SJL's ES 6 ticks scalping

[SJL]

Hello, I have been reading Elitetrader for quite a long time, but I never really participated in forum. I decided to share what I am doing now maybe this will help some other small account traders like myself. Also I can get helpful tips from experts in this forum as well.

Here you go!

My goal : Everyday grabbing at least 18 ticks from E-mini S&P500 futures or at least 360 ticks a month. Becoming the best small trader going after 1.5 point (6 ticks) in E-mini S&P500 futures.

My dream is to live comfortably from trading profits. In other word, achieving financial freedom.

In order to do this, if I succeed this goal. ultimately my trading business needs to be under a company entity such as S corp or LLC with IOM membership enabled with that entity.

My philosphy: For going after small profit target. I believe that small account trader has an edge over big account trader due to liquidity and profitability.

Trading plan:

- Going after 6 ticks profit target with 3 ticks stoploss.

- Looking for pullback entries

- Trading first 2 hours of Newyork opening

- No trade on US bank holidays or when circuit breaker activates

- Avoiding big US events listed on forexfactory for couple minutes

Software / Settings:

- Sierrachart + CQG

- Chart trading mode enabled + DOM

- 2000 volume chart with no indicators

- Using keyboard hotkey for quick execution

Money management:

- 12 ticks loss = stop for the day

- 6 ticks profit target / 3 ticks stoploss (bracket order)

- Will be adding 1 contract for every $4000 gain and subtract 1 contract for every $4000 loss starting with 1 contract.

This is all I can think of right now. I will be posting a screenshot after done with trading for the day. I will be adding more information if necessary later on. Thanks for reading. Any helpful advice or suggestions will be appreciated!

 

[onemoreshot]

Good luck! Look forward to reading your progress.

 

[RedDuke]

Hi SJL,

I have been trying to do a very similar thing a while back. The issue is that at this level the prices are random. I am a very skilled software engineer have tried back testing these types of strategies with literally thousands of simulations. For the most part, they did not work.

I had a great successes with DOM pattern trading, but it turned out to be not scaleble. And with every tick being very important, it had very little room for error. Very tiring years.

Good luck, but most likely it will not work.

 

[Handle123]

3 tick stop? LOL, if you going to do market orders or stops you lost 1-3 ticks, and what testing I have done 2000 volume charts, going to have many false signals. How far did you back test? I wish you well, but hasn't been since the 80s I could trade with 3 ticks, more like 3 points now.

 

[SJL]

Hi SJL,

I have been trying to do a very similar thing a while back. The issue is that at this level the prices are random. I am a very skilled software engineer have tried back testing these types of strategies with literally thousands of simulations. For the most part, they did not work.

I had a great successes with DOM pattern trading, but it turned out to be not scaleble. And with every tick being very important, it had very little room for error. Very tiring years.

Good luck, but most likely it will not work.

Thanks for your reply RedDuke. I've been quite successful with sim trading so I decided to give a try. What can I do? I have to see the result myself. I am still preparing for trading so I will start updating on either Friday or Monday.

 

[SJL]

3 tick stop? LOL, if you going to do market orders or stops you lost 1-3 ticks, and what testing I have done 2000 volume charts, going to have many false signals. How far did you back test? I wish you well, but hasn't been since the 80s I could trade with 3 ticks, more like 3 points now.

Thanks for your reply Handle123. I've done simulation for 3 months. I guess not so long. Just out of curiosity if you have 3 point stop, how much profit target do you go for? No matter how large the stoploss is, stoploss seems to get hit because I picked the wrong direction.

 

[Handle123]

Oh boy, it would take weeks to explain all that comes to my mine as I been day trading S&P500 for over 30 years now. I know this market better than any instrument and 3 months, well, not anywhere close in what I have in mind. Also, if you been doing sim, you don't know if package you using in very much like actual day trading or does it fudge too much, and I don't know which are the best ones, I think Ninja might be better than most.

Profit is defined by type of signals and has little to do with whether trend or counter-trend. Has to do with lengths of average swings then mini swings like waves of Elliott Wave, knowing on average what should be normal in ES and what is harder trending day and how to identify and have Trading Plan to adapt to changing structure.

Using 3 tick stops, noise alone will pick that off. I don't use hard stops, I average down on each signal, so I don't want to cause my own slippage. If you getting hit no matter what stop loss you using, you know where near trading real time. Your back testing should be no less than 3,000 sample size as you would know better what to expect and going back 5 years. Last method I back tested had over 26,000 sample size, so I know my method well and know what to expect. You make what you put in.

For me, day trading profits generally are inverse to risk, I always risk more than reward, but since I concentrate on low losing percentages and make plus one tick is breakeven for me and ave down at same price for the plus one tick on original trade, meaning if I add on of minus 1, 2, 3 and get out at Plus 1, then plus 2, 3, 4, I do well on a breakeven trade. I target either 2 or 3 points and depending on where price within a swing ave defines time stops to get to breakeven plus one tick.

To me it is where price is now, what price is doing as far as patterns of price and or volume, is price structure showing I should not take a signal is as important as taking signals, being in trade so many minutes, getting out early if price shows patterns. I trade first 75 minutes on most days and like today, traded hour early cause of reports.

 

[Q3D]

Al Brooks talks about great re-occurring setups on the ES where a trader can risk 3 or 4 ticks for even 8 ticks, certainly 4. Al Brooks also talks about getting your trading so good that you can scale up to 100s or 1000s of contracts on some of these setups.

 

[speedo]

I've traded the ES for years and have known Al for years. Three ticks is unrealistic for a stop loss. As Handle said, the noise alone will stop you out.

 

[Xela]

Very interesting - thanks for starting the thread.

If questions are welcome, why have you gone for 2,000V charts (just to clarify: I'm not asking about why volume bars, or why no indicators) for entering trades with a 6-tick target? I would have perhaps expected somewhat smaller/faster bars?