Why scalping beats any other trading style

Quote from RedDuke:

Agree. The short time frames, reduce risk and provide more opportunities. However, the draw back is screen time. It is nice to sip chardonnay while looking at weekly charts, but to do it you need to operate on large scale in order to attain any meaningful results.
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LOL. I like the way you put that.
 
Yoohoo,



Just put your numbers in a graph and
then you will notice that from the 10-
minutes time frame and lower the
profit in points and net profit starts
to grow exponentially.
Before you reach the 10-minute time
frame, the relation between timeframe
and profit is linear.

Graph where on the most left horizontal axis you put the 60-minutes time frame and the most
right the 1-mintute and the profit on the
vertically axis

The net profit grows with a smaller
exponentially factor than the net points because of commission becoming
bigger in relation to your gross profit.

at 60 minutes your commissions are only 3% of gross profit where as at
the 1 minute time frame it is 32 %
so the importance of low fees for a scalper.
 
Mark Douglas in his "Trading in The Zone" said something like (don't remember exactly, but remember an idea): when you have an edge the only thing you should care about is having your trade setups represented as often as possible.

That's why I think scalping is more profitable (in the case of enough liquidity and no slippage of course): roulette in casino has a very small edge, but wheel spins many many times a day and result is a nice profit.

Personally I trade from 1 min (sometimes even smaller) charts just because they give me more signals during the day. Completely choppy day on 5 min chart can be quite a good day with several trading opportunities from 1 min.

But RedDuke is right: sitting at night (when US markets are open is night for me) 6 hours a day in front of screen being in full concentration (cause every couple of minutes your setup can happen, so you can't even turn your head from the screen to watch TV) is really hard.

And as soon as I have enough money I think I'll trade short term for just an hour or two and trade the rest off say daily charts.... I trade from daily charts now too and can say that it's like a paradise: signals are sooo clear comparing to 1 min and you have really a lot of time to make a right decision, so most of the stress is away.

So the moral is: every trading style has it's own benefits and drawbacks.
 
Nick, spending 20 years working down through all the timeframes has made this transparent for me. Incidentally, I seldom have time on a chart now, it's just the price that I'm interested in.
 
Pretty funny joke.

You could generate this "result" based on random walk data, and of course the maximum possible profit would actually be zero minus fees in all cases.

Fletch
 
Nick, that's what I found too. However a key for me was rolling a trade from one timeframe to another i.e. letting a trade run a bit longer. I don't scalp for a target profit, but try to identify the strength of each move and run with it.
 
You are preaching to the converted when you talk quick turn trading with me.

Points target against the trend and a managed trade with the trend.

Now, what about comms fees?
What do you expect to pay for volume trading comms?
 
Yoohoo,

Very interesting Info.

IMO, I definetly agree, I used to trade 4 Hour / 1 Hour Charts. Profits, Draw Down, Percentage of Profitable Trades, and Stress went down substantially when I dropped to 5 Min / 1 Min.

The system your friend came up with is very interesting. Especially if its automated. I dont really hear about to many successful auto system's these days, well, not at the retail level anyway. What type of trading is he doing? Im not asking for you to divulge, Im asking like is it a trend pull back, mean reversion, momentum, etc, type system?

But needless to say, interesting stuff man, thanks for the post.

- secXces
 
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