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Is scalping Emini a sustainable trading strategy?


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Is scalping Emini a sustainable trading strategy?

 
ThescalperAnalyst
rome italy
 
Posts: 17 since Feb 2021
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You are right to do as you do now. Only the study, the constancy and the passion for this world bring the hoped-for results. You just need to have a lot of tenacity and not be in a hurry to earn. For the question you asked me, the speech is complex and long. What I can tell you is that depending on the volatility and volumes traded in the most trading hours, you can change the money management or cancel certain strategies that with high volatility do not work but others do. Furthermore, looking at the distribution of volumes and net closings can also give you other small operational advantages to support your trading system.
Trentatron View Post
Thank you! You always hear "build your own strategy" but I've never really heard someone break down what that looks like.

I'm curious, can you clarify "volumes traded in the cash hour and at the close of the same"?

In regards to the psychological aspect, I am almost done with "Trading In the Zone" and I'm very glad I read it. I think it will keep me from creating bad habits before they have a chance to take hold.

Right now that is part of my "three-pronged approach" lol, I'm reading on psychology while working through a few different basic courses in the morning before work and trying to paper trade when my schedule and the market volume align.

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Trentatron View Post
For every 4 people that said "scalping isn't sustainable" there is one that claims to be consistently profitable scalping.

Are all the traders claiming to scalp minis for a living only using two-legged pullbacks charlatans or are they actually consistent?

I've spent weeks studying scalping because I like the idea of being in/out with a predetermined stop/profit target while not leaving myself exposed in the market for very long. However, this thread has been a slight kick in the nuts because it sounds like swing trading is where most professional traders end up being profitable and I'm just a typical newbie that bought into the scalping idea.

The issue always comes down to competition. Many new traders underestimate how competitive it really is, and aren't even aware of the market history behind such strategies. The history is particularly interesting with scalping because there was a time not so long ago that it was very successful. From the late 90's up until around the 2008 financial crisis there was a number or traders proven to be successful scalping. For instance, one of the most familiar names for us in the futures community is Anthony Crudele who we know was at one point clearing around $1 million in profits from scalping. There's also Paul "The Flipper" Rotter, and more recently the flash crash trader Navinder Singh Sarao that were scalping the tape.

Competition from robots forced most of those big scalpers to trade differently today. For instance, part of why Navinder was quote stuffing was to screw up the robots who were eating away at his trading. After the 2008 crisis the industry changed significantly, and it wasn't long before the algorithms had complete domination.

So now that retail scalping is not competitive on the spread, traders have been applying what they know to longer timeframes. So now people tend to refer to scalping as trades where you're maybe in the market for a few minutes, or a single market rotation. The problem is that it's just incredibly difficult to predict price on those timeframes even with edges like the order book and news.

Sorting this out as a new trader becomes even more difficult because of the games people can play with risk. You can make money, at least in the short run, by simply taking on tons of risk. So there's tons of retail traders with overleveraged accounts taking on skewed risk rewards to generate streaks of profitability. They believe the systems work because they've had solid periods of profitability, not realizing that their success was due almost entirely to the risk they were taking on. When the risk catches up to them and blows their account they just dismiss that as a personal mistake.

As a result many people have started to drift over into swing trading. By trading a larger time horizon you are given more room for the dominant forces in the market to work out in your favor. Here again though many traders don't really understand how to judge their own performance. They just see profits, and don't realize that those profits are largely due to the holding period and directional bias of the instrument. So in the end their results underperform the underlying instrument on a risk adjusted basis even though they don't realize it.

Hence all the claims that you get. People think that they're profitable until they blow out.

Ultimately though the problem is not the method or timeframe that you are trading on. The problem is that markets are competitive, and it is difficult to consistently stay on top. How do you expect to stay on top using the same tools and strategies everyone else is? It's just not realistic. Which is why I again say that it's possible to make money scalping, but it's probably not going to be from a strategy that people are willing to make public.

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Ghappy21
plano TX/USA
 
Posts: 52 since Feb 2021
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There could be a small challenge in terminology. Sometime people use the term scalping when possibly they really mean highly active intraday trading. For example, I place 4-12 intraday ES trades. Usually, about 4 contracts, looking for 3 to 8 points (dollars in price, not ticks), and try to keep a loss to 2 points. A true scalper may do a lot more trades, at higher contract counts, looking for smaller profit targets and stop losses. Can a manual scalper beat high speed algos? Seems highly unlikely. I believe one can or some people can, make money on very short term swings, lasting a few minutes or more.

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Trentatron
Knoxville
 
Posts: 20 since Mar 2021
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Ghappy21 View Post
There could be a small challenge in terminology. Sometimes people use the term scalping when possibly they really mean highly active intraday trading. For example, I place 4-12 intraday ES trades. Usually, about 4 contracts, looking for 3 to 8 points (dollars in price, not ticks), and try to keep a loss to 2 points. A true scalper may do a lot more trades, at higher contract counts, looking for smaller profit targets and stop losses. Can a manual scalper beat high-speed algos? Seems highly unlikely. I believe one can or some people can make money on very short-term swings, lasting a few minutes or more.


Agreed, from what I've read I think the term scalping has evolved to mean something else than what it used to.

I'm using the term in the same context as how you trade.

I'd like to grow my account to where I'm taking almost exactly the same trade size and frequency you are while only risking 2% of my account.

Hearing that's how you trade is encouraging, thank you!

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Ghappy21
plano TX/USA
 
Posts: 52 since Feb 2021
Thanks Given: 5
Thanks Received: 66

Trentatron, my active intraday trading on ES is going very well. My results are better than I deserve. I struggle with the stop loss. It is so tempting to not have rigor around a stop loss as so often the market will swing back and turn my excessive loss into flat or a win. This is execution failure on my part, regardless of capturing a profit. Many times, I avoided a $300 loss to dig a $4,000 hole. Then swing back to flat or a $200 win. Not good. Lucky...but not good.

I use a 5min regular candle chart for the bigger picture and a 512 tick Heikin Ashi candle chart for entry/exits. I like the tick chart as seeing how quickly candles form gives me a sense or transaction pace. eminimind.com is a good source of (mostly free) content, and their youtube channel.

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Trentatron
Knoxville
 
Posts: 20 since Mar 2021
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Ghappy21 View Post
Trentatron, my active intraday trading on ES is going very well. My results are better than I deserve. I struggle with the stop loss. It is so tempting to not have rigor around a stop loss as so often the market will swing back and turn my excessive loss into flat or a win. This is execution failure on my part, regardless of capturing a profit. Many times, I avoided a $300 loss to dig a $4,000 hole. Then swing back to flat or a $200 win. Not good. Lucky...but not good.

I use a 5min regular candle chart for the bigger picture and a 512 tick Heikin Ashi candle chart for entry/exits. I like the tick chart as seeing how quickly candles form gives me a sense or transaction pace. eminimind.com is a good source of (mostly free) content, and their youtube channel.

I totally understand your struggle with the stop loss. If I had the time and patients (or knowledge of an efficient way to test) I'd like to compare a 1 point stop, 2 point stop, and 3 point stop just to see how many times one get's stopped out vs the other resulting in ultimately a winning trade.

I have seen some traders use the ATR to determine where to set a stop. This makes a lot of sense to me because it takes into account the average volitility of the instrument being traded. The one trader in particular that I'm thinking of was trading Forex and I don't know enough about how it compares to futures to know whether that is a sound strategy for ES.

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aloyceprince
dar es salaam
 
Posts: 5 since Apr 2021
Thanks Given: 3
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duuh i cant enter position and stay 10 to 30 second damn
am try to think how many entry per day you enter and and after 20 years i thnk u re eyes will be already tired to look the chart again duuh

 
 ZB23 
Atlanta Metro Area
 
Experience: Intermediate
Platform: Rithmic API
Broker: Ironbeam
Trading: Futures: CL spreads, IR outright.
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Duration: Never
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Trentatron View Post
As a new trader, this is my paradox, especially while studying scalping practices.

On one hand, you'll hear "price action is all that matters because indicators can only tell you what has already happened". My simple brain likes this concept because if I can learn price action then I don't have to worry about the latest greatest indicator and (in theory) I would be able to trade almost anything that can be charted.

Then, on the other hand, you'll see fairly busy charts as @loantelligence has shared and the strategies with those indicators that I have to assume are working.

.....

I've spent weeks studying scalping because I like the idea of being in/out with a predetermined stop/profit target while not leaving myself exposed in the market for very long. However, this thread has been a slight kick in the nuts because it sounds like swing trading is where most professional traders end up being profitable and I'm just a typical newbie that bought into the scalping idea.

Day trading is as alluring to new traders as a flame is alluring to a moth.

I learned very quickly that although I love the idea of day trading, I don't have the skill for it. In fact, I suck at it. I find trading futures butterflies incredibly boring. However, they're perfectly suited for me. So, that's what I do.

It was hard for me to accept this fact, initially. Then I came to realize that part of trading is knowing and being honest with oneself. I constantly remind myself that I suck at day trading and scalping, so that I don't attempt to do something stupid.

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MichaelFlowTrader
Atlanta
 
Posts: 152 since Jan 2017
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Ghappy21 View Post
There could be a small challenge in terminology. Sometime people use the term scalping when possibly they really mean highly active intraday trading. For example, I place 4-12 intraday ES trades. Usually, about 4 contracts, looking for 3 to 8 points (dollars in price, not ticks), and try to keep a loss to 2 points. A true scalper may do a lot more trades, at higher contract counts, looking for smaller profit targets and stop losses. Can a manual scalper beat high speed algos? Seems highly unlikely. I believe one can or some people can, make money on very short term swings, lasting a few minutes or more.

Yes, what you are doing isn't really scalping. Just active intraday trading. Actual scalping is typically 3 ticks + whatever the market can give you quickly in ES. For say NQ, it could be anything from 6 ticks to 15 ticks. In bonds, you might only go for 1-2 ticks.

You are NOT relying on charts, but instead the DOM/price ladder. Time based charts are definitely useless for this trading but volume/tick based can have their place.

People who do not do this type of scalping always worry about the algos, when they are not your competition. Algos are hunting in milliseconds, taking much less in profit, but sometimes more.

I find this type of trading high win-rate, psychologically and emotionally satisfying. It takes a long time to get good at it, but so does most forms of active trading. Obviously not for most people, with that said, most people have never done or seen this form of scalping.

Average holds are 25-30 seconds, but can last 1 min or so. It can be longer depending on what is happening. Easily 20-50 entries/hour depending on the product. Win-rate needs to be in the mid 80s to be any good. It is a skill and art, and should be left to those who are naturally drawn to it, who can pick up reading the DOM/price ladder, who will use replay to practice in the DOM until hitting the mid 70s win-rate, then you HAVE to go live to test if you really have what it takes.

Learning to read price/orderflow/auctioning at this level opens you to extend your trading in many levels, but you don't get that until you do all the work.

It is a blast.

 
Trentatron
Knoxville
 
Posts: 20 since Mar 2021
Thanks Given: 30
Thanks Received: 16



BA 21 View Post
Day trading is as alluring to new traders as a flame is a alluring to a moth.

I learned very quickly that although I love the idea of day trading, I don't have the skill for it. In fact, I suck at it. I found that trading futures butterflies incredibly boring. However, there are perfect suited for me. So, that's what I do.

It was hard for me to accept this fact, initially. Then I came to realize that part of trading is knowing and being honest with yourself. I constantly remind myself that I suck at day trading and scalping, so that I don't attempt to do something stupid.

I will admit that when I first started down this path I kept hearing things like "find your place in the markets" and "find your trading style" and all of this abstract mushy feely type stuff but as I've exposed myself to more of the world of trading I certainly understand what they mean.

For me personally, I'm a bit fast-paced in my speech and thought, I have a pretty high-risk tolerance (calculated risk that is), and I like making decisions quickly and under pressure. So for right now, I find that active intraday trading based on price action fits me pretty well, or at least I'm having fun at it.

Looking back through this thread and realizing that I do think there was some confusion around the term "scalping" I don't find it quite as discouraging.

My underlying motivation (beyond enjoying the learning process and the act of actually trading) is that I'm tired of working 50 hour weeks and essentially working to live.

I'm still going at this with both eyes open so who knows where it will lead me, but come hell or high water I will find my place and exploit it to the best of my ability.

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Last Updated on January 7, 2024


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