still the problem is the definition of scalping. a scalper is a day trader but not a swing trader. a day trader might be a scalper but not a swing trader. anyway I think it makes sense that a profit target of 1 tick and a stop of 5 points is not really a great approach. but going for 2-5 points and risking 4-6 ticks might work in a market like es. anyway for me there're 2 choices: day trading (flat a the end of the day) and swing trading (carrying positions overnight).
when talking risk, then it's pretty obvious the biggest risk is when the market is closed and you can't react to market changing events. especially high risk are open positions over the weekend. another risk is company news that often come after the cash market is closed. cme index futures are also closed from 4:15 till 4:30. and of course economic news where the liquidity could be a problem.
what is more profitable? I think it's fair to say that a market like es likes to "range" more than to "trend". there might be 4 swings in a day, but the market will close the day unchanged. as a day trader you might be able to catch some of those swings. as a swing trader you normally don't.
another thing I read a lot is about using bigger time frames. for day trading I think large time frames are not really helpful. you're are looking at the past to predict the future. exactly the same thing with most indicators. instead I like to focus on what's happening right now. some call it order flow. while it's not even necessary to have a chart at all, a smaller time frame is more helpful to see "the right now" than a bigger time frame like a 60 min or daily. of course you're missing the "big picture". another very popular phrase a read a lot here. but again, when looking at order flow, you'll recognize fast when a market approaches an important level from the past.
this is of course only imho and I realize that's not what the bmt gurus are teaching
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I started as a swing trader holding positions over night and have always thought of myself as being a really good futures trader until I compared my trading results with a prop trader who trades the same instrument. The prop trader blew my trading results out of the water, and that was from only trading the day session. After realising this I said to myself that this guy has a more efficient and effective way of trading. This scalper was doing around 100 round turns a day and the most impressive thing was that the results I looked at where from his private account with normal brokerage rates not prop rates. Although now from what I know this person only trades for his prop firm and not his own money.
I have spent many hours since trying to master the art of scalping purely from reading the DOM and I can see why many people do it.
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I have found the best risk to rewards are usually in swing trades. The problem is they tend to be lower probability trades. So for most novice traders it is hard to take and hold a swing position because of account size or pyschological reasons. Where as a scalp may have a smaller reward but higher probability of success. So as a novice you want to win more often then you lose. which we know doesn't lead to profitability if you are losing more then you are winning per trade.
Personally I like to limit my risk by limiting my number of trades a day. I would rather place a trade and allow it to work for the day, then scalp every single tick or wave. I am still working to that goal.
But I agree, the idea that a smaller timeframe with tighter stop is less risky is a fallacy. That can lead to a death by a thousand paper cuts.
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I couldn't vote because none of the options were valid for me but I rather needed "It's fun, fast, profitable, I can do it, and I still get bored and/or scared trying to hold trades open for longer". When I get past that last barrier, I'll still do scalps and swings because of the first part of the sentence and the way that a good scalp entry should lead to a better swing entry. That's the plan for the autumn and next year anyway.
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1. Scalping has the advantage of being able to find more opportunity. This could take the form of A) Exiting on extensions, and re-entering over and over at better prices, or B) being able to profit in a market environment that a longer term player sees as noise or even a losing period (typically this would be a tight range). This advantage comes at a cost of higher commissions though.
2. I don't buy that any particular strategy (other than COMBINED analysis) yields a better R:R. A scalper can very well have 3:1 R:R just like a swing trader can. I think one of the best edges in the market is entering on a lower timeframe (call it a scalp-entry and scalp-stop loss based on the small timeframe) in the context of a great R:R point on a higher timeframe or swing trade opportunity. Achieve the reward of a swing, with the risk of a scalp. This is one way to tremendously increase R:R, although it comes with a small price of a few more stop outs/commissions.
3. Ultimately @Big Mike is right in saying that it really does not make a hill of beans as to what other people are doing, or what is the most efficient, or who made the most doing what. If it doesn't resonate with you, and you can't follow it.... it's useless. You have to find your own way.
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Agree with you in principle. I am working towards the same goal myself. However disagree that swing trades are lower probablity trades. A scalp held over longer timeframe becomes a swing trade( assuming you are in profit :-) ) So a strategy could be to treat every trade as a scalp and if it pays off hold the runner for well the ride.
You can practise your skills all day long, but it's comparatively easy to get better at playing. The hard thing is to get better at winning--anonymous
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Problem I see with that is that if you intend a trade to be a scalp where are you going to exit? How are you gonna manage it? At what point does your scalp become null and you switch to a swing? How do you determine that a swing is now feasible? Or are you just holding onto a losing (or failing) trade?
Usually (for me) when I enter a scalp I have a hard target I am expecting it to reach, if it does I am out, if not I am looking to cover the trade if it comes back to B/E.
The same goes for a swing, but I am willing to allow that swing trade more time to work. Scalps I don't usually take heat, swings I will. Lately I have been trading a hybrid, where I use one contract to scalp and allow one to run. This has been really helpful.
While the idea of a trade starting as a scalp and becoming a swing sounds good. The odds are it will never really happen (with 1 car anyway). The reason is when you enter a trade you had an idea, that idea has to be fullfilled or it has to fail. If you are starting with a scalp idea you will never allow the trade the ability to run longer enough to be a swing. And if you do you run the risk of not cutting a losing trade quick enough because you start hoping that it will become a swing. Or if you were in the black and you had big swings in your open P/L, that could cause you to exit the trade early.
Again just my 2c as well.
Last edited by tturner86; October 26th, 2014 at 02:54 AM.
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