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Is scalping Emini a sustainable trading strategy?


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Is scalping Emini a sustainable trading strategy?

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  #1 (permalink)
mrbouffa
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Like the title says, I've been testing it out on a 512 tick chart, only staying in a position for 10-30 seconds. I use exit brackets, so the trade auto exits at 2 - 3 ticks. Is this sustainable compared to longer day trading? Haven't been using any indicators just volume and price. Any indicators work best for scalping?

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 bajaho 
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Silly question honestly. Is your strategy sustainable? Only you can know.

Are there any indicators that work better than others? No because it all depends on how YOU are using the indicator.

Do people have much better luck swing trading rather than day trading? Yes. Do almost all new traders want to scalp? Yes.

What will bring you more value: asking strangers online for validation or gaining your own validation by building up a track record?

You just need to test your strategy yourself. Have you done that? Your question makes me think you havenít, or at least not enough.

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  #3 (permalink)
 Tradeer 
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Commissions makes it hard that way to scalp in my opinion but it depends on your broker fees. Do less trades try to scalp in a longer term position that would be my advice. Hold the winners. But if it works for you with 3 Ticks then do it. Test it if it works for you go for it.


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 SBtrader82 
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I will tell you my opinion, based on my personal experience: this strategy in unsustainable.
Of course, this is only my opinion but I will tell you something that I have learnt over the years:
  • the smaller the timeframe, the more difficult trading becomes
  • on small timeframes you are competing against robots and algos, trading is more mechanical and algos excell in that environment
  • transaction costs are crazy high
  • most scalpers lose money, look at trading journals in this website ...you will see that as people get better they ask more money to their winners
  • by scalping you are making money for the broker so you will find a lot of people telling that scalping is the way to go (and they will have a huge interest in telling you that)
  • philosophically the more risk you take, the more money you make: being in the market for longer time is a risk, and if you manage it correctly it will pay you
  • look at big big traders, they are normally swing traders or day traders with longer time frames
  • in longer time frames there is a strategy, there is something meaningful you trade.... so in case you are stopped out you get paid with market understanding, so you lose money but you got paid with something else.

Of course this is my opinion, scalpers will tell you the opposite so it's definitely worth trying every different style.

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  #5 (permalink)
 TWDsje   is a Vendor
 
 
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You can make money scalping the emini. The vast majority of people don't, but it can be done.

But not for 3 ticks. The noise in ES is more like 8-12 ticks so it's pretty difficult to get the consistent winrate you need to get that to work. The only way I see this working is if it is some sort of momentum trade where your risk/reward is equal and you're getting an incredibly high winrate.

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DmanX
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Try developing a system using 5 mins bars. Done right, you can get 4-12+ ticks per trade, perhaps as many as 10 trades a day. One key tip: learn what an uptrend and downtrend is and how to identify it. Why? The signals are different for those phases of the market.

Developing a system is tedious work. But it is what separates the winners from the losers. Cliche, I know but outside of employing a system, you're gambling and the house will always win.

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 awesomizer 
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@Big Mike is the forum owner and top admin and from reading his trading journal, he has the experience of reading hundreds or thousands of trader's journals since starting this forum and from his experience he says it is not sustainable and you will not find anyone that can prove they scalp and make big bucks long term.

From my experience, it is an evil temptation of greed and learning to be patient with trades is actually more profitable.

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 Rrrracer 
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There is no way I could trade like that LOL.

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  #9 (permalink)
dshepherd11
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Very interested in your findings please keep us informed.

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 loantelligence 
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Can you make money.........Well at 2 to 3 ticks on the ES....25 - 37.50/contract and the commission on the round turn being 4.50/contract
....sure ..do that 10-20 times a day....which is relatively easy or not...you can make money....its a lot of work....but the trades are quick....I find it easier on the NQ....lot more movement than the ES...but a lot more reversals/turns(volatility) ...you have to have something that tells you direction/trend....and strength of move, are you in a chop(no trade zone) or is it an actual move to the upside or downside.... and i use a simple bollinger band(34, .06) and EMA(either 9 or 14) for that.... and then I modify the price bars to a Kagi line....which has a thin and a thick line.....I make them both thick....what you will notice is your best scalp time is when the EMA moves outside of the Bollinger bands and your Kagi line is either green for the upside or red for the downside.... when the EMA is inside the Bollinger.....no trade zone.....but you will learn how to handle that....you now have part of the Holy Grail......There is more....but try this first to see if it doesnt help you out with your scalp timing......

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  #11 (permalink)
lightsun47
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awesomizer View Post
@Big Mike is the forum owner and top admin and from reading his trading journal, he has the experience of reading hundreds or thousands of trader's journals since starting this forum and from his experience he says it is not sustainable and you will not find anyone that can prove they scalp and make big bucks long term.

From my experience, it is an evil temptation of greed and learning to be patient with trades is actually more profitable.

I agree, but only somewhat. This forum does not represent 100 percent of all the traders out there in the world and similarly, you cannot claim scalping does not work for all the people around the world.

There are people personally I know who scalp out points (1-2 at once) everyday (not ticks) successfully and go on dozens of lots. It is hard, but not impossible.

If there is an alien civilization thriving a few billion light years away from earth and you cannot see them because of ridiculously vast distances, that does not mean they don't exist.

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  #12 (permalink)
 bobwest 
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mrbouffa View Post
Like the title says, I've been testing it out on a 512 tick chart, only staying in a position for 10-30 seconds. I use exit brackets, so the trade auto exits at 2 - 3 ticks. Is this sustainable compared to longer day trading? Haven't been using any indicators just volume and price. Any indicators work best for scalping?

One basic question is, "Have you been trading this in a cash account?" Not sim, not "testing." Live trading.

I'm not going to say I know the answer to your question, but if you haven't been trading it live, you won't know either. If you did trade it live, and if you were making money at it, I think you would know, and wouldn't be asking anyone. ( )

That does sort of show my opinion.

But to spell it out, it is very likely that going for "2 -3 ticks," you are going to get killed. These are just very, very small fluctuations, and it is very unlikely that you will consistently be that spot-on in your timing. Also, you can't take even as much a one or two ticks of slippage with that small a leeway, and there is always the problem of commissions. It is quite possible to scalp and make money exceeding commissions, but the smaller the profit, the harder it is to do that.

The main thing is that when actual money is being made or lost, everything changes. Your emotional equilibrium goes out the window, you become impulsive or panicky, you jump in and out too much, and your account suffers. Keeping your head and actually following a strategy gets very difficult with real-money trading. I do not suggest trying anything as difficult as you propose without having a ton of experience under your belt.... which is why I asked whether you were trading live or not, and why I assumed that you are not.

If I am right about whether you are live or sim, there are simple things you can do:

(1) Go live as soon as it is financially possible. Trade the micro contracts, so your risk is less (the MES has one-tenth the size and financial risk of the ES, and is a good way to learn.)

(2) Try your strategy. Do only one contract per trade, and have a daily and perhaps a weekly limit on how much you will lose that day (or week) before stopping for the day (and/or week). I predict you will find it more difficult than you think. But you also will not be needing to ask anyone else what is an unanswerable question for them, which is whether you can profit from your plan. In other words, try it and see. But if you are trading in sim now, get out of sim as soon as you can. Trade in the real world.

After doing these two steps, you will know the answer, and you will also be better prepared to either fix what needs correcting, or to try something with a different timeframe, or whatever you find you need to do.

--------------

If I've made the wrong assumptions about whether you're trading in sim or live, or if I've made the wrong assumptions about your experience level, I apologize. But I do not think that someone who is trading live in the markets with actual cash would be asking your question, so I have tried to give you a way to find out the answer for yourself.

If I am right, it may cost you some money to get that answer, but that's still how you would be best advised to do it.

Good luck.

Bob.

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 SBtrader82 
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lightsun47 View Post
I agree, but only somewhat. This forum does not represent 100 percent of all the traders out there in the world and similarly, you cannot claim scalping does not work for all the people around the world.

There are people personally I know who scalp out points (1-2 at once) everyday (not ticks) successfully and go on dozens of lots. It is hard, but not impossible.

If there is an alien civilization thriving a few billion light years away from earth and you cannot see them because of ridiculously vast distances, that does not mean they don't exist.

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exactly!! I also don't like to put things like absolute truth: I cannot say "scalping doesn't work" or "that methodology doesn't work", because to a certain extent there is nothing that really does or doesn't work in trading.
Maybe the essence of trading itself is that there is no black or white, and no absolute truth.

One thing that I mentioned in another post (can't remember where) that I think should be considered is the sustainability of a certain strategy. The more we want to play "mechanically" the more we are entering the robots' playing field.
In the case of scalping, all the techniques used by scalpers (by the way I took John Grady's courses in the past), are extremely mechanical. Any decent programmer could code them.
So, sooner or later your edge will disappear.

There is one thing called "the Moravec's paradox": basically the easier it is to describe something in words the easier it to be done by robots.

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 bobwest 
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SBtrader82 View Post
The more we want to play "mechanically" the more we are entering the robots' playing field.
In the case of scalping, all the techniques used by scalpers (by the way I took John Grady's courses in the past), are extremely mechanical. Any decent programmer could code them.
So, sooner or later your edge will disappear.

There is one thing called "the Moravec's paradox": basically the easier it is to describe something in words the easier it to be done by robots.

Thanks for this. Not to wander off-topic too much, but I found this topic of Moravec's paradox extremely interesting, and I didn't know anything about it:

"As Moravec writes, 'it is comparatively easy to make computers exhibit adult level performance on intelligence tests or playing checkers, and difficult or impossible to give them the skills of a one-year-old when it comes to perception and mobility'."
( https://en.wikipedia.org/wiki/Moravec%27s_paradox )

There are implications of this for trading, as you say, so it's not actually off-topic. You could say that the more conceptual something is, the easier it is for a computer to duplicate it and do it better.

There is always a tendency for an edge to disappear, because if it works, someone else will figure it out too and will do it better than you. This paradox opens up another angle on this: the better your technique (or perhaps, the more mechanically precise it is), the more vulnerable it is to the machines beating it.

Bob.

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 SBtrader82 
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bobwest View Post
Thanks for this. Not to wander off-topic too much, but I found this topic of Moravec's paradox extremely interesting, and I didn't know anything about it:

"As Moravec writes, 'it is comparatively easy to make computers exhibit adult level performance on intelligence tests or playing checkers, and difficult or impossible to give them the skills of a one-year-old when it comes to perception and mobility'."
( https://en.wikipedia.org/wiki/Moravec%27s_paradox )

There are implications of this for trading, as you say, so it's not actually off-topic. You could say that the more conceptual something is, the easier it is for a computer to duplicate it and do it better.

There is always a tendency for an edge to disappear, because if it works, someone else will figure it out too and will do it better than you. This paradox opens up another angle on this: the better your technique (or perhaps, the more mechanically precise it is), the more vulnerable it is to the machines beating it.

Bob.


Exactly!!! and to be honest I use this concept a lot!
whenever a trade is "too evident" I am concerned about the viability of it, because everyone will see it and try to take it, which would mean that there should be no-one taking the opposite trade.
On the other hand machines can help us, because they will compute very fast what is the best way to go from a strategic point of view. So sometimes I like to think "what are the robots going to do in this situation?".

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ondafringe
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SBtrader82 View Post
...whenever a trade is "too evident" I am concerned about the viability of it, because everyone will see it and try to take it, which would mean that there should be no-one taking the opposite trade...

But only if what you're watching to determine "too evident" is the same thing everyone else is watching, which is why I don't watch what everyone else is watching!

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 AlexSobol 
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I'm no fan of fixed targets like 2 ticks, 1 point. Even if you wanna use targets make em based on price action. Previous high/low, S/R. It makes more sense.
If you're using 512 tick chart you can easily hold for few minutes or even hours.
Scalping is possible but not with 2 ticks target.

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SBtrader82 View Post
In the case of scalping, all the techniques used by scalpers (by the way I took John Grady's courses in the past), are extremely mechanical. Any decent programmer could code them.
So, sooner or later your edge will disappear.

There is one thing called "the Moravec's paradox": basically the easier it is to describe something in words the easier it to be done by robots.

When I went back and tested the John Grady strategies what I found was that there were periods where they worked pretty well, and there were periods that were quite dismal. Essentially you become prone to large drawdowns. It is impossible for the market to be completely efficient against all strategies all the time. So instead it cycles.

So the question then becomes when do you use the strategy? I have been unable to find any kind of market generated data that can reliably predict what kind of market we are in early enough to make it all work. However, I have found situations where you can know what strategy to use based on the news and fundamentals. It largely comes down to whether latent liquidity will break or hold. Things about the situation that I can deduce in the moment based on unique factors for that day, but are far too varied to program for. They also tend to be factors that most people overlook. This is what Grady calls "context". So there are still places where the humans can see things that the robots don't, but they are rare. So then the problem is that as a retail trader your knowledge and understanding is too incomplete to reliably catch the 20% of cases where this applies, or your execution just isn't fast enough.

Which really stresses just how tight the tolerances really are. Say you knew that the market was going to move up 8 ticks, and you had no risk or margin limitations. What's the optimal number of contracts to maximize your profit when you consider the potential price impact of your trades? When I analyze this I get out about 200 lots.

Meaning that if more than 200 lots try trading on the same signal as you, the signal's expectancy could become unprofitable because of execution impact unless you can consistently get in and out first. Maybe that's why you don't see many market orders at any one price larger than 200 in ES?

Coincidentally, this is the opposite way of how Grady approaches it in his book. He's willing to share the information because he thinks the more people trading the signal the better. My conclusion after learning more about market microstructure is that he is simply wrong on this point, and that some of the edge has indeed been arbitraged away unless it's a more volatile market or you're really good at the context. His course is still really good BTW, and I highly recommend it.

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lightsun47
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TWD, I followed everything what you said - except when you said if everyone's jumping on same price level, it is bound to fail.

Why is that can you please tell us? Thanks.

P.S. The OP is nowhere to be seen and the replies are getting bigger and bigger here.....

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TWD, I followed everything what you said - except when you said if everyone's jumping on same price level, it is bound to fail.

Why is that can you please tell us? Thanks.

P.S. The OP is nowhere to be seen and the replies are getting bigger and bigger here.....

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When you place an order, it has an impact on the market. Your one lot probably doesn't matter, but the combination of you and everyone else trading that same signal does have an impact. So we think of everyone trading that signal as one big order called a meta-order. There is an order quantity at which the impact of that meta-order on price cancels out what you would expect to make from the signal itself. Everyone trying to get in at once moves price away from you so you get a worse spot and make less.

There's a lot of research on this area, and when I try the models myself on ES I get numbers that are roughly equal to the largest market order you'll tend to see on a normal day. So if more than 200-400 people are trading your 8 tick signal it will reduce the effectiveness of the signal.

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ondafringe
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TWDsje View Post
... Which really stresses just how tight the tolerances really are. Say you knew that the market was going to move up 8 ticks, and you had no risk or margin limitations. What's the optimal number of contracts to maximize your profit when you consider the potential price impact of your trades? When I analyze this I get out about 200 lots.

Meaning that if more than 200 lots try trading on the same signal as you, the signal's expectancy could become unprofitable because of execution impact unless you can consistently get in and out first. Maybe that's why you don't see many market orders at any one price larger than 200 in ES?

How did you come up with a number like 200? Trading 200 lots at different times of the day, with different levels of volume, will have different impacts on price.

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ondafringe View Post
How did you come up with a number like 200? Trading 200 lots at different times of the day, with different levels of volume, will have different impacts on price.

I got this number by plugging in the quieter parts of the day into the Kyle model to find Kyle's lambda and optimum Q with current price and volume standard deviations and a two handle target. The 200 is more the lower bound I think. Like it's just a quiet market, and nothing is happening. We should dive into it further and check my application of it, but I didn't want to drive the thread too far off topic

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DaretoDo
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Hereís how I balance scalping and longer trades. Get yourself into as many contracts of ES/MES as your risk management allows per trade. Take 1/2 to 3/4 profits as a scalp and then use the balance for longer holds dependent on your strategy. I especially like to move my stop to break even on the balance if I get some cushion. Having a zero risk/guaranteed profitable trade on as a runner is my goal everyday. Heck Iíve had intraday runners turn into multi-week swing trades for hundreds of points. Think of each contract as an employee and make them work for you!!

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 AlexSobol 
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DaretoDo View Post
Hereís how I balance scalping and longer trades. Get yourself into as many contracts of ES/MES as your risk management allows per trade. Take 1/2 to 3/4 profits as a scalp and then use the balance for longer holds dependent on your strategy. I especially like to move my stop to break even on the balance if I get some cushion. Having a zero risk/guaranteed profitable trade on as a runner is my goal everyday. Heck Iíve had intraday runners turn into multi-week swing trades for hundreds of points. Think of each contract as an employee and make them work for you!!

Good approach.
It's good to have statistics for every target separately so you can see that you might lose money scalps. So either you should make a bigger target or don't scalp at all.

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 bobwest 
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TWDsje View Post
Coincidentally, this is the opposite way of how Grady approaches it in his book. He's willing to share the information because he thinks the more people trading the signal the better. My conclusion after learning more about market microstructure is that he is simply wrong on this point, and that some of the edge has indeed been arbitraged away unless it's a more volatile market or you're really good at the context. His course is still really good BTW, and I highly recommend it.

I don't know anything about John Grady, but I have encountered the idea now and then that it is better for someone if their strategy is followed by others, because all the followers will magnify the effect.

I think the exact opposite.

For one thing, I think that when a given view of the best trade becomes widespread, its profitability ends. For example, look at the recent runup and decline of GameStop that has been in the news, fueled by people jumping on a "sure thing." Late jumpers got creamed, and in terms of the timeframe they were working on, a typical swing-trading holding period, they weren't all that late. But in terms of the popularity of the idea, they were:



For another thing, you put it well when you said "some of the edge has indeed been arbitraged away." A commonly-followed strategy will move the market, which will bring out the counter-trades, erasing the profit. This is another way of looking at the GameStop phenomenon, taking into account the timeframe for the swing-type trading. (There was an element of classic pump and dump in GME as well, but that is part of the market dynamic too.)

On a short-term basis, if you are adroit and can trade counter to the supposed edge, you may do well, but then you are among the arbs... which puts you in a very cut-throat group, most of whom will be much better at it than you.

This is the major problem that every trader faces. Those edges are very hard to come by, and don't last that long.

Which if taken out to an extreme, means no one can trade profitably, in the long run, which brings us back to the efficient market hypothesis.

I do not entirely agree, but it does make it clear why most traders do not do well in the markets. It is not cynicism to point to the widely-held belief that 90 or perhaps 95 percent of traders fail, in the long run. It is simply reality.

Bob.

------------------

Edit: I'm getting a little off-topic here, but not completely. The thread topic is whether scalping is a sustainable strategy. My post, and the one I quoted, are pointing out the difficulties -- not just of scalping actually, but of any approach. The John Grady detour is worthwhile because he apparently thinks it is good if your strategy is widely-followed, but perhaps it is not.

Beyond that, no one should think any strategy is a sure thing. The markets are always actively working against you, even if you're good at what you're doing. This is because the other traders are at least as smart as you, maybe sometimes even smarter.

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  #26 (permalink)
 LastDino 
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I think this is just difference of edge, some edge works best when kept to yourself but some will work best when maximum people are using it and your edge is basically this fact "That maximum people are using it". One notable example I can think of is Vwap, its attractive tool because many people are using it, in fact its more than likely that you have heard people say its used by institutions and hence you also keep an eye on it.

It is entirely possible to have an edge based on that and trade it but that's not to say that all edges should be shared so that it has more people trading it, in fact that will certainly make that edge useless.

So it boils down to what kind of edge are we talking about, so unless I know what it is that point will be mute.

Having said that, I feel like "Scalping" or any intra day strategy in general will have much shorter lifespan than the swing trading, so its difficult to tell if its going to be sustainable, at least from strategy point of view.

Just my 2c, I'm probably not making any sense
//Coffee rambling

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 bobwest 
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LastDino View Post
I think this is just difference of edge, some edge works best when kept to yourself but some will work best when maximum people are using it and your edge is basically this fact "That maximum people are using it". One notable example I can think of is Vwap, its attractive tool because many people are using it, in fact its more than likely that you have heard people say its used by institutions and hence you also keep an eye on it.

It is entirely possible to have an edge based on that and trade it but that's not to say that all edges should be shared so that it has more people trading it, in fact that will certainly make that edge useless.

So it boils down to what kind of edge are we talking about, so unless I know what it is that point will be mute.

Having said that, I feel like "Scalping" or any intra day strategy in general will have much shorter lifespan than the swing trading, so its difficult to tell if its going to be sustainable, at least from strategy point of view.

Just my 2c, I'm probably not making any sense
//Coffee rambling

Good point about VWAP. One could probably find a lot of other things that are similar.

On the other hand, VWAP is probably one of the most common things we see on charts. But, as I read trade journals here, traders generally still struggle, even though they are looking at it, and I assume are trading with it in mind.

I would not call any one thing-on-a-chart an "edge." I would think of an edge as the strategy/tactics you use, possibly one that makes use of VWAP or anything else. When looking at how people trade, there are great differences in the use they make of the many common elements that they are working with.

I do think there are profitable traders, some using VWAP or many other things, and I read their work here every day. I just think there are good reasons why many are not. It has to do with the fact that competitive markets are competitive... and the other competitors are pretty good at it.

Bob.

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 LastDino 
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bobwest View Post
Good point about VWAP. One could probably find a lot of other things that are similar.

On the other hand, VWAP is probably one of the most common things we see on charts. But, as I read trade journals here, traders generally still struggle, even though they are looking at it, and I assume are trading with it in mind.

I would not call any one thing-on-a-chart an "edge." I would think of an edge as the strategy/tactics you use, possibly one that makes use of VWAP or anything else. When looking at how people trade, there are great differences in the use they make of the many common elements that they are working with.

I do think there are profitable traders, some using VWAP or many other things, and I read their work here every day. I just think there are good reasons why many are not. It has to do with the fact that competitive markets are competitive... and the other competitors are pretty good at it.

Bob.

Exactly, words of the wise man

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 bobwest 
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LastDino View Post
Exactly, words of the wise man

Thanks, but I never think of myself this way... probably because I know myself too well.

Bob.

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 bobwest 
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lightsun47 View Post
P.S. The OP is nowhere to be seen and the replies are getting bigger and bigger here.....

This is very common. Many threads are started by someone asking a question, and then people start pitching in, often at length, but the thread starter is absent, sometimes not heard from again.

It doesn't surprise me any more... I guess the question just wasn't so important to the original poster after all. I would like to be wrong. Maybe he'll turn up again.

There's some value to others anyway, so the effort was not wasted.

Bob.

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Mozart2112
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DaretoDo View Post
Hereís how I balance scalping and longer trades. Get yourself into as many contracts of ES/MES as your risk management allows per trade. Take 1/2 to 3/4 profits as a scalp and then use the balance for longer holds dependent on your strategy. I especially like to move my stop to break even on the balance if I get some cushion. Having a zero risk/guaranteed profitable trade on as a runner is my goal everyday. Heck Iíve had intraday runners turn into multi-week swing trades for hundreds of points. Think of each contract as an employee and make them work for you!!

I have a very similar approach, take half off and move stop to BE. Allow winners to run!

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onemorecoffee
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bobwest View Post
There's some value to others anyway, so the effort was not wasted.

There is definitely value to newer traders reading this thread, even if the OP is MIA.

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 TWDsje   is a Vendor
 
 
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bobwest View Post
On the other hand, VWAP is probably one of the most common things we see on charts. But, as I read trade journals here, traders generally still struggle, even though they are looking at it, and I assume are trading with it in mind.

VWAP is probably a really good test case here. We know that some large institutions use VWAP as a guide for executing large metaorders. However, that clearly must not be good enough or we wouldn't have gotten Almgren-Chriss in 1999. I've even read some things from the authors of that paper suggesting that they themselves don't use it anymore. I know for fact that some of the large institutions have taken these kinds of models a few steps further.

And the thing that makes it extra difficult is that when such an edge disappears it's not like there's just nothing to it anymore. The strategy works, just not well enough to be consistently profitable. It becomes what I call "base". It will either break even, or be inconsistent since the market can't be efficient against all technical edges at the same time. So a retail trader will look at something like VWAP, and it will be pretty clear that there's something to it. Ultimately though they won't see that it's not an "edge" until they've traded or backtested it.

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 Tymbeline 
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loantelligence View Post
i use a simple bollinger band(34, .06)


I found this quite some surprise, in your interesting post.

I'm even wondering whether it might be a typo, and you actually meant "34, 0.6", perhaps?

.06 standard deviations would surely be remarkably narrow for a Bollinger band - barely different from the MA (central line) on its own?

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 loantelligence 
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Correct .6 not .06....did you try it.....

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 Tymbeline 
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loantelligence View Post
Correct .6 not .06....did you try it.....


Thanks for clarifying.

Not exactly, but over 20 years ago, I used to try to scalp Cable, trading spot forex, using a BB with 30, 0.75 settings and a 10-period EMA, which seems strikingly similar to what you mentioned above. I took thousands of trades with it, and it seemed to have a small but steady edge, on M1 charts.

I've played about with point-and-figure before, but I barely know what Kagi is, let alone how to use it.

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  #37 (permalink)
 loantelligence 
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Kagi is just the type of bar you are using...when its green you are going up and when its red you are going down....in todays world you can now add Order Flow Cumulative Delta...with the same bollinger band.....and the trades pop out at you.....great scalp......works on anything...

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 Fonz 
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Scalping is not a strategy. It is more related to the time you will stay exposed to the markets.
The duration of my trades are between a second and 10 minutes, usually less than 2 minutes. So, regarding the OP question "is scalping a sustainable strategy?", I would say yes and no

I trade about 3 strategies in 3 different market behaviors or contexts. All scalping.
I also swing trade just one instrument in one context only. (a different story).

I am risks adverse and this is why I scalp. Unfortunately, scalping brings gamblers and long term investments bring risks adverse people.

This is true that trading the smaller time frame brings a lot of commissions. This is also true that an "open" journal from successful scalpers is hard to find and for two raisons: 1st, just a few make it and 2nd, why would they advertise?

Good trades!

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 sunshnpeg 
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loantelligence View Post
Correct .6 not .06....did you try it.....

I tried it with 0.60. Works like a charm!! Great tip, thanks!

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 Fonz 
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bobwest View Post
This is very common. Many threads are started by someone asking a question, and then people start pitching in, often at length, but the thread starter is absent, sometimes not heard from again.

It doesn't surprise me any more... I guess the question just wasn't so important to the original poster after all. I would like to be wrong. Maybe he'll turn up again.

There's some value to others anyway, so the effort was not wasted.

Bob.

Even if the OP disappeared, I also think this thread brings interesting thoughts and hey... I am not far from MIA myself

More seriously, I believe than scalping is deeply misunderstood. It requires a long learning process.
I don't think there is any shortcut that can be found.
So, why learning for so long with no guarantee of success and for small gains, instead of investing like everyone does?
Income? No.
Home run? No.
Way of being rich(er)? Well, definitely not easy.
My answer would be: To not lose money (at some point, it comes), to have no huge drawdown anymore, consistency (incredibly important), make a living from my passion and invest the leftovers.

Happy trades!

Sent using the futures.io mobile app

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Quickly22
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Skalping is a death proof Strategy if the market is running in a direktion.
When you try to skalp a Market what runs to the side, it will be a problem.
So you have to recognize if the Market is runnig. If not thers the swing traders paradise and your hell.

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 Zanu 
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loantelligence View Post
Kagi is just the type of bar you are using...when its green you are going up and when its red you are going down.

Hello loantelligence,

what Base period type/value and Reversal type/value are you using for Kagi when trading ES and NQ?

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 Zanu 
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Zanu View Post
Hello loantelligence,

what Base period type/value and Reversal type/value are you using for Kagi when trading ES and NQ?

Oh, I see you are not using Kagi as a Data Series. You'are using normal 1 minute bars with Chart style 'Kagi Line', right?

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 loantelligence 
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Actually I use 500 Volume.....you want volume involved to confirm momentum and direction....here is a picture of one of my charts blown up to see it better....notice the Cumulative Delta on the bottom chart.....breaks out of the bollinger .....when the price (upper chart) is inside of its bollinger...its a transition move from buy to sell or vise versa or just chop.....(That bollinger represents a no Trade Zone)....I use these charts to leg into a position....start with one contract...if it doesnt make 6-10 times the commission... but possibly reverses... but the Kagi is still green/red ....I can enter another contract (kind of like dollar cost averaging)....may have 4 - ???? no. of contracts before it turns in my direction.....again looking for 6-10 times costs...what you also see is an ema 14 (red line) and an EMA 9(blue line) as well as an OBV Chocolate LIne and a Chaikin money flow line(shows the underlying buyer/selling pressure and are leading indicators). I usually wait for the Red or Blue to break out of the bollinger before I get in...if the kagi crosses back over the ema line....get out...this works on ES, GC, CL, RTY, YM...I stay with with MNQ...my choice instrument....chart is from last friday......just noticed this example... was kagi bars created with a Line Break 5 volume 500.....try it either way...with volume or line break... .

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  #45 (permalink)
 loantelligence 
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First 15 mins Monday morning using the above technique......

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  #46 (permalink)
 DanDaMan 
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loantelligence View Post
Actually I use 500 Volume.....you want volume involved to confirm momentum and direction....here is a picture of one of my charts blown up to see it better....notice the Cumulative Delta on the bottom chart.....breaks out of the bollinger .....when the price (upper chart) is inside of its bollinger...its a transition move from buy to sell or vise versa or just chop.....(That bollinger represents a no Trade Zone)....I use these charts to leg into a position....start with one contract...if it doesnt make 6-10 times the commission... but possibly reverses... but the Kagi is still green/red ....I can enter another contract (kind of like dollar cost averaging)....may have 4 - ???? no. of contracts before it turns in my direction.....again looking for 6-10 times costs...what you also see is an ema 14 (red line) and an EMA 9(blue line) as well as an OBV Chocolate LIne and a Chaikin money flow line(shows the underlying buyer/selling pressure and are leading indicators). I usually wait for the Red or Blue to break out of the bollinger before I get in...if the kagi crosses back over the ema line....get out...this works on ES, GC, CL, RTY, YM...I stay with with MNQ...my choice instrument....chart is from last friday......just noticed this example... was kagi bars created with a Line Break 5 volume 500.....try it either way...with volume or line break... .

Hi @loantelligence

I tested this out, but do not see where there can be an edge with timing entries here.
How do you manage your entries, stops, and targets? Consistently?
The EMAs are often hovering close to the Bollinger bands, break out just a bit and fly back inwards.

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 loantelligence 
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if you are trading during regular hours you can use the volume 500.....if not switch to 30 seconds.....you can also use the 9 ema (blue line) if you are looking for a longer entry......this is a scalp....not a swing trade only last for seconds.....I leg into a position looking for 6 to 10 times commission per contract....so 6-10 dollars a contract assuming the commission at 1 dollar.....(about .82-.94 per round turn for a micro)....those are my targets...if the ema is not outside the bollinger then you cant use this technique....(inside the bollinger is no trade...you have no direction)..because you are working with with multiple contracts....and I close them all at my target....I also look at a 233 tick chart(kagi bars) to see the internals....and a 377 tick chart to look at bigger time frame...this shows some trades from today...in and out three times in one min...each time multiple contracts showing the 233 and the 500 volume in the same time frame for 1 min.(11 contracts $133)....also notice that the cumulative delta may give you a quicker signal...but that doesnt always move the price.....you can also notice on the 233 tick chart when the ema low moves away from the ema 27 red line...looks like a win(entry) there also....

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  #48 (permalink)
9nix6
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Hi, At the end of the day you eventually find out the price is the only factor that matters. Pay attention to and mark up significant support & resistance zones as the day unwinds. Look for patterns in these zones. You'll see they repeat day after day and you will be able to profit. All indicators do is show you what the price has already done.

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 DanDaMan 
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9nix6 View Post
Hi, At the end of the day you eventually find out the price is the only factor that matters. Pay attention to and mark up significant support & resistance zones as the day unwinds. Look for patterns in these zones. You'll see they repeat day after day and you will be able to profit. All indicators do is show you what the price has already done.

This is the truth. Plainly spoken.

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Ghappy21
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My experience in recent months is yes. However it is intense and mentally draining work. I trade (4) ES contracts, looking to capture 4-8 points of move in the ES. Then try to contain losses to 2 points.

Maybe it is a 50/50 bet (I think it can be better) but if one makes larger gains than losses on each trade then 50/50 works. If find the challenge is not letting a loss run. So often the loss comes back to a gain so it is tempting to let it run a bit but when a loss really runs then it blows out all the wins for the day.

I believe there is plenty of market feel, discretion, in trading small move in very short timeframes. However this just my experience and opinion.

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Trentatron
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9nix6 View Post
Hi, At the end of the day you eventually find out the price is the only factor that matters. Pay attention to and mark up significant support & resistance zones as the day unwinds. Look for patterns in these zones. You'll see they repeat day after day and you will be able to profit. All indicators do is show you what the price has already done.

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.

My goal (and hope) for my learning process has been to keep it simple but I keep running into conflicting opinions and strategies, this thread alone is a great example of that.

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.

Eating an elephant is one thing...at this point trying to find my place as a trader feels like trying to eat the entire circus while juggling flaming chainsaws.

*on a side note finding this forum has definitely helped maintain my sanity, thank you all for that!

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  #52 (permalink)
 trendisyourfriend 
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9nix6 View Post
Hi, At the end of the day you eventually find out the price is the only factor that matters. ....

It's like saying for a weather forecaster clouds are the only factor that matter or for a guitar player to say, notes are the only factor to play music. Most long time traders know it is not the reality but it is what it is. Sigh!

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 bajaho 
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Bro just pick one style and stick with it for 6 months or 3 months at least. Youíre getting conflicting info because THERE ARE MANY WAYS TO TRADE SUCCESSFULLY. Many ways to trade successfully necessitates conflicting points of view. Choose one indicator, or none, and stick with that while documenting your trades to track progress. Ps...candlesticks are an indicator, itís a basic one but itís still an indicator.


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.

My goal (and hope) for my learning process has been to keep it simple but I keep running into conflicting opinions and strategies, this thread alone is a great example of that.

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.

Eating an elephant is one thing...at this point trying to find my place as a trader feels like trying to eat the entire circus while juggling flaming chainsaws.

*on a side note finding this forum has definitely helped maintain my sanity, thank you all for that!


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Trentatron
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bajaho View Post
Bro just pick one style and stick with it for 6 months or 3 months at least. Youíre getting conflicting info because THERE ARE MANY WAYS TO TRADE SUCCESSFULLY. Many ways to trade successfully necessitates conflicting points of view. Choose one indicator, or none, and stick with that while documenting your trades to track progress. Ps...candlesticks are an indicator, itís a basic one but itís still an indicator.

You are 100% right, I've tried to stick with a couple of moving averages and price action.

I just need to find a simple strategy that has been proven to work with a certain probability and then test and practice it until I reach its historic probability.

Totally right about candlesticks too, which is why I thought learning price action could serve as a good foundation, even if I don't stick with scalping.

Now to find that strategy...

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Ghappy21
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A few thoughts...
1) Part of your challenge is possibly not accepting a zero sum gain. For every buyer there is a seller. For every winner there is a loser. For every gain there is a loss. Many people try highly active intraday trading and lose money. They stop doing and new people enter to "try" it. While on the other side of zero sum are some traders that are fairly consistent at taking money out of the market in highly active intraday trading. It can't be that everybody wins or everybody loses.

2) As a very short term trader, I like price action because it is also very short term. I have more successful when I am not committed to my prediction but am willing to change my prediction and change it again, and again. In this model, my edge is knowing the product well, so possibly my predictions and active revisions lead an edge in begin correct a bit more often. Then trade mgmt allows me to keep in the game.

3) Indicators are fine. The number of indicators and setting are endless. What works or didn't work in the past may not work or work now. If one is a highly active intraday trader, and one sets the indicators to very fast/short timeframes then one is almost looking at recent price action through a different lens.

4) You seek "what works" ...well...the actual proper (and very difficult) question is what works for you, which product or products, which type of trade or set-up, what timeframes, profit targets, stop losses, etc. This is why trading is hard.

5) I suggest pick a product, trade very small or paper, use price action for very rapid feedback, use an indicator or two for comparison. See if you can gain some edge in knowing the product, reading price action, or some indicator success.

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  #56 (permalink)
zzzz2021
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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.

My goal (and hope) for my learning process has been to keep it simple but I keep running into conflicting opinions and strategies, this thread alone is a great example of that.

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.

Eating an elephant is one thing...at this point trying to find my place as a trader feels like trying to eat the entire circus while juggling flaming chainsaws.

*on a side note finding this forum has definitely helped maintain my sanity, thank you all for that!


You aren't the only one who seems to get confused by all of this because I was like that years ago and I believe all newbies too.

Since my english isn't good, I'll use simple terms to explain my opinions. Reading price action is like making a travel plan for a leisure trip to Europe from US. You'll have to do some due diligence to find out what sort of things you need to prepare to make sure your trip is a successful one. Things like visiting your favorite places, what hotel to stay in for each place, where to rent a car and etc... You can consider these as tools/indicators in reading price action which you've to do it on your own. It depends on your trading style and how you interpret price action so you can create trading plans to capture those movements that you keep seeing everyday.

TA is a vast field and every trader uses it differently. The problem is you can't tell whether or not they can use it successfully to make consistent profits. So, you always have to take it with a grain of salt in what everyone says. What matter is that you've to give it a try in a serious manor to see if you can figure it out on your own while trading under sim. If you can't, the only thing you'll lose is time.

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ThescalperAnalyst
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This is a really good question. Let's start by saying that there is not only a way to be profitable, but you have to build your own. Scalping means staying on the market for a short time and there are hundreds of ways to do this. What matters is to be consistent and specialize at your edge. You can use dom, order flow, footprint price action renko charts eccc. What matters is finding your way and if this means entering the market and holding a position for a few seconds or a few minutes, that's fine. But the study of the tool and its behaviors is essential to be successful in this way. I have chosen this approach to the market and I like it because it adapts to myself. If you really want to operate in this way, test a strategy for 3-4 months in sim and then go live with the micro trying to optimize every possible aspect day after day, trying to build strict rules and find your advantage on that market. Good luck

Sent using the futures.io mobile app

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Trentatron
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ThescalperAnalyst View Post
This is a really good question. Let's start by saying that there is not only a way to be profitable, but you have to build your own. Scalping means staying on the market for a short time and there are hundreds of ways to do this. What matters is to be consistent and specialize at your edge. You can use dom, order flow, footprint price action renko charts eccc. What matters is finding your way and if this means entering the market and holding a position for a few seconds or a few minutes, that's fine. But the study of the tool and its behaviors is essential to be successful in this way. I have chosen this approach to the market and I like it because it adapts to myself. If you really want to operate in this way, test a strategy for 3-4 months in sim and then go live with the micro trying to optimize every possible aspect day after day, trying to build strict rules and find your advantage on that market. Good luck

Sent using the futures.io mobile app

It's encouraging to hear you say that!

Any super simple set-ups that you would suggest starting with?

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ThescalperAnalyst
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Trentatron View Post
It's encouraging to hear you say that!

Any super simple set-ups that you would suggest starting with?

Talking about setup is very difficult. As I told you you have to build yours that aligns with what works best for you. What I can tell you based on my experience is: specialize on 1-2 instruments maximum - try to understand the logic of the chosen instrument and the correlations with other instruments. Understanding the speed and volumes traded in the cash hour and at the close of the same. Take a look at the historical series to also see the distribution of volumes and the net daily variation. After this he begins to study the instrument looking at it for days and days and tries to find your edge or situations that are repeated in the market. Try to read the tape. There are so many ways to do this I look at orderflow, footprint and volumeprofile. At that point, build your own strategy and test it, only then can you begin to see the first results and understand if you are on the right trade. And obviously don't forget a fundamental aspect. Work on your psychology and your trading routine because without them even an excellent strategy becomes bankrupt. Good luck

Sent using the futures.io mobile app

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  #60 (permalink)
Trentatron
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ThescalperAnalyst View Post
Talking about setup is very difficult. As I told you you have to build yours that aligns with what works best for you. What I can tell you based on my experience is: specialize on 1-2 instruments maximum - try to understand the logic of the chosen instrument and the correlations with other instruments. Understanding the speed and volumes traded in the cash hour and at the close of the same. Take a look at the historical series to also see the distribution of volumes and the net daily variation. After this he begins to study the instrument looking at it for days and days and tries to find your edge or situations that are repeated in the market. Try to read the tape. There are so many ways to do this I look at orderflow, footprint and volumeprofile. At that point, build your own strategy and test it, only then can you begin to see the first results and understand if you are on the right trade. And obviously don't forget a fundamental aspect. Work on your psychology and your trading routine because without them even an excellent strategy becomes bankrupt. Good luck

Sent using the futures.io mobile app

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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  #61 (permalink)
ThescalperAnalyst
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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.

Sent using the futures.io mobile app

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 TWDsje   is a Vendor
 
 
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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
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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
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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
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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
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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
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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

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 BA 21 
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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
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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.

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Trentatron
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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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 BA 21 
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Trentatron View Post
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.

That's my motivation as well sans the 50 hour work weeks.

I started on my journey in 2016, and I'm still at it. However, I abstained from trading for two years, because I lost 35 percent of my account in 15 minutes, because of a lucky streak and hubris.

Now, I know a lot more than I did five years ago, which is still not very much in the grand scheme of trading.

These days, I still have the desire to extricate myself from a 9-to-5, but sobriety kicks in when I realize the extra expenses involved (i.e., no more employer-sponsored health insurance) and my existing single source of major debt-- a mortgage.

For me, in order to have a shot at trading for a living, I must eliminate my mortgage, FIRST.

The last thing I need to worry about while trading is how I am going to pay the mortgage?

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spencer1155
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loantelligence View Post
Can you make money.........Well at 2 to 3 ticks on the ES....25 - 37.50/contract and the commission on the round turn being 4.50/contract
....sure ..do that 10-20 times a day....which is relatively easy or not...you can make money....its a lot of work....but the trades are quick....I find it easier on the NQ....lot more movement than the ES...but a lot more reversals/turns(volatility) ...you have to have something that tells you direction/trend....and strength of move, are you in a chop(no trade zone) or is it an actual move to the upside or downside.... and i use a simple bollinger band(34, .06) and EMA(either 9 or 14) for that.... and then I modify the price bars to a Kagi line....which has a thin and a thick line.....I make them both thick....what you will notice is your best scalp time is when the EMA moves outside of the Bollinger bands and your Kagi line is either green for the upside or red for the downside.... when the EMA is inside the Bollinger.....no trade zone.....but you will learn how to handle that....you now have part of the Holy Grail......There is more....but try this first to see if it doesnt help you out with your scalp timing......

Okay so I have a couple of dumb questions

What are your bollingers set to?
What do you use for an EMA?
What time frame do you use?
What is a Kagi line?

Okay so that was more than a couple of questions.

TIA

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  #73 (permalink)
Trentatron
Knoxville
 
 
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spencer1155 View Post
Okay so I have a couple of dumb questions

What are your bollingers set to?
What do you use for an EMA?
What time frame do you use?
What is a Kagi line?

Okay so that was more than a couple of questions.

TIA

Most of the answers are in his post...

What are your bollingers set to? 34 and .6
What do you use for an EMA? 9 or 14
What time frame do you use?
What is a Kagi line? https://www.investopedia.com/articles/trading/07/kagi_chart.asp

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  #74 (permalink)
 loantelligence 
Syracuse, NY
 
Experience: Intermediate
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Broker: Mirus Futures/Zen-Fire
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I use both 233 tick and Volume 500 on MNQ also look at 377 tick......now adding in Cumulative Delta with a Bollinger on that at 14 and .6....when they are all on the up side of the bollinger and going up it is a buy signal when they are all on the down side and going down.....sell signal....8 times out of 10...I can with stand a pull back and buy/sell another contract...2/3/4/5 even looking for 6 to 10 times the RT commission cost...of approx .92 (i use 1) .....note...cumulative delta doesnt work well with RTY...I specialize in MNQ....technique also works with ES....probably different numbers...1000 on volume maybe...ticks at 340 and 610....have to test.......

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  #75 (permalink)
idkau
Phoenix Arizona
 
 
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I personally scalp the NQ but I use footprint charts on a 5 min time frame. I havent been doing it long but I make an average of 4-8 ticks after hours. I dont trade unless the candles are close to 20 ticks in size. I could have more profits but i tend to exit early about 50% of the time. I cant do the same on ES because it doesnt move enough for me overnight.

Is it sustainable? probably not.

Its also a lot of work.

I used to lose a lot and badly. Its teaching me risk management. I also view hourly charts and go with the trend(another rule i used to break).

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  #76 (permalink)
 DanDaMan 
Montreal Quebec
 
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@loantelligence

Are you adding in judgment of support and resistance areas or strictly just taking the trades every time the signal you mentioned come up?
Do you judge other aspects, or just take the trade the second they are out of the bollinger and heading in the direction?
Youíd need a solid 85% win rate. Hard to do consistently profitable day after day. Not saying impossible- just saying it must be very mentally demanding, especially if you need to judge each entry on other criteria aside from being out of the bands and heading in your direction.


loantelligence View Post
I use both 233 tick and Volume 500 on MNQ also look at 377 tick......now adding in Cumulative Delta with a Bollinger on that at 14 and .6....when they are all on the up side of the bollinger and going up it is a buy signal when they are all on the down side and going down.....sell signal....8 times out of 10...I can with stand a pull back and buy/sell another contract...2/3/4/5 even looking for 6 to 10 times the RT commission cost...of approx .92 (i use 1) .....note...cumulative delta doesnt work well with RTY...I specialize in MNQ....technique also works with ES....probably different numbers...1000 on volume maybe...ticks at 340 and 610....have to test.......






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  #77 (permalink)
 loantelligence 
Syracuse, NY
 
Experience: Intermediate
Platform: Ninja Trader
Broker: Mirus Futures/Zen-Fire
Trading: NQ
 
Posts: 131 since Jan 2011
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you are correct ....there is more to it than just Cumulative Delta....the Price has to be breaking out also....I also use the Chaikin (money flow) indicator to tell me the direction of the money....and OBV indicator...it also shows where the mkt is going has to be in alignment with the price....and yes if there are any pivots coming up or zones of supply and demand on the NQ in my case because I trade the MNQ....I also added 1 min chart to look at....if its breaking out also....good strong sign...but not necessary to trade...it has a much larger breakout area....and breakouts happen in the smaller charts first...here is an example...I trade off the DOM so you see very little of the 1 min chart when trading but enough..... the two renko charts are 2/5/10 and the NQ Renko is 4/10/20......the dotted lines are pivots....where the price has turned around before......I need to expand to another screen this is all on a laptop.....so a little crowded...the only thing that is lacking is how High/Low is the price going to go.......Know of an indicator for that???

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  #78 (permalink)
 loantelligence 
Syracuse, NY
 
Experience: Intermediate
Platform: Ninja Trader
Broker: Mirus Futures/Zen-Fire
Trading: NQ
 
Posts: 131 since Jan 2011
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another example at 7:57 this morning (Tuesday Morning 4/6/21)....note NQ ran into a pivot and reversed....NQ also is going to run into a zone.........maybe reverse.....would stop the trade until that decision is made....when not trading during Regular hours I change the Volume chart to 30 Secs....this chart reflect 500 Volume so you see the Cumulative delta does not reflect the same as the other charts....if this happened during regular hours....I would conclude the volume is not there for the move down.....it would have to show more of a downside to take a trade...however note the red line in the middle chart on the 377 tick...Money flow is pointing down...Hmmmm.decisions...decisions.....

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  #79 (permalink)
 loantelligence 
Syracuse, NY
 
Experience: Intermediate
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sure enough a couple of mins later..........

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  #80 (permalink)
 Tripken 
Market Wizard
Knoxville, TN/USA
 
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I will jump in here only because this is very interesting to me and my journey.

I'm not sure what the definition of scalping is or was, I was introduced to it when I found PAT's (Mack's Price Action Trading). His interpretation of scalping is a 2:1 RR while using a runner once you can trade multiple (3+) contracts. It made sense to me and still does, however, achieving the required 80% win rate is no easy task.

This is why Al Brooks and others push the swing style for new traders. I agree with that premise also, but being risk averse, I am much more comfortable taking 1 pt. "scalps" and win or lose I'm done. Al talks about putting on a trade and taking a walk or going to Walmart. LOL. No way not me.

So, I consider what I do scalping. Sometimes if the volatility and ATR is high enough I look for 2 points instead of 1. I've developed my own strategy based around Mack's system. Some people can make it work some can't. I've not been able to do so it consistently but I believe that is not due to the system but my own makeup.

I'll post a chart of what I see each and every day and still "chicken out" on the bulk of these trades when they mostly work. You have to understand the context of the day and what the bars are telling you, etc, etc.

My point is I think it is doable, you just need a system and the mental makeup to do it. At this point I have half of the requirements and continue to work on the other.

Enjoying the discussion and happy to see another "Knoxville" trader in the group!

2021-04-06_21-37-44


1 point trade example
https://www.screencast.com/t/gFLYKtp74l

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  #81 (permalink)
 loantelligence 
Syracuse, NY
 
Experience: Intermediate
Platform: Ninja Trader
Broker: Mirus Futures/Zen-Fire
Trading: NQ
 
Posts: 131 since Jan 2011
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I see a lot of your boxes are formed by breakouts...the video you included showed a box being formed but it was already in the works when it stated to get in I guess...can you see it coming or do you get in when the box forms or when it states to get in ...and have you ever looked at MNQ.....

and just a note.... to the person who asked...the renko I stated is actually Unirenko....where you state the offset/the size of your bar/ and then the reversal size....where as renko just state the size of the bar....as it doesnt show reversal....

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Trowhaway3014
Hanover Lower Saxony Germany
 
 
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Scalping itself is often called a "strategy" which it in my opinion isn't, it's a trading style which for most people are the hardest to become profitable with. If you yourself got a strategy or system that works on smaller timeframes consistently that could make you consistent.

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 Tripken 
Market Wizard
Knoxville, TN/USA
 
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loantelligence View Post
I see a lot of your boxes are formed by breakouts...the video you included showed a box being formed but it was already in the works when it stated to get in I guess...can you see it coming or do you get in when the box forms or when it states to get in ...and have you ever looked at MNQ.....

and just a note.... to the person who asked...the renko I stated is actually Unirenko....where you state the offset/the size of your bar/ and then the reversal size....where as renko just state the size of the bar....as it doesnt show reversal....

Sorry, didn't explain it well. The boxes I draw manually and place them to mark possible/successful 1 pt. scalps. So they're of no use to my trading, the white/blue pivot lines are what I use and they plot in real time. So yes many of the trades are BO's of the previous S/R areas. The other trade I look for using them is during PB's in a trend if there is enough room I scalp a point going back "to" the prev. S/R. Many times those trades also BO and it's a 2 point possibility.

Yes, I have looked at the NQ/MNQ several times, the movement is just too nerve racking for me. I looked at it again after lancelottrader's excellent webinar.

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