The Ultimate DAX Scalping Discussion Thread!

this thread was carefully crafted to entice successful ET members to give up their goods scientist never intended this as a venue to disseminate his redoubtable successes.
 
Quote from Scientist:

Fully agree with all of this! ES is probably the most difficult of all. Yet I don't know about Hong Kong's HSI - LOL.

But all the ES hype out there was always encouragement to me, because it told me: "Hey, the more hype, the more newbies, the more dumb money." Unfortunately, this doesn't seem to hold well in reality. In reality, all the bigfoots go there, because they know this too, and they fire and bang and arb, swinging much bigger dicks than any of us do, whacking them into the stomachs of the small traders, just throwing their 500-5,000 lot insti orders into the flow in small increments, then pulling them all out at once, in exactly the moment where you really don't need it, scalper or day trader you'll get hurt. This is ES to me.

I remember a day some 2 or 3 months ago, when we (the ES) were looking a dramatic-looking abyss, I pulled a long last minute and thought I'd wait for a good short entry point. Well, it went down and there was no entry point. At some point you fear entering a falling knife, because you know the faders could take longs for a serious rebound (the V-shape thing), so you wait for at least a small discount. The discount never came, at a a very crucial support point, it hardly hesitated, then crashed through. Then came that moment. I met a man whose name I don't know, but I called him "The 250 Million Dollar Man"; Guess what? The tape rolled through to print 20 lines of 250- lots - all apparently sold at below bid (orange print on my tape), all at exactly the same second. I was amazed. I thought, man, 5,000 cars in the same one second! Clearly a single trader (institution), right? I didn't quite think it was another incident of GSCO's boss' cat walking over the "sell 5,000 at market" button, like the earlier fat finger incidents a few months ago. No, I think it was someone consciously selling at support, probably making fat money on breaking it. I think a lot of client's accounts must have been saved or enriched that day by that massive stop, it continued to fall plenty after that.

This large but typical ES event reminded me of Mark Douglas' story of the retired chairman. You know that story, where a firm's new TA expert proudly shows the retired chairman (and many-decade veteran floor trader) support on the soy bean futures, saying the market will definitely stop or even reverse there? And the chairman says "Oh really? That's bullshit!", rings the floor boy and tells him to sell 3 million bushels at the market - Straight after that, the market (logically) falls right through the support and keeps going down. Then he turns around to the terrified-looking TA analyst and says: "Where did you just say price was going to stop? If I can do that, anyone can." :D

The sheer underlying volume to contract value, and the sheer power of gigantic institutions is something that can only be experienced on the ES (or SPooz), in both pleasant and painful ways, that is if you're still emotionally affectable by the outcomes of trades. If you're a scalper, it is impossible to survive unless you see all your trades ice-cold, no feelings. Now, how many people trying to scalp ES have that, and can sustain that after large strings of losses on ES, possibly caused by insti's? No other electronic index future has such a relative depth or volume, or big-dickers. Australia's SPI trades 10K a day, DAX trades 100K a day. ES has traded over 1,000K (1M) a day.

Yes, I love(d) the ES in a way, too. I love the challenge. I seem to know the players in it, the flow, I've watched it so much. I thought there was no world beyond the ES. But surprise, there is. There is more out there, and saying you can ride the world's most difficult future is great - But why not give up some "difficulty", try a less competitive market and use that "edge" you have to make large profits in that market. I remember how I came back to Nasdaq semi's, after having traded ES for a while. It was like being on holidays. This also motivated me to have a look at other things, like Eurex.

In my case, the hours are are actually very comfortable, but I haven't looked at trading ESTX50 yet. There's clearly less "mad moves", because of the considerably larger liquidity, plus you have the great liquidity. The trade off is that it seems like it has very "dampened" movement compared to the DAX. DAX is leveraged ESTX it seems.

However, you say ESTX50 is "much easier to trade than DAX" for you? Very interesting. Could you give us some insights why? :)

It seems that we agree on a lot of things.

Scientist.
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Good post. I've always looked for the "2nd" market. There is less competition and more edge. Just being able to watch the primary market (ES) tick up first is at least a partial edge. The Dax is also one of the few markets where you can still get on the bid and offer without having 100 lots ahead of you. Don't forget the FTSE, CAC and SMI futures.

You can make money on the ES, Bund, and other ultra-liquid markets. However, my experience is that you have to be very selective indeed in your trading. These markets have the best daytraders in the world looking at them constantly, and all obvious edges are gone e.g. there is always a huge queue on the bid/offer so you lose the bid/offer edge. My experience is that you can have say 2-3 big days per month (e.g. 10 ticks per contract profit or higher on the Bund, 5 points+ on ES), 1-2 bad days (ditto in reverse) per month, and the rest of the time you basically churn with marginal profitability. You really have to make almost no mistakes, and really seize on the few fleeting opportunities to score big each week/month, to be able to do size with confidence in these markets.

I've found that although I can make more profit trading these markets and upping my size, my volatility is significantly higher. If I normalise the volatility of results, to roughly double my income by trading the bigger markets would require 5-10 times the volatility. A more skilful trader could probably improve on that, but for me it isn't worth it. Personally I would rather make x amount with acceptable volatility, than 2x with worrying volatility. So I stick to the easier markets like the Dax, FTSE, Gilt, etc. The drawback is that there are size constraints due to slippage and liquidity, but you can still make a very nice living.
 
Another nice post. Do you guys trading Dax make most of your money before the US markets open, while it is opening or after it opens? I havent paid much attention to the DAX or ESTX50 after the market here opens. Maybe I should. ES is harder to trade, no doubt. I only make a dozen trades a week and am usually done by 11:00 as I find it impossible to trade after the morning volume fades. Do you trade DAX much between 11:00 and 2:00 EST?
 
Quote from Scientist:

LOL! Oh no, you bastard! Got me red-handed on the bolognaise! :eek:

Hey, welcome man! Nice to see some decent scalpers dribbling in! :cool:

Scientist.
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Thanks :-)

Exactly, take it easy on the bolognese!

I don't scalp the dax but something not unfamiliar.

Currently I am investigating new ways of positioning in liquid markets. I don't think in buying here and selling there anymore.

More so; I am buying in this area, might buy some more below or above, but not below the area. The last add constitutes the entry price level for profit or loss taking. This takes some of the strain out of having to be right exactly to the tick.

I don't do this on high volume, it's better (and easier) to just take one price and take it all there I find.

This is an ongoing project. Not sure if it will keep up.
 
All Posters:
I wonder if any of you veteran DAX traders have reservations about trading during the holidays? If there is a problem with execution or connection to the broker is interrupted (as happens so often with IB), you might have to wait a while to get someone to answer the phone. I realize that the popular conception is that you use your back-up broker, but to do that, you have to know what where your existing position is. This year I have seen more than one ocassion where my connection to a broker has been interrupted and I did not know if I had a position or not. I am interested in your comments. Best Regards, Steve46
 
Quote from Scientist:

YAAAAYYY! Did you folks just see that DAX move???

I got in for the ride at 54 and sat in, covered 84!!!
See what I mean with "don't have fixed targets"?

Yaaay yay yay yay!!! That's why I love the DAX!

Well, I'm off & down the city strip for a roll today.

Have Fun & C Yous all L8R... :)
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thats the trouble with scalping, I went long at 53 ,sold at 56.5 and saw it go 30 pts higher at the same time as I got my sell fill
 
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