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Interesting video scalping ES...


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Interesting video scalping ES...

  #21 (permalink)
 
Fat Tails's Avatar
 Fat Tails 
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I watched the video, it is fun, but I do not believe in white elephants....

(1) It is a broker's dream, generating lots of commissions, but for any trader having a retail account it is one of the fastest method to blow the account.

(2) ES traded from 16:11 to 16:30 GMT (?) within a 4 tick range between 1133.50 and 1134.50. How many of these setups do occur? To find out, I took a 10 min chart and tried to find bars with a range of 4 ticks or less. The fastest method to do this is to apply an ATR(1) to the ES chart and look at an occassion that ATR(1) fell below 1 point (= 4 ticks) for two consecutive bars during real trading hours.

This is what I found for last week (all times in Eastern Time):

Monday, April 12: 11:20 - 11:40
Tuesday, April 13: 11:20 - 11:40, 11:50 - 12:10, 12:30 - 12:50
Wednesday, April 14: 11:50 - 12:10, 12:40 -13:00, 14:40 - 15:20 (outlier)
Thursday, April 15: 10:50 to 11:10
Friday, April 16: none

This means that you get about 8 specific setups per week, where you can trade that style, if you do not pay commissions. Out of the 8 setups, 7 occured between 10:50 and 13:00, so this type of setup will be found during the two hours around noon.

(3) Trading style: The trading style is nothing else than market making. To be a market maker you usually need some privileges, such as not paying commissions. You cannot do this with a retail account.

(4) The black swan effect: Any mean reversion method will yield you a large loss, once price moves out of the range. You will get a couple of small gains and the game will end with a larger loss, when the breakout occurs. So even if the guy hits the exit button very fast, his loss will by 3-4 ticks at least, while he gained 1 tick on each of his wins. So he needs a win rate > 75%. By the way the video stopped at the very moment when the breakout occured, so he does not show his loss.

(5) You cannot predict that prices will stay in a trading range of 4 ticks for 20 minutes, but you can try 10 times and maybe it will work once. You only need to publish the one video, when it actually worked.

I agree with Sam. This guy is selling snake oil, and I am certainly not going to buy it, LOL. Keep your precious money and enjoy the video.

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  #22 (permalink)
 
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 sam028 
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vast View Post
Would love to get a translation of what he is saying.
ES is liquid enough to do that.
Jugador do you understand French?

I tried to translate and recording it, but unfortunatly I was laughing every 30 seconds, impossible to finish it...

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  #23 (permalink)
 
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 Fat Tails 
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Ne fait pas perdre ton temps, cela ne se traduit pas.


sam028 View Post
I tried to translate and recording it, but unfortunatly I was laughing every 30 seconds, impossible to finish it...


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  #24 (permalink)
Jugador
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sam028 View Post
I tried to translate and recording it, but unfortunatly I was laughing every 30 seconds, impossible to finish it...

Okay, well we appreciate you trying to help and giving it a shot. Your a good man!

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  #25 (permalink)
 
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 Fat Tails 
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Just a few minutes ago, there was price action that was similar to the prices I had seen in the video. The trading range on the chart below is 5 ticks wide. It lasted for 22 minutes. However, the volume was significantly lower compared to the volume shown on the video.

This was tradeable from the long side, with an entry 1 tick above the lower line with a target of 4 ticks and was filled when the breakout occured to the upside.

Even if the video is a joke, noon time is definitely a setup for mean reversion strategies.

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  #26 (permalink)
Jugador
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Fat Tails View Post
Noon time is definitely a setup for mean reversion strategies.

Also, late night. I installed the "Open E Cry" software (the same he uses in the video) a couple of days ago. Last night I got up at 1:00 am and the market was perfect, with about a 3 tick range for 30 minutes.

I made about $400 trading 5 lots. However, like you, I am a bit skeptical about the fills. I'd have to see it "live" and not a demo to believe it.


As for as this being a "white elephant", I think it's feasible if you trade size, and could negotiate a "low" commission rate.

But, first things first, I want to see these fast fills on a live account.

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  #27 (permalink)
 
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 Fat Tails 
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Hi Jugador,

the point is that as a trader you would always think about your competitive advantage. I am a retail trader, so this has some advantages and some disadvantages.

Advantages:

(1) I have ultra low fixed cost: my fixed cost including rent, data, depreciation for equipment and software is below USD 200,- per month
(2) I always get reasonable fills and can feed off the menus of the big guys, as i am trading moderate size in liquid markets
(3) I can choose, when to trade a market and when not to trade, I just need a few trades per day to be happy.

Disadvantages:

(4) Being located in Central Europe, I am relatively far away from the exchange (about 120 msec to Chicago)
(5) I have a higher cost per round turn than exchange members
(6) I have limited technical support
(7) I have limited research capabilities

(4) and (5) keeps me out of high frquency trading. Because of (6) I am not running an automated system. Because of (7) I am not a fundamental but a technical trader. My basic understanding of probabilities teaches me to look for frequent trading opportunities and limited market exposure. My basic understanding of psychology tells me that I should look for an approach with a high win rate, as I am a bad loser, LOL. Note that this is not required to obtain a positive expectancy.

So my personal comfort zone is a trade-off between

- the competitive position of the retail trader
- some basical concepts of probability
- my own psychological limits

Scalping the way shown in the video means competing with HFT of Goldmann Sachs and a lot of trading houses that are sitting in the building next to CME. I am not committing suicide, but will stay in a niche, where these other guys can not beat me up easily. It is a sniper approach or if you like, I am just the vulture who feeds off the big guys, who make things happen.


Jugador View Post
As for as this being a "white elephant", I think it's feasible if you trade size, and could negotiate a "low" commission rate.

But, first things first, I want to see these fast fills on a live account.


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  #28 (permalink)
Bamizo77
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Very Impressive... Am suprised it actually works... Any other videos like this.. (in ENGLISH)??

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  #29 (permalink)
Bamizo77
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sam028 View Post
I tried to translate and recording it, but unfortunatly I was laughing every 30 seconds, impossible to finish it...

Try again and finish it this time, and you may have more to laugh about.. all the way to the bank...

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  #30 (permalink)
 
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 gabga100 
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Here is the theory behind it ......

If there is a big move against you you lose big.... no such thing as a riskless trading strategy



I can make the translation this evening if anybody interested ...

You know what you know but you do not know what you do not know.
You do not see things how they are, you see things how you are.
In life you do what you want but you do not want what you want.
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Last Updated on May 13, 2010


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