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

  #51 (permalink)
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monpere View Post
Again a mirage. I have a strategy that works with 6 tick stop 12 tick target. Why do I want to go change the stop/target to optimize? If I want to make more money, I increase my size. I make more money, my broker makes more money. If I want to increase my stop or target, I go back to the drawing board and start my backtesting again from scratch, and spend the next 2 years fiddling with it, because it's a new strategy. You make the assumption that if I change my targets, I will take take half the number of trades. That is a total nonsense number pulled out of thin air. No guarantee as to the number of trades you will get, it depends on the specifics of your strategy. You may increase your target, take half the number of trades, and also turn your strategy into a losing one. This kind of logic looks good on spread sheets, but is basically worthless in reality.

I made 1 million dollars last year and paid $100k for commissions, you made 1 million dollars last year and paid $10 for commissions, which one of us made more money last year? Which one of our brokers made more money last year? What do I care which one of our brokers made more money last year? I made 1 million and you made 1 million, who cares what our brokers made? If my broker calls me up tomorrow and says he's lowering my commissions, great!, but I'm not gonna change the parameters of a profitable strategy, solely for the purpose of paying less money to my broker.

I suggest we all spend less time fiddling with spreadsheets and more time developing strategies that make money in the real world.

Monpere I respect your trading but disagree kindly with the business concept, whichever business nets the highest with the lowest overhead wins(overhead could be time invested to make the million a yr)

You guys have been great, I was thinking I might start trading a small % of my account with my other broker on swing trading and keep my scalping the same, Hell in a yr I ll know for myself which one is better, As @Silvester17 eluded in a earlier reply, best case is range days scalp, trend days scale in and second push load up this is IMO. I watched a recent webinar where the speaker said only trade time frame on your main chart if you look at other time frames only trade off their time frames. Hence issue I have is i see target on big charts,take trade on small but then dont close at target on small and then i ride ALL the retrace back on my small so Im taking heat which i dont like on a scalping chart till it drops and goes back to my target on my big. What im saying is I caused myself pain looking at different time frame charts. Ok I just told u how im fixing it scalp on small scalp,swing or points trade on big no more BS combining the different times, bc noise becomes issue if you do. Blah Blah Blah its Saturday Im leaving my pc. Hope everyone has a great weekend, c ya Mon

Thx again for all the replies
R


Last edited by Rad4633; October 20th, 2012 at 01:54 PM.
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  #52 (permalink)
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pfranz View Post
I'd like to ask frequent traders (especially scalpers) how do they rate latency.
I mean, do you think latency makes a big difference in your returns?
Is it important to get a submission confirmation in 50ms rather than 250ms? And to receive quotes in 20ms rather than 100ms?
I think it should be taken into account when asking who makes more money, because if latency makes a difference for a scalper,(s)he could make more money than a slower trader having a low latency,but could end up doing worse than a slower trader if latency is high.

The answer is no one knows, so im going to find out for myself, I hate testing easier if someone does it for us

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  #53 (permalink)
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monpere View Post
Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).

If I see this right, this is a two range/renko chart. On CL, this small range bar can print in a nano second. My question for you is this; how do get your order in during times of high volatility and price is moving really fast?

I know you can tell right where the bars will finish but still on a two range, this happens really fast.

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  #54 (permalink)
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Rad4633 View Post
Monpere I respect your trading but disagree kindly with the business concept, whichever business nets the highest with the lowest overhead wins(overhead could be time invested to make the million a yr)

You guys have been great, I was thinking I might start trading a small % of my account with my other broker on swing trading and keep my scalping the same, Hell in a yr I ll know for myself which one is better, As @Silvester17 eluded in a earlier reply, best case is range days scalp, trend days scale in and second push load up this is IMO. I watched a recent webinar where the speaker said only trade time frame on your main chart if you look at other time frames only trade off their time frames. Hence issue I have is i see target on big charts,take trade on small but then dont close at target on small and then i ride ALL the retrace back on my small so Im taking heat which i dont like on a scalping chart till it drops and goes back to my target on my big. What im saying is I caused myself pain looking at different time frame charts. Ok I just told u how im fixing it scalp on small scalp,swing or points trade on big no more BS combining the different times, bc noise becomes issue if you do. Blah Blah Blah its Saturday Im leaving my pc. Hope everyone has a great weekend, c ya Mon

Thx again for all the replies
R

The optimum way would be looking at your higher time frame to spot you areas of interest, then go to your smaller time frame to pin point your entry and then go back to your higher time frame to follow prices into your designated areas of interest, again.

The problem is that when we go to our lower time frame we tend to stay there. The higher time frame is no longer needed (considered).

If I become half a percent smarter each year, I'll be a genius by the time I die
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  #55 (permalink)
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PandaWarrior View Post
If I see this right, this is a two range/renko chart. On CL, this small range bar can print in a nano second. My question for you is this; how do get your order in during times of high volatility and price is moving really fast?

I know you can tell right where the bars will finish but still on a two range, this happens really fast.

This is not a regular Renko chart, it is a customized Renko. I only trade reversal bars, on this size chart reversal bars are generally between 6 and 8 ticks. As you can see near the right edge of the chart, there were roughly 1000 bars produced for the entire session, that is around the perfect amount of bars I look for in any instrument. That number of bars is typical for the CL on that chart.

My trading is also semi automated. I can see a signal setting up generally 5 to 10 bars in advance, the beauty of renko bars is that once my indicator pattern starts forming, I know the very next up or down bar will be an entry signal. So I can put in my entry order 4 or 5 bars in advance, if the bar does not close in my direction then the entry is automatically adjusted to where the next bar in my intended direction will close, and so on, until the next bar closes in the right direction or the order canceled when the pattern ceases to exist.

Once I put in that order, that is the extent of my involvement in the trade, the rest takes care of itself. I've come to realize that my trading style is so different then typical traders that I tend to be an oddball. I only need to look at a chart for 5 seconds to determine if I have a trade or not, because I trade patterns, the same basic 2 patterns for years, and I can recognize them in a split second while they are forming.

The CL can print many fast bars at times, my coding takes care of that as well. You see near the chart right edge '29% fast', you may also see text sometimes that say '2Fast', or the bars are darker then the surrounding bars, that is my indicator saying this action is too fast to be traded, and so it will not allow me to enter any trades in that area. I know a lot of beginning traders read these posts, I would not advise inexperienced traders to trade the CL.


Last edited by monpere; October 20th, 2012 at 03:28 PM.
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  #56 (permalink)
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monpere View Post
Again a mirage. I have a strategy that works with 6 tick stop 12 tick target. Why do I want to go change the stop/target to optimize? If I want to make more money, I increase my size. I make more money, my broker makes more money.

Slightly off-topic, but @monpere, since we all know you have a mostly perfect automated trading system, why aren't you trading 100 lots or more per? Why haven't you opened a multi-billion dollar hedge fund? I mean just go in the code, and change the number of contracts and add a few zeros at the end.... Why not trade 100's of products simultaneously?



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  #57 (permalink)
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pfranz View Post
I'd like to ask frequent traders (especially scalpers) how do they rate latency.
I mean, do you think latency makes a big difference in your returns?
Is it important to get a submission confirmation in 50ms rather than 250ms? And to receive quotes in 20ms rather than 100ms?
I think it should be taken into account when asking who makes more money, because if latency makes a difference for a scalper,(s)he could make more money than a slower trader having a low latency,but could end up doing worse than a slower trader if latency is high.

The more you are a scalper (smaller the target, less time, more frequency) the more latency will matter. And the more you are a swing trader (bigger target, more time, less frequency) the less latency will matter.

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.

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  #58 (permalink)
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Mike,
granted it is like that, but my question is: HOW MUCH?
Is anyone able to translate higher latency to money, as if commissions were higher?
How much - in terms of money - does passing from latency x to latency y imply, given that your trading style has z profit per trade?
When exactly is an increase in latency not important,and when must it be taken into account?
I ask because it seems noone cares for latency,not even scalpers.

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  #59 (permalink)
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pfranz View Post
Mike,
granted it is like that, but my question is: HOW MUCH?
Is anyone able to translate higher latency to money, as if commissions were higher?
How much - in terms of money - does passing from latency x to latency y imply, given that your trading style has z profit per trade?
When exactly is an increase in latency not important,and when must it be taken into account?
I ask because it seems noone cares for latency,not even scalpers.

Yes of course. Frequency and latency go hand in hand. Ever heard of High Frequency Trading? These guys have specialized FPGA hardware executing orders (not even at the software level, but right on the chip) because latency is so critical. At the Aurora facility, the CME makes everyone use a 1000ft cat5 cable because if someone had a 500ft cable then those few microseconds would give them a big advantage.

In terms of what you, an individual can do, you are dealing in microseconds, already way slower than any serious HFT firm. The best you can do is not scalp, that solves all issues. If you insist on scalping, then you can still be profitable even if you are 250ms away from the exchange. Once you are consistently profitable, then to improve your profits you can get physically closer to the exchange, like hosting in Chicago near Aurora. This will be a primary benefit to automation only, not discretionary traders.

In general terms, don't worry about latency as a retail trader. The solution is simple - don't scalp, don't increase frequency. When you get to the point where you know through your own research that latency is directly impacting your profitability, then you can move to Chicago (either yourself, or your hardware).

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
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  #60 (permalink)
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@ Monpere

The issue I have with your posts in this thread is you are promoting/defending a system of extremely small targets that has virtually a zero chance of success. Because you have been on this forum for awhile the danger is some people may start believing it's a viable system and start trading it live.

In this post below you state:

"2:1 Risk/reward ratio. I can post this chart everyday for the next week if you want, the results are always the same, around 60%-65% win ratio"

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

Again, if we go back to Anagami's research your claimed figures of 2:1 and 60%+ win ratio puts you in case 6 (Liar). He states:

"For 60% winning at 1:2, the ratio is about 39 - absolute mastery of mind, method, and money, combined with experience. I AM THE MARKET. Monstrous edge of a trading mystic.

I'm not sure 60% at 1:2 RR is attainable... but you never know. Until I see somebody's trading records, I'm calling this the LIAR level (if you exist, speak up!)".

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

You dismiss Anagami's research out of hand but provide no viable alternative to what the typical win rate of a normal scalper is. I've never heard of anybody able to achieve your claimed 2:1 RR and long term 60%+ win rate. If they are, they probably aren't writing in this forum but sitting in Goldman Sachs making $10 million+ a year.

Frankly, whether you are achieving such a high return is not the issue. The issue and the thrust of my posts is to point out that the odds of a trader achieving success with such small targets is extremely low and should be avoided wherever possible.

My Spreadsheet Analysis

The spreadsheets I've presented are simple mathematics not theoretical. Any trader that inputs his typical risk/reward ratio, % win rate, number of trading days, targets, stops, slippage and commission that is exactly what he should earn in a given year. That can be the budget by month to measure performance.

Variable Expenses

Also to suggest commission costs shouldn't matter and not having even a basic understanding of slippage costs stating 1/2 tick on oil when the reality is 1.5 + will cause problems when profitability starts to fall.

In my experience business owners who don't understand or manage their costs have a higher probability of failure. This is because when business is good costs don't matter as they still profit. Once their business profitability starts to fall due to the economy, increased competition or other factors their bloated costs catch up with them which can have disastrous effects as they don't have the cash reserves to see them through the down time. I've seen some ugly situations in this regard.

Exactly the same principle applies to trading. Trading doesn't always go well. If for some reason a trader who scalps and their performance starts to falter and fall to 2:1 RR and 40% win rate, the trader will start losing money. Simple mathematics.

As an expert in cost accounting I will also say this. Trading variable overhead (commissions and slippage) is more dangerous for scalpers than the variable overhead of a business that sells product. This is because variable overhead of a product based business generally increases as revenue rises. For example if there is demand for your product you may set up additional temporary retail distribution centers statewide when there is demand. If demand drops then you close the temporary centers therefore keeping the ratio between revenue and costs constant.

For trading there is no relationship with revenue and no such luxury to reduce costs. Whether you are making money or not you will still incur the commission and slippage. The problem for the retail scalper is when their win/rate reduces the slippage is compounded resulting in much higher losses than the person trading higher timeframes. Again simple mathematics.

Cheers
DJ

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