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

  #171 (permalink)
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tturner86 View Post


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).

It will not work with 1 contract. What I was suggesting is close to what You are currently doing.

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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  #172 (permalink)
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tradersam View Post
It will not work with 1 contract. What I was suggesting is close to what You are currently doing.

Then we are in agreement.

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  #173 (permalink)
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hmmmm



tturner86 View Post
Then we are in agreement.

Note sure I am communicating my thoughts correctly.
What exactly is a scalp and what exactly is a swing trade.
One persons swing trade is another persons scalp.
The difference is the time you hold on to the stock/contract.

A trade can start off as a scalp ( of course more than 1 contract/share) and after the scalpers profit objective is reached may be converted into swing trade( ie. hold for longer time) if conditions are favourable.
Favourable condition: Market showing obvious trend. Major S/R line breached on high volume, Channel line break failure etc( this depends on traders trading style) and price may be followed ( trade management) or a higher profit objective determined( either based on price or time).

The risk/Reward is a little different. For the hallf the contracts/shares Risk/Reward may be 1:1. For the rest it may be 1:2, 1:3 etc. Here the risk is the same. The reward is changing. So you are in a swing trade on scalper's risk.

Again,Nothing different from what you are already doing. Just pointing out that scalp can ( under favourable conditions) be converted to a swing or Position trade.
To trade this style the ask is:
1. Good foundation in Market Structure concepts.
2. Good Trade management Rules
3. Small stops ( Scalpers stops) but well managed ie. not based on say 1 point or 1.25 points etc but on market conditions like swing low/high + 2 ticks etc.
4. Win rate of atleast 60%. This is because many of the trades you may not get any profits on the runner as price may come back to entry price.

Also key is to understand every time you enter the market there is exposure to risk. The goal is ofcourse to make $$ but reducing the risk exposure so have fewer entries and take any freebies that the market is offering at any time. In a trading range condition, better to be a scalper though.

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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  #174 (permalink)
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tradersam View Post
Note sure I am communicating my thoughts correctly.
What exactly is a scalp and what exactly is a swing trade.
One persons swing trade is another persons scalp.
The difference is the time you hold on to the stock/contract.

A trade can start off as a scalp ( of course more than 1 contract/share) and after the scalpers profit objective is reached may be converted into swing trade( ie. hold for longer time) if conditions are favourable.
Favourable condition: Market showing obvious trend. Major S/R line breached on high volume, Channel line break failure etc( this depends on traders trading style) and price may be followed ( trade management) or a higher profit objective determined( either based on price or time).

The risk/Reward is a little different. For the hallf the contracts/shares Risk/Reward may be 1:1. For the rest it may be 1:2, 1:3 etc. Here the risk is the same. The reward is changing. So you are in a swing trade on scalper's risk.

Again,Nothing different from what you are already doing. Just pointing out that scalp can ( under favourable conditions) be converted to a swing or Position trade.
To trade this style the ask is:
1. Good foundation in Market Structure concepts.
2. Good Trade management Rules
3. Small stops ( Scalpers stops) but well managed ie. not based on say 1 point or 1.25 points etc but on market conditions like swing low/high + 2 ticks etc.
4. Win rate of atleast 60%. This is because many of the trades you may not get any profits on the runner as price may come back to entry price.

Also key is to understand every time you enter the market there is exposure to risk. The goal is ofcourse to make $$ but reducing the risk exposure so have fewer entries and take any freebies that the market is offering at any time. In a trading range condition, better to be a scalper though.

I understand your point. But we agree that it is difficult to switch with only one car.

And to be honest you are not really switching. If you enter with 2 cars and you plan to peel one off, that first car is a scalp trade and the second is a swing. So you never really switch.

Like when I trade, my first 2 cars are a scalp, and the last runner is a swing. Even though they are entered at the same time they are managed differently. I would not take the runner at my scalp target (unless I got some kind of exit signal that invalidated my trade at which point I am just covering to go flat).

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  #175 (permalink)
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djkiwi View Post
I couldn't agree more. My golden rule is I will never put on a trade where the cost of doing business (slippage and commission) is greater than the house odds of an American style roulette wheel.

The wheel has 35 numbers and 2 zeros so the cost of my trade (commissions and slippage on the stop) cannot be more than 5.7%. To be able to achieve this based on my typical winning percentages the minimum targets and stops are:

Stop 30 ticks
Target 1 30 ticks
Target 2 60 Ticks

This will ensure I do not exceed 6%.

I know that if I start trading smaller targets the odds are turning drastically against me to the point that the odds of winning over the longer term are virtually zero. Now of course using much larger targets such as this swing trade here the overhead cost is just over 1%. This type of trading approach means I am working smarter and not harder. This is what I'm trying to gravitate to for all trades.

https://futures.io/traders-hideout/23779-day-trading-support-resistance-levels-e-mini-s-p500-futures-2.html#post271989

My background as a licensed CPA brought me in contact with many business owners who got into trouble financially. The common theme was many allowed their overheads to spiral out of control whereby their sales were simply insufficient to support their bloated cost structures. Some survived through drastic cost reductions and many had to close down. I remember one example where a business owner spent $30k on a Persian rug which meant he couldn't make payroll for that month.

The point is trading is a business and overheads (commission and slippage) must be kept under control or the trader will, like any business have cash flow problems and have to close down. The problem is many traders continue to employ scalping strategies blowing up account after account blissfully unaware the impact of slippage and commissions.

Cheers
DJ

Totally agree, this is why I no longer scalp, the math just didn't equate when compared to costs.
Cheers John

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  #176 (permalink)
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Probability vs. RR

The first point Iíll make regarding this topic is that managing your trades based on your PnL will most definitely lead to a trader losing money in the long run. Traders need to manage their trades based on where the market is going to prove them wrong, and where the market is going to prove them right.

Personally, I never set a target on a trade, in my view you automatically sabotaging your trade by using targets as you are limiting yourself, what I do, is I define an area where if the market trades there while Iím on a trade, then I manage my position by trailing my stop (I donít use stops, I click out of trades btw.)

With that being said, from my experience, comparing different timeframes, trading styles, and the technicalities of managing a trade is redundant as we are all different and our decision making process is subjective to how we feel, our account size, etc.

I look at trading in two ways: Risk:Reward (R:R) and High Probability (HP). These normally have an inverse correlation, the higher the probability the worst the R:R.

For example, if you have a trade idea that gives a probability of success of more than 70% and your R:R is 1:1, then you have a great trade idea. If you follow it and do it everyday, in the long run you will make money. On the other hand, if you have a trade idea with a probability of success of 40% but your R:R is 1:6 then you also have a great trade idea that in the long run will make you money. (Iím not sure I put the maths correctly here, but you get the point)

The hard thing to grasp is that the probability and the R:R of a trade idea or setup changes with time and change as the market conditions change and this is where traders tend to get stuck, they make money taking a trade idea over a certain period of time and they get surprised when the trade stops working. Traders need to accept that in order to REMAIN profitable you need to work on yourself everyday. There is no holy grail or trading style that is better than all the others. Just look at Warren Buffet ( a long term investor) and some HFT firms out there. They both make money because they keep on looking for R:R and probability. They accepted that these two are inversely correlated and they work their ways around it with their own ways and habits.

My suggestion is to look at this relationship and start managing your trading by what it is, TRADING. At the end of the day itís a numbers game and no one's opinion is more valid than other's. We all think differently, otherwise, it would be possible for us to buy where other's are selling and vice versa.
Best wishes to all,
G

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  #177 (permalink)
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We should make a new thread called

"Who pays more money in commission, Scalpers or Point Traders?"

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  #178 (permalink)
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Just out of curiosity, who has made a lot of money since 2012 and was it from scalping or point trading?

You don't need to name any figures, I just want to know if anyone had any success with either or since the beginning of this thread.

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