.
I think this kind of scalping is long gone to the HFTs. Maybe some thin instruments you can still do it manually, but you gonna get run over sooner or later. Just an opinion. There's been some discussion here on what scalping is. I'm thinking in terms of micro momentum bursts and seeing how far they can carry me.
Percentages do not tell the whole story. If it's not scalable, it's not as desirable/viable.
Why do I need to Scale it, I've made nearly 1K in about 2hours of actual trading time and had 1 bad trade wipe out a lot of my profit and still got back to +1K, 1K in 2hours is fine with me
That's at $10 per pt DAX, I can go to $100 per pt so 10x's the profit, with 10x's the account size!!