Who makes more money. Scalpers or Point Traders - Traders Hideout | futures io social day trading
futures io futures trading


Who makes more money. Scalpers or Point Traders
Updated: Views / Replies:38,642 / 177
Created: by Rad4633 Attachments:16

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ė all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donít need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 16  
 
Thread Tools Search this Thread
 

Who makes more money. Scalpers or Point Traders

  #31 (permalink)
Identify Evaluate Execute
Mercer Island WA
 
Futures Experience: Advanced
Platform: Ninjatrader/Strategy Desk
Broker/Data: Various
Favorite Futures: TF/NQ/ES/Stocks
 
djkiwi's Avatar
 
Posts: 561 since May 2010
Thanks: 980 given, 1,524 received


arnie View Post
Here's an example of something that I could have taken a bit further.

Now add these types of trades 8 or 10 times per day and we can easily see commissions adding up.

@arnie, it's also the slippage that is the killer. Some people forget about slippage altogether. Every time you hit that market button prematurely it's costing you money. If you have time a good idea is keep a track of this in your journal. For example detailing trades you prematurely exit, whether the decision to exit would have resulted in a win or a loss and the various transaction costs. That's is how I identified the issue.

I have a complete record of commissions and slippage on all of my trades. Once I started to really focus on expenses and started to optimize my transaction costs with my targets the improvement in my trading results was profound.

Part of this process was to put a complete stop to exiting prematurely as it was affecting my return from higher transaction costs and also lost opportunity (ie. after I exited price would turn around and hit my original target).

All of my entries are based on signals but once in the trade it is managed by an ATM strategy which will manage the exit criteria automatically. Having said that the trade is only exited in very rare circumstances.

Cheers
DJ

Reply With Quote
The following 4 users say Thank You to djkiwi for this post:
 
  #32 (permalink)
Elite Member
Greensboro NC
 
Futures Experience: None
Platform: TOS/ NT Dorman
Favorite Futures: ES TF CL
 
Rad4633's Avatar
 
Posts: 1,352 since Sep 2011
Thanks: 2,651 given, 886 received


djkiwi View Post
@arnie, it's also the slippage that is the killer. Some people forget about slippage altogether. Every time you hit that market button prematurely it's costing you money. If you have time a good idea is keep a track of this in your journal. For example detailing trades you prematurely exit, whether the decision to exit would have resulted in a win or a loss and the various transaction costs. That's is how I identified the issue.

I have a complete record of commissions and slippage on all of my trades. Once I started to really focus on expenses and started to optimize my transaction costs with my targets the improvement in my trading results was profound.

Part of this process was to put a complete stop to exiting prematurely as it was affecting my return from higher transaction costs and also lost opportunity (ie. after I exited price would turn around and hit my original target).

All of my entries are based on signals but once in the trade it is managed by an ATM strategy which will manage the exit criteria automatically. Having said that the trade is only exited in very rare circumstances.

Cheers
DJ

Thank you your continuing support of this thread, also one should be aware of flipping, even if you are a scalper and you are wrong and flip there is a 2 tick slippage incurred on top of the amount you went to prove you were wrong. This is my personal experience through 3 different brokers when I reversed my position. I dont think most traders realize this when they flip until they see their PnL displayed when trade is over.

Reply With Quote
The following user says Thank You to Rad4633 for this post:
 
  #33 (permalink)
Elite Member
Malaysia
 
Futures Experience: Beginner
Platform: Multichart DT
Broker/Data: MB Trading
Favorite Futures: Fx
 
torroray's Avatar
 
Posts: 273 since Nov 2009
Thanks: 52 given, 59 received



Rad4633 View Post
Thank you your continuing support of this thread, also one should be aware of flipping, even if you are a scalper and you are wrong and flip there is a 2 tick slippage incurred on top of the amount you went to prove you were wrong. This is my personal experience through 3 different brokers when I reversed my position. I dont think most traders realize this when they flip until they see their PnL displayed when trade is over.

I am surprise this subject rarely brought up in this forum, maybe most are swing or position trader. For a short term trader this is one of the problem faced when managing trade. You have to change your opinion about the market and manage your risk when you are on the wrong side of the trade. You dont want risk to exceed the limit of your trading plan.

For trader trading longer time frame, when a trade didnt go as plan theres a risk management function in place that limit the trade from excessive loss and the trader wait for the next trade setup to happen.

Reply With Quote
 
  #34 (permalink)
Banned: Piracy
Magadan Russia
 
Futures Experience: Master
Platform: NT
Favorite Futures: FDAX
 
Posts: 79 since Nov 2010
Thanks: 17 given, 14 received

leggers

Reply With Quote
 
  #35 (permalink)
Elite Member
Austin, TX
 
Futures Experience: Master
Platform: ninjatrader, r-trader
Favorite Futures: CL, NG, TF, NQ, YM, GC, ES
 
liquidcci's Avatar
 
Posts: 862 since Jun 2011
Thanks: 609 given, 1,051 received

I don't think anyone can say who makes more money. There are scalpers who do very well, day traders with higher point targets that do very well, swing traders that do very well. There are also a whole lot of people who lose quite a bit of money using any of these styles.

There are so many ways to make money in the market and so many ways to lose it. I don't think anyone style can be classified as making more than another especially since that is a metric that would be hard to measure. I don't scalp but just because I do well with my style does not mean it makes more than another style. A great read is the Market Wizard series which I am sure many have read here. If there is anything to learn in those books is people make money in the markets in diverse ways.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."

Last edited by liquidcci; October 18th, 2012 at 11:44 AM.
Reply With Quote
The following 9 users say Thank You to liquidcci for this post:
 
  #36 (permalink)
Elite Member
Greensboro NC
 
Futures Experience: None
Platform: TOS/ NT Dorman
Favorite Futures: ES TF CL
 
Rad4633's Avatar
 
Posts: 1,352 since Sep 2011
Thanks: 2,651 given, 886 received


liquidcci View Post
I don't think anyone can say who makes more money. There are scalpers who do very well, day traders with higher point targets that do very well, swing traders that do very well. There are also a whole lot of people who lose quite a bit of money using any of these styles.

There are so many ways to make money in the market and so many ways to lose it. I don't think anyone style can be classified as making more than another especially since that is a metric that would be hard to measure. I don't scalp and make money but just because I do well with my style does not mean it makes more than another style. A great read is the Market Wizard series which I am sure many have read here. If there is anything to learn in those books is people make money in the markets in diverse ways.

Thx for the reply, also I ll throw this one no one talks about the trader who waits for trend days scales in loads up and makes his year of those few days. I know one who does this, there are many ways you have to find your way. Thanks Again
R

Reply With Quote
The following 4 users say Thank You to Rad4633 for this post:
 
  #37 (permalink)
Elite Member
Bala, PA, USA
 
Futures Experience: Intermediate
Platform: NinjaTrader
Broker/Data: Mirus, IB
Favorite Futures: SPY, Oil, Euro
 
monpere's Avatar
 
Posts: 1,858 since Jul 2010
Thanks: 300 given, 3,276 received


djkiwi View Post
@monpere

The posted example merely shows the differences between scalping and day/swing trading using multiple instruments. It was not based on factual numbers. Thanks for pointing out this post as it enables me to use real life numbers into the model to compare scalping with day/swing trades.

https://futures.io/traders-hideout/18809-probability-101-a-4.html#post205362

Your post implies you typically use a 6 tick stop 12 tick target and place about 41 trades per day with 59% probability and 2/1 risk reward ratio. If this is not representative let me know and I will update the numbers. I've put these assumptions in the model in the scalp 1 column

The first observation is your 59% and 2/1 risk reward is only 1% less than Case 6 in Anagami's model shown here.

https://futures.io/psychology-money-management/19870-why-7-difference-between-failure-success-trading.html#post217834

If this is your level of expectancy over a longer timeframe then you are operating at a level few can or ever achieve. In fact you are excelling in spite of the deck being heavily stacked against you.

What we need to find out is can the average aspiring scalper achieve profitability given the huge hurdle they face with commissions and transactions costs?

1. CL Scalp Trades

...

To answer this question I've also included other scenarios, labeled scalps 2 - 6. These scenarios are the same except they include a reduction in the expectancy from your 60% to 30% in row 19 in 5% increments. This enables us to see the changes in net profitability as the expectancy reduces.

To get a feel of trader expectancy lets look again at Anagami's model. He points out with a 2/1 risk/reward case 3: 40% expectancy is a likely scenario suggesting improved traders and Case 4: 45% for expert traders.

So even if a scalper is classified as improved/competent and achieves 40% expectancy as shown in Scalp 5 he will still make a loss of $12k (Cell I46) mainly because he is getting whacked with significant trading expenses.

He would make $73,800 (Cell I35) in pre-expense margin then get whacked with $86,100 (Cell I43) in trading expenses. This is primarily because of the increased slippage from the increase in losers. Commissions are fixed at $31k per year based on 41 trades per day.

Even an expert trader achieving Case 4: 45% would be whacked with 25% trading expenses. His whack is $81k trading expenses resulting in a measly $48k in return for all his hard work.

Note the above numbers are actual numbers of exactly what you will earn based on the numbers presented and merely changing the expectancy. It is simple math.

2. Day/Swing trading

For the day/swing trader I'm going to use my own budgeted expectancies. Recently I've doubled my contracts per trade from 2 to 4 and am now averaging 2 trades per day compared to a single trade before.

My budgeted expectancy is 60% achievement of the first target and 35% the second target. These assumptions are shown in the Swing 1 column.

Here is a chart example using my 30 tick stop/30 tick first target and 60 tick second target based on front-running the swing pullback and using volume profile and cumulative delta as an overlay in the final decision. These target numbers have been optimized to take into account transaction costs.

It should be noted setting wider targets can still result in a sufficient number of trades. The chart shows 9 trading opportunities (red arrows for shorts and blue for longs) over 4 days for CL. The 30 tick stop is in red, and first 30 tick target at the first yellow bar and 2nd 60 tick target at the second yellow bar.

...

On Anagami's scale my budgeted performance would approximate Case 3:40% improved trader i.e. nothing spectacular. It's hard to categorize it accurately as he is only using 2:1 risk reward in the model whereas my 1st target is based on 1:1 risk reward and 2nd target 2:1.

Now, if you look at the Swing 1 column if I'm able continue to achieve by budgeted expectancy of 60% and 35% over the course of a year then this should result in a net profit of $153,000 (Cell M46) after all expenses. So even with my mediocre expectancy I'm able to achieve solid returns and easily cover my transaction costs without operating at a super high competence level. The point is I don't need to be a spectacular trader because I don't have to cover the significant overhead of commissions and slippage like the scalper.

Furthermore, my expenses shown in Swing 1 are only $26k (Cell M43) or 6% of revenues. Compare this to a similarly competent scalper achieving Scalp 5 - 40% expectancy where his expenses are $86k, plunging the trader into a loss situation of $12.3k.

My longer term goal is to periodically add 2 additional contracts (See row 9) providing minimum performance benchmarks are met. By scaling up the corresponding improvement in the post expense margin is shown in row 46.

The overall point is for traders to review their cost structures and take action where appropriate to optimize their targets/stops and transaction costs. If you are a struggling scalper and cannot figure out where you are going wrong this is a good area to start.

I will tidy up this spreadsheet and include a copy so people can play around with it themselves as I think it's a critical part of money management which is pretty much overlooked.

Cheers
DJ

More theoretical spreadsheets. Ok, Firstly, I don't know who is Anagami, and don't know what gives him/her the credential to classify beginner/competent/expert traders etc. From my perspective, those are assumptions that may or may not have anything to do with reality. To me, any deductions derive from these, are questionable at best.

Ok, let's get back to reality. Firstly, when you mention 30%, 60% etc, I think you are talking about win ratio, not expectancy, so I'm going to assume that to be the case. With the original spreadsheet, in real life, if you are a scalper and you are trading 7 different instruments at the same time, not only you need to re-evaluate your trading approach, you possibly need to have your head examined. Numbers derived from such an approach is not based on reality.

To be successful as a scalper you need to have a higher win ratio then a swing trader because your risk reward ratio will be smaller, so why are we calculating numbers for scalping methods with 30%, 40% win ratio? Given typical 1:1, 1.5:1, 2:1 real life scalping risk rewards? That is a futile exercise, and conclusions drawn from that have little value.

Also, in your second spreadsheet, is the scalper trading 1 contract, and the swinger trading multiple contracts (given that he has multiple targets)? Is that a worthwhile comparison when looking at profit numbers? But, I may be looking at the spread sheet layout wrong.

I'm glad you showed a chart with theoretical trades. That's good, but I'm assuming that like most you are a discretionary trader. So my question is, how likely is it that you would have traded these theoretical trades optimally enough to even approach the theoretical numbers you are relying on? If you chicken out on any of the targets, or move your stop too soon, etc. etc. Those numbers that you so painstakingly crafted, go right out the window, because reality just caught up to you.

I'm not questioning who makes more money, I just think the relevance of determining these numbers like this is misleading. I think that can only be determined realistically by comparing 2 real life specific methods, and it can go either way depending on the specific systems. Here's a suggestion, choose a trading day, any trading day, and determine the profitability for that trading if you were to trade absolutely perfectly with your chosen swing method, then we'll compare that to a scalping method trading the exact same day. Or, just apply your day/swing method to the charts that I posted in the other thread.


Last edited by monpere; October 18th, 2012 at 01:08 PM.
Reply With Quote
The following 4 users say Thank You to monpere for this post:
 
  #38 (permalink)
Identify Evaluate Execute
Mercer Island WA
 
Futures Experience: Advanced
Platform: Ninjatrader/Strategy Desk
Broker/Data: Various
Favorite Futures: TF/NQ/ES/Stocks
 
djkiwi's Avatar
 
Posts: 561 since May 2010
Thanks: 980 given, 1,524 received

@monpere


monpere
Ok, let's get back to reality. Firstly, when you mention 30%, 60% etc, I think you are talking about win ratio, not expectancy, so I'm going to assume that to be the case. With the original spreadsheet, in real life, if you are a scalper and you are trading 7 different instruments at the same time, not only you need to re-evaluate your trading approach, you possibly need to have your head examined. Numbers derived from such an approach is not based on reality.

I think I mentioned this was merely an example in the last post.


monpere

To be successful as a scalper you need to have a higher win ratio then a swing trader because your risk reward ratio will be smaller, so why are we calculating numbers for scalping methods with 30%, 40% win ratio? Given typical 1:1, 1.5:1, 2:1 real life scalping risk rewards? That is a futile exercise, and conclusions drawn from that have little value.

The point is the win ratio must be higher to cover the horrendous transactions costs. I'd be surprised that many scalpers can achieve a 2/1 risk/reward ratio and anything higher than a 40% win ratio. If they can't achieve that they will blow up. We know this likely to be the case because most retail traders are scalpers and 90% of that group lose all their money or quit.


monpere
Also, in your second spreadsheet, is the scalper trading 1 contract, and the swinger trading multiple contracts (given that he has multiple targets)? Is that a worthwhile comparison when looking at profit numbers? But, I may be looking at the spread sheet layout wrong.

All this shows is an optimized swing strategy v an unoptimized scalping strategy. From what I can see our approaches are fundamentally the same. We both front run the swing but use different front run criteria. I'm suggesting the swing approach is optimized for transaction costs hence the larger targets whereas the scalping strategy is potentially leaving quite a bit of money on the table. Why have 2 new bosses (broker and market maker) and pay for their BMWs when they could be parked in your garage?


monpere
I'm glad you showed a chart with theoretical trades. That's good, but I'm assuming that like most you are a discretionary trader. So my question is, how likely is it that you would have traded these theoretical trades optimally enough to even approach the theoretical numbers you are relying on? If you chicken out on any of the targets, or move your stop too soon, etc. etc. Those numbers that you so painstakingly crafted, go right out the window, because reality just caught up to you.

It's a good point. First point is I'm trading 7 instruments (ES, FDAX, NQ, CL, GC, 6E and TF). This multi-instrument approach has revolutionized my trading in the sense that I'm able to assess signal strength and make a choice of which instrument is more likely to result in a positive outcome. I use some volume profile for this (See below).

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


For example if we look at oil right now we can see it in a fairly balanced state with a fairly symmetrical distribution. I'm going to be much more interested in signals generated with confirmed rejection at the fringes of the value area than anywhere else. I did have a signals on oil but trade location was wrong.

Because signals are only generated based on historically volatile periods of the night/day it requires a 24 hour approach.

For example if I'm looking at the FDAX and gold and they support a trade based on the current volume profile before I go to bed I will set alerts which will flow through on my tablet through teamviewer and wake me up on a signal. I've usually got time to get up as price moves around. I only ever use limit orders. These targets are set through ATMs and I've made it so they cannot be changed. I can close the trade prematurely which I was doing on occasion but have stopped this ill-disciplined practice completely. The biggest issue is not getting filled with the limit orders.


monpere
I'm not questioning who makes more money, I just think the relevance of determining these numbers like this is misleading. I think that can only be determined realistically by comparing 2 real life specific methods, and it can go either way depending on the specific systems. Here's a suggestion, choose a trading day, any trading day, and determine the profitability for that trading if you were to trade absolutely perfectly with your chosen swing method, then we'll compare that to a scalping method trading the exact same day. Or, just apply your day/swing method to the charts that I posted in the other thread.

All I'm doing in these posts is putting forward an opinion that the smaller the targets people trade the higher the transaction costs. The higher the transaction costs the better the skill level required to cover these costs. If it helps someone great. I'm certainly not trying to prove a point that any system is superior to another. I'm not sure an example will help too much. I can pick a day which has 2 winners on 4 contracts on oil which is $3600. You could have a day with 20 winners and no losers.

Cheers
DJ


Last edited by djkiwi; October 18th, 2012 at 06:15 PM.
Reply With Quote
The following 11 users say Thank You to djkiwi for this post:
 
  #39 (permalink)
Elite Member
Bala, PA, USA
 
Futures Experience: Intermediate
Platform: NinjaTrader
Broker/Data: Mirus, IB
Favorite Futures: SPY, Oil, Euro
 
monpere's Avatar
 
Posts: 1,858 since Jul 2010
Thanks: 300 given, 3,276 received


djkiwi View Post
@monpere
...
All this shows is an optimized swing strategy v an unoptimized scalping strategy
...

I'm not entirely sure why you would want to make such a comparison... How are the results of such a comparison meaningful? Most of the assumptions, and the premise of the entire approach is unusual.

Reply With Quote
The following user says Thank You to monpere for this post:
 
  #40 (permalink)
Elite Member
Greensboro NC
 
Futures Experience: None
Platform: TOS/ NT Dorman
Favorite Futures: ES TF CL
 
Rad4633's Avatar
 
Posts: 1,352 since Sep 2011
Thanks: 2,651 given, 886 received


@monpere
We all know your a excellent scalper, and if you would answer this question for me. From your experience and possibly experience of other scalpers, do ya trade using only one time frame which is usually smaller?

If one gives this further thought one could say you could scalp using medium time frames as well, your targets would be greater as well as your risk, @Gary Im sorta thinking of you, am I correct?

@djkiwi
I appreciate all the charts and info you have supplied and if one isnt a skilled scalper they better take note of your spreadsheets before they find out the hard way, many thx again. I am still undecided as to the way I want to make money in the markets, I do like scalping 2 pts a day with the ES and be done in a hr or less, and I can honestly sit down and take a solid trade at any time of the day scalping. I can also trade for more if I want, its up to me Ive been scalping like this for 6mths or so. I have larger charts that give me a bias to direction. I did take one trade for 12 pts off my big charts a few weeks back it just depends on my feel. But as you noted commissions(which doesnt concern me) but slippage does, I noted in a reply a few posts back if one flips which you will have to do at some time or another if you scalp IMO, you have a additional 2 ticks of slippage incurred with compounds to the amount you went to prove the trade wasnt going to work out.


All this being said Swing trading is definitely easier since you give yourselves a very large room for error, but if you cant trade, a trader will still fail at swing trading, other than slippage scalping and swing are the same to me. But the whole point of this thread was "SHOW ME THE MONEY" movie quote Core data is hard to come by in trading, I was hoping there were articles, rankings etc out there somewhere,lol

In closing I want to note I am full time trader that depends on my trading income, most dont as you already know


Thx again for everyones input
R

Reply With Quote
The following 6 users say Thank You to Rad4633 for this post:

Reply



futures io > > > Who makes more money. Scalpers or Point Traders

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Jigsaw Trading: TBA

Elite only

FuturesTrader71: TBA

Elite only

NinjaTrader: TBA

Jan 18

RandBots: TBA

Jan 23

GFF Brokers & CME Group: Futures & Bitcoin

Elite only

Adam Grimes: TBA

Elite only

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Do Individual Day Traders Make Money? AuburnTrader Traders Hideout 4 July 19th, 2012 10:21 PM
Credit Suisse makes life a little harder for aspiring rogue traders kbit News and Current Events 0 December 15th, 2011 08:45 PM
Goldman Sachs Traders Lost Money kbit News and Current Events 5 November 10th, 2011 08:56 PM
Money management questions for CL traders vegasfoster Psychology and Money Management 9 May 2nd, 2011 02:36 AM
how many traders trade with point & figure charts- carlos Traders Hideout 3 April 24th, 2010 11:05 PM


All times are GMT -4. The time now is 11:18 AM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-16 in 0.24 seconds with 40 queries on phoenix via your IP 54.226.34.209