where to , to learn how to scalp the ES ? | Traders Hideout

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where to , to learn how to scalp the ES ?

  #11 (permalink)

Los Angeles, California
Posts: 24 since Mar 2017
Thanks: 4 given, 5 received

iantg View Post
Like others have mentioned... This route will be hard for you.

There is right and wrong way to do this, or put another way... an easy way and a very hard way to consistently get a few ticks profit on the ES.

If you want to be successful with the ES aiming for just a few ticks of profit then you are essentially entering the arms race with the HF traders. And that is okay, there is a right way to play in this space... You will need to be an algorithmic trader and take advantage of the spread on entries and exits alike using only passive limit orders and your execution speed will need to be very quick.

I did some analysis on how quickly price levels were clearing a little while back but I think this will give you some perspective on what you are up against. If you are targeting 2-3 ticks, you will need to be in and out in 1 to 2 seconds in order to not end up going for a ride 3-5 ticks the opposite way. To do this effectively and use the spread in your favor you will need queue optimization, and an algorythm to pull the trigger only using passive limit orders on every entry and every exit. You can have the occasional emergency exit that crosses the spread, but this won't get hit too often if you know how to use it. These are the tools of HF traders, and wanna be HF traders like me. . There is a play book to this that is fairly well known among these types of circles, but for anyone else trying to profit in the ES on just a few ticks.... most of this is going to sound like Charlie Brown's teachers.... Unfortunately I think you will have a difficult time if you don't use this type of tool set, and it is not very well known or discussed.

There are plenty of other profitable ways to trade the ES, especially for discretionary retail traders, but these all involve using larger targets. This is due the fact that you will not be competitive in a speed race at all in this market. So the few ticks you pick up will be across the spread, late on entries and late on exits every time. And I think you will struggle to find an edge that overcome these factors. So it would be better IMO to target 5,10,15,20 ticks on the ES if you are discretionary / retail.

Consider the following:

1. Based on my analysis below you will see 50% to 75% of the price levels get cleared in 1 to 2 seconds.
2. Unless you are co-locating and using an algorythm that is very optimized you will typically be clicking to trade from home and hitting 1- 2 seconds just to click, submit your order, send your order over the internet, touch your data feed, go to your broker, then go to the exchange.
3. Adverse selection will come into play in a big way considering points 1 and 2.
4. Depending on if you submit a profit target / stop loss with your order or if you try to pull the trigger on your exit yourself you may see additional delays that can impact your P&L.

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Best of luck!


Hey iantg. Is there anywhere that you have shared some of your methods and strategies for trading? I understand you're trading with algorithms? All my trading is discretionary, although I'd like to find a platform where I could build various strategies and actually test them. I tried previously with NinjaTrader, but the platform seemed buggy at the time giving mixed data.


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