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Who makes more money. Scalpers or Point Traders
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Who makes more money. Scalpers or Point Traders

  #151 (permalink)
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bobwest View Post
OK, sorry to be peppering this thread with posts, but I just noticed that, as of now, the second-highest vote tally (after "I don't scalp") is "It's the lowest risk".

I am scratching my head over this. True, if you never carry a trade "overnight," you never face a big gap opening, or bad overnight news, etc. And as a short-term guy (now), I can see that... except for the fact that today, "overnight" is all of from 5:15 PM to 6:00 PM Eastern US time for equities contracts, and similarly for other contracts. There's no overnight risk because there's no "night" in "overnight" any more. (Weekends excepted.)

My view is that trading highly leveraged futures contracts with a short timeframe is very risky, and it's an inherent risk resulting from the choice of the vehicle, the leverage, and the short timeframe. The short timeframe could not be exploited without high leverage, and leverage can cut both ways, very quickly, and does.

One of the frequent posters on futures.io (formerly BMT) (I'll post who it is when I can find it) has a quote from Dr. Steenbarger in his signature, to the effect that the market must always ultimately reward risk. And it does. But only if you're one of the survivors, which is the big problem.

We know -- it's almost a cliché -- that most new businesses fail. There's a great deal of risk in starting up something new. You are saying that you can make it in a competitive market that already has a lot of established participants. When people wonder why most traders fail, I think it's the same answer, and it's very simple.

But some new ventures succeed, and I don't think just by chance (usually), and the same principle applies to trading. Risk has opportunity, but if anyone thinks there is opportunity with low risk, I have to disagree. There is such a thing as an edge, and it may shift the probabilities in your direction.... But this short-term trading, whatever you call it, is not less risky. The risk may be manageable, but it's part of being in the markets.

Bob.

Your talking about @josh.

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  #152 (permalink)
in a meditative state...
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My trades lengths between 1 minute to 1 hour.

Am I scalping?

Is it that important to give it a name?

If I become half a percent smarter each year, I'll be a genius by the time I die
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  #153 (permalink)
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tturner86 View Post
Your talking about @josh.

Yes, I just found it. His posts are always good to read, even his signature .

Here's the Steenbarger quote on risk, thanks to @josh :

"Markets ... must, over time, reward risk assumption. ... Although [safe, certain paths] may produce acceptable returns on particular occasions, overall, they must be punished if risk is to be rewarded by the markets. ... The panic response of the market--whether to the upside or the downside--is rarely rewarded."
--Dr. Brett Steenbarger, Ph.D.

This is a good perspective on risk, as well as on what works and what doesn't work in trading markets.

Bob.

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  #154 (permalink)
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The point is to allow people to select whether or not they believe they are a scalper, regardless of what another's definition might be. And the point is to present options that that scalper believes in, like lower risk or higher profit, regardless whether or not others believe it to be true.

The real reason polls exist on the site is for the discussion of the poll, not the result of the summed up votes. I would like to see more discussion on the "lower risk" or "more profit" aspect because I believe discussion is good for everyone, and I believe some people are trading a certain way only because they were told it was better -- and they've never proved that to themselves to be either or true, or in my opinion - most likely false.

Mike

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  #155 (permalink)
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Big Mike View Post
I believe some people are trading a certain way only because they were told it was better -- and they've never proved that to themselves to be either or true, or in my opinion - most likely false.
Mike

Yes..and the "evolution" of scalping has evolved as a result of brokers lowering the industry standards in terms of margin and account minimums ($1,000?).
How could this lead to good behavior among traders? How could this set good precedence for the new generation of traders? I assume that brokers want their customers to do well in the long run.

I have seen good scalpers, but their methods are programmatic, they have servers on the exchanges (dedicated, not VPS) and they are capitalized. This is not for the masses in my honest opinion.

Matt

THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.

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  #156 (permalink)
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mattz View Post
Yes..and the "evolution" of scalping has evolved as a result of brokers lowering the industry standards in terms of margin and account minimums ($1,000?).
How could this lead to good behavior among traders? How could this set good precedence for the new generation of traders? I assume that brokers want their customers to do well in the long run.

I have seen good scalpers, but their methods are programmatic, they have servers on the exchanges (dedicated, not VPS) and they are capitalized. This is not for the masses in my honest opinion.

Matt

THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.

I believe the bigger issue is that traders take a very micro look at the market, and they believe that a small time frame along with a small stop loss and small profit target (ie: scalp) are lower risk. They don't examine it from a macro perspective where I believe that would be disproven.

This is especially true when evaluating the cost of commission and slippage on a macro scale vs micro one.

The traders that are funding those $500 or $1000 accounts (and then going bust) are exactly the ones that I am trying to reach and educate. Same is true for all the traders asking about lower margins. Generally this is the audience of less experienced traders that are scalping and blowing up their account. Naturally, that is not always the case, but I believe if you read the 250k+ posts on futures.io (formerly BMT) as I have (mostly), you will find it to be overwhelming in the majority of cases.

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
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2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
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  #157 (permalink)
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Big Mike View Post
I believe the bigger issue is that traders take a very micro look at the market, and they believe that a small time frame along with a small stop loss and small profit target (ie: scalp) are lower risk. They don't examine it from a macro perspective where I believe that would be disproven.

This is especially true when evaluating the cost of commission and slippage on a macro scale vs micro one.

The traders that are funding those $500 or $1000 accounts (and then going bust) are exactly the ones that I am trying to reach and educate. Same is true for all the traders asking about lower margins. Generally this is the audience of less experienced traders that are scalping and blowing up their account. Naturally, that is not always the case, but I believe if you read the 250k+ posts on futures.io (formerly BMT) as I have (mostly), you will find it to be overwhelming in the majority of cases.

Mike

I don't disagree and I dont need to read 250K posts to see the reality out there. The real question for me is this: What has changed that evolved to this behavior and such a belief system? I have been a broker way before futures.io (formerly BMT) evolved and I can tell you that this "scalper" mentality evolved out of somewhere. It was not there before.

PM with any questions about optimusfutures (800) 771-6748 (561) 367 8686. THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING.
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  #158 (permalink)
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mattz View Post
I don't disagree and I dont need to read 250K posts to see the reality out there. The real question for me is this: What has changed that evolved to this behavior and such a belief system? I have been a broker way before futures.io (formerly BMT) evolved and I can tell you that this "scalper" mentality evolved out of somewhere. It was not there before.

I'm guilty of scalping myself for a couple of years around 5 years ago. It was when I first started trading futures, moving from the world of equities where I was never a scalper.

I believe I started down that path because it is what others were doing around me (similar to me in that they were retail and using NinjaTrader). I listed peer pressure as an option on the poll...

I finally climbed out of the scalping hole and am so much better off for it. For me, it's the resumption of "normal" in my trading career and I look at scalping as a phase. Unfortunately, part of that phase (when I started with Ninja) is also overloading indicators on my charts, using exotic bar types and tiny time frames, etc.

Anyway, I try to leave the debate to others but just make my opinion known.

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

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  #159 (permalink)
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Big Mike View Post
I'm guilty of scalping myself for a couple of years around 5 years ago. It was when I first started trading futures, moving from the world of equities where I was never a scalper.

I believe I started down that path because it is what others were doing around me (similar to me in that they were retail and using NinjaTrader). I listed peer pressure as an option on the poll...

I finally climbed out of the scalping hole and am so much better off for it. For me, it's the resumption of "normal" in my trading career and I look at scalping as a phase. Unfortunately, part of that phase (when I started with Ninja) is also overloading indicators on my charts, using exotic bar types and tiny time frames, etc.

Anyway, I try to leave the debate to others but just make my opinion known.

Mike

I respect the fact that you have evolved as a trader and found a method that matches your lifestyle and risk tolerance.
Having said everything above, I always respect traders choices, they are the ones who need to feel comfortable with it. I also want to be very specific and say that scalping methods also range in reward outlook and risk.

PM with any questions about optimusfutures (800) 771-6748 (561) 367 8686. THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING.
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  #160 (permalink)
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Lack of funds


I know there are other options but lets just look at this example for futures (the most commonly traded product on this forum)-

If you want to trade CL and scale in and out effectively with 3 contracts you'll most likely need about 100,000 dollars with 30 tick stop. You'd essentially be risking 900 dollars or .9% per trade before slippage, commission, or any other sort of error are factored in. IMO 3 contracts still is a very modest amount of units to properly scale in or out as legs present swings in price.

However much people want to hide behind their ego about their account size, I believe we've become accustomed to scalping because that is what is most comfortable with our smaller accounts so we've tried to learn this method of trading more than other methods. Either that, or we don't feel comfortable risking a whooping 900 dollars starting off even when our accounts are 100,000 dollars or more.

I define scalping as anyone who is going to exit if price starts coming against them before their stop has been hit without dividing their attention away from trading. Basically anyone who is sitting there watching price continuously with their finger on the exit button, or they have a predefined target that is 1:1.

IMO micro contracts are a waste with their commission structure and lack of liquidity. I believe this whole problem could be solved if the exchange would allow a matching system that divided each contract into 10 parts with 1/10th the commission per subcontract and match them into the same liquidity the full sized contract is traded! Wouldn't this be more efficient for small investors trying to hedge their own stock portfolio against risk?

If this opportunity I stated above was possible I believe many scalpers would start taking on larger time-frames naturally. I believe they'd start trading around core positions etc. because they could risk substantially less ( the Idc amount ).


Last edited by Itchymoku; July 27th, 2014 at 02:27 PM.
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