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I want profit 1 tick per trade , Can I do that ?


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I want profit 1 tick per trade , Can I do that ?

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  #1 (permalink)
casablanca
 
 
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Hello

i want profit 1 tick per trade , for example sell from price (3508 to 3507) or buy from ( 3510 to 3511) for get 1 tick only and relying on lots of contracts , so i want to know Will there be problems with the Spread (ASK , BID) be using this strategie ?

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  #3 (permalink)
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simo88 View Post
Hello

i want profit 1 tick per trade , for example sell from price (3508 to 3507) or buy from ( 3510 to 3511) for get 1 tick only and relying on lots of contracts , so i want to know Will there be problems with the Spread (ASK , BID) be using this strategie ?

Hi, I would say, forget this strategy as soon as possible, doesn't make sense. Where is your stop loss?

Regarding the price, I guess you want to trade the Eurostoxx50? 1 tick = 10.-- minus commissions = i.e. 4.-- = profit 6.-- 9times winner = 54.-- 1 loss i.e. 10ticks = - 104.--

How should this work?

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  #4 (permalink)
casablanca
 
 
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Thanks for your answer, I really want to trade in eurex

The problem here is not only Stop loss but there aslo Spraed and the execution order,
I am a beginner in this trading contracte futures and I do not know if the trade is open at a loss or open at zero, I mean, is there a spread

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  #5 (permalink)
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simo88 View Post
Thanks for your answer, I really want to trade in eurex

The problem here is not only Stop loss but there aslo Spraed and the execution order,
I am a beginner in this trading contracte futures and I do not know if the trade is open to a loss or open to zero, I mean, is there a spread

The Eurostoxx50 is one of the most liquid instruments worldwide, the spread between bid and ask is always 1 tick.

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  #6 (permalink)
casablanca
 
 
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we Can avoid Spread by order limit ?

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  #7 (permalink)
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simo88 View Post
we Can avoid Spread by order limit ?

Of course! Futures are not CFD's, if u enter with a Limit Order, u get this price or better.

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  #8 (permalink)
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Whether you can or not, just forget about it. It's more likely a losing strategy!

No one can tell you if you can do something or not until you try it yourself.

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  #9 (permalink)
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Asking the wrong question will cost you.


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simo88 View Post
Hello

i want profit 1 tick per trade , for example sell from price (3508 to 3507) or buy from ( 3510 to 3511) for get 1 tick only and relying on lots of contracts , so i want to know Will there be problems with the Spread (ASK , BID) be using this strategie ?

most likely this simple strategy already get automated somewhere, so can your strategy be executed faster than somebody else strategy is the real question.

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  #11 (permalink)
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This is a strategy that requires extremely low commissions for it to work, as in lower than what you will be able to get as a retail trader. I'd suggest you try other ideas out.

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  #12 (permalink)
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The consensus wisdom is that this is a losing idea for the retail trader. Now keep in mind the consensus wisdom, aka common wisdom, also leads to mostly failed traders.

I've been thinking about similar strategies myself. With new commission free brokers like Tradeovate, there could be new opportunities for retail traders. I have seen in the ES (my primary market) that there are many more opportunities to capture 3 ticks of profit because most traders want that 4th (or 5th/6th etc) tick. If you can capture 3 ticks with 10 contracts in ES, that's $375. This type of strategy is probably most likely to work in a fashion where you enter on market and only capture one side of the spread. The catch is that you will probably have a low win ratio because you'll have to scratch or take many 1 tick losers.

Few potential catches: (1) your commission will make up a high percentage of your wins/losses-- this will make your win rate hurdle higher, (2) you will be incurring a higher "hidden risk" of trading so many contracts-- in event of a technical breakdown or something, if that combines with sharp market movement then it could lead to very large losses, (3) you will have to deal with uncertainty risk.. you might send your orders to exchange when you think you need too but faster traders might get filled before your target price, leading to you having to take a loss, (4) there will be a delay between when exchange reports you filled and you were filled, during the interim your trading platform may have issues reporting position correctly --not sure how that works.

My general feeling is that: 1 tick might not be worth the risk but that trying to capture a few ticks could be viable strategy. It is presumed that market makers, even those that are unofficial, capture the spread many hundreds of times by staying on the book at all times (and keeping top of book). They offset their risk by hedging using some other product such as a synthetic basket to replicate the market. Their edge is basically the volume that is traded multiplied by the spread. As a retail trader, you won't get top of book and you won't be able to do enough volume to make it work out and you won't be hedged. So, probably not..

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  #13 (permalink)
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100% doable as a point and click trader depending upon product.

Best product for this is likely to be treasuries. You're basically attempting a market maker risk overlay without the technology infrastructure though.

With good order flow skills, you could create a enough of a edge to translate it more markets.

I would also recommend spread trading, going the non-predictive route and more efficient use of margin to equity.

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SpeculatorSeth
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tpredictor View Post
The consensus wisdom is that this is a losing idea for the retail trader. Now keep in mind the consensus wisdom, aka common wisdom, also leads to mostly failed traders.

I've been thinking about similar strategies myself. With new commission free brokers like Tradeovate, there could be new opportunities for retail traders. I have seen in the ES (my primary market) that there are many more opportunities to capture 3 ticks of profit because most traders want that 4th (or 5th/6th etc) tick. If you can capture 3 ticks with 10 contracts in ES, that's $375. This type of strategy is probably most likely to work in a fashion where you enter on market and only capture one side of the spread. The catch is that you will probably have a low win ratio because you'll have to scratch or take many 1 tick losers.

Few potential catches: (1) your commission will make up a high percentage of your wins/losses-- this will make your win rate hurdle higher, (2) you will be incurring a higher "hidden risk" of trading so many contracts-- in event of a technical breakdown or something, if that combines with sharp market movement then it could lead to very large losses, (3) you will have to deal with uncertainty risk.. you might send your orders to exchange when you think you need too but faster traders might get filled before your target price, leading to you having to take a loss, (4) there will be a delay between when exchange reports you filled and you were filled, during the interim your trading platform may have issues reporting position correctly --not sure how that works.

My general feeling is that: 1 tick might not be worth the risk but that trying to capture a few ticks could be viable strategy. It is presumed that market makers, even those that are unofficial, capture the spread many hundreds of times by staying on the book at all times (and keeping top of book). They offset their risk by hedging using some other product such as a synthetic basket to replicate the market. Their edge is basically the volume that is traded multiplied by the spread. As a retail trader, you won't get top of book and you won't be able to do enough volume to make it work out and you won't be hedged. So, probably not..

Tradovate is definitely the right answer. You'll be saving yourself money on commissions within a week with the number of trades that kind of strategy needs.

You have to have a strategy with a reliable edge though. If you win you'll make a tick. If you lose you could lose two, or even up to four if you get really bad slippage. Which means you need a strategy that wins 66% of the time and probably more like 80%.

My suggestion is to focus on spots where you'll get filled. However, I think what you'll find is that somewhere along the way you'll find trades that are worth more like 2-4 ticks, and find those work out better for you.

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It is of course, entirely possible. I know people that do it. So it's not a theoretical question as far as I am concerned.

But the keys to making it work are:

1 - How will you decide that it's a safe time to trade?
2 - How will you decide to enter on the bid vs the offer?
3 - How will you decide to scratch a trade once you are in (in other words - you get in on the bid, you didn't get filled on the offer yet and you decide to exit because conditions are no longer right).
4 - How will you decide to let the trade run for more than 1 tick?
5 - How will correlated markets factor in your strategy?
6 - Who is on the other side of your trades when you enter?
7 - What is the appropriate ratio of commission fees to tick value on the instruments you see as candidates for trading. For example -this is a no go on the DOW but attractive on the Ultras

If you can answer these questions, then you will be able to make it work.

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  #16 (permalink)
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simo88 View Post
Hello

i want profit 1 tick per trade , for example sell from price (3508 to 3507) or buy from ( 3510 to 3511) for get 1 tick only and relying on lots of contracts , so i want to know Will there be problems with the Spread (ASK , BID) be using this strategie ?

Hello, I red somewhere about a nice technique to do this. Please bear in mind that I never did that and I also wouldnt do that.

First you need an instrument that have big value per tick. If one tick profit is equal your commisions, you wont get anywhere. Then you also need some way to monitor your position in que.

So there is bid ask auction, you eneter a limit order at bid, or ask, depending on where you think market will go. Say you go ask. You watch your estimated position in que, as aggresive traders eat liquidity, your position will get closer and closer to be traded - and then, when you are only a couple of contract from being traded, you hit bid market order - and baam, your ask limit order will get traded right away and you are out with 1 tick profit. If you aret oo late, you hit market order at same price you just traded and you are out with just commisions loss.

I doubt you can do that with a huge position tho. Also remember that High Frequency Trading can do this really really fast, they are kings of small profits. But that doesnt mean it is inpossible to do, there might be some leftowers for a small fish. It just means that a lof of things can happen in a blink of the eye and trade going one direction can stop almost instantly. Also there are big orders that move market really fast.

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Mlok View Post
So there is bid ask auction, you eneter a limit order at bid, or ask, depending on where you think market will go. Say you go ask. You watch your estimated position in que, as aggresive traders eat liquidity, your position will get closer and closer to be traded - and then, when you are only a couple of contract from being traded, you hit bid market order - and baam, your ask limit order will get traded right away and you are out with 1 tick profit. If you aret oo late, you hit market order at same price you just traded and you are out with just commisions loss.

That isn't quite right.
1. You say you enter a limit order at the Ask and watch the aggressive traders eat liquidity. So that means you have placed a limit order to sell, and it is at the inside Ask/Offer.
2. As the price level is traded you can't "hit bid market order". Firstly terminology, if you hit the bid you are aggressively selling the bid, not buying. Secondly if you buy with a market order you are trading at the Ask price. Therefore you buy the Ask, the same price level your exit order is at (just before the price ticks up and that previous ask price goes bid), and you have made zero on the trade but have paid the commission.

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SpeculatorSeth
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If you're going for 1 tick I'd recommend looking for trades where you enter the trade with a limit order instead of a market order.

Here's why I believe that: For a small 1-2 tick scalp, the biggest issue is getting out. You don't want a situation where it moves against you, and you have to hope it ticks back up. You don't want a situation where you have to sit there forever to get filled on your exit. The longer you are in the market, the riskier it becomes for you. So you want the less likely part of your trade to be your entry.

So instead what you want to do is enter in positions where it's hard to get filled, and exit where it is easy to get filled. So if you don't get filled on your entry? Oh well. You missed the opportunity, but you didn't lose any money.

Now the counter to that is that if you use a market order, you can try to catch the edge. Hit into a level just as it is about to leave, and instantly be green or break even. Then you can exit with a limit order at the next price, or just let it ride. Unfortunately, there's already a lot of competition for this one. That's exactly what most robots are trying to do. I might still do it though if I think the next price is really likely to be hit. For instance, we're going up, and I know that 10 is a super key level everyone is looking at. I know we're going to test it, but who knows if we'll go through? That makes 9 a level that is very likely to clear. So I might hit with a market order just as they are about to leave 8, and get out with my limit at 9. Even better if you can stick a crocodile at 9 before we get there since there's always more liquidity on the two inside bids/offers. Place that limit order when we're 4 ticks away so that you can at least be 400th in line instead of 700th.

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matthew28 View Post
That isn't quite right.
1. You say you enter a limit order at the Ask and watch the aggressive traders eat liquidity. So that means you have placed a limit order to sell, and it is at the inside Ask/Offer.
2. As the price level is traded you can't "hit bid market order". Firstly terminology, if you hit the bid you are aggressively selling the bid, not buying. Secondly if you buy with a market order you are trading at the Ask price. Therefore you buy the Ask, the same price level your exit order is at (just before the price ticks up and that previous ask price goes bid), and you have made zero on the trade but have paid the commission.

Wait, you are right. Damn. Sorry. Well I didnt give it much thought when I red about it. But there is some way how to use position in que on limit order to scalp one tick. See this is the reason why you dont listen to random people on internet, because they write things even when they just barely remember them

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Mlok View Post
Wait, you are right. Damn. Sorry. Well I didnt give it much thought when I red about it. But there is some way how to use position in que on limit order to scalp one tick. See this is the reason why you dont listen to random people on internet, because they write things even when they just barely remember them

LOL. Pity, because it almost sounded like you had found the Holy Grail. Oh well.

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  #21 (permalink)
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This works if your entries are perfect and your win rate is incredibly high. It's highly unlikely to have both of these things(not impossible, just improbable). You'd want to do this on an instrument with very high tick values, like US treasuries.

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  #22 (permalink)
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I think you may need some more advanced semi-algorithmic order entry and stop loss too. I found when trying to scalp a few ticks I could do pretty well. However, I could read via the tape that the market was trading very efficiently because when my stop would be hit the other traders would not be. The efficiency of the markets suggest that very few if any retail traders are doing this.

The problem is if you try this with a normal exchange stop loss or whatever, you will be selling out to the top of book. You would need to use a more advanced stop that only triggers when the probability of price at least touching the next price is very high or some sort of automated strategy that moves your take profit limit right to your stop level as soon as your stop level is cleared.

Generally for point/click scalpers, scalping becomes much easier when the markets are more volatile.

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module0000 View Post
This works if your entries are perfect and your win rate is incredibly high. It's highly unlikely to have both of these things(not impossible, just improbable). You'd want to do this on an instrument with very high tick values, like US treasuries.

also jgb and n225

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@ simo88

You might want to try looking up Gary Norden. It seems his strategy of scalping you may find helpful.

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  #25 (permalink)
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It sounds like R Trader has a feature called R Trader Bass designed to detect micro-instances where the spread widens by a set number of ticks and then to offer on both sides. They also have what sounds like a book stuffing algo. It sounds like they detect when the order flow is high and then stuff the book on the opposite side a few ticks below.

This is certainly interesting stuff. I have been working/thinking about similar ideas for a long time. However, I have also imagined there would be a discretionary component which would allow the trader at least some input, i.e. graybox.

However, I'm just trying to figure out if this can really work. I haven't tried it but it just seems that without some ability to add some of your own "edge" or ability to read the market the jumping to fill the bid wouldn't be a very sound idea. I mean let's just take a moment to consider the other market makers have more intelligence and have let the spread widen.

I'm curious to hear from anyone using either of these products. If one could use their market read or trading ability with these products then that would be very interesting. If it is just a "dumb" algo then I'm still interested to learn if it can really work.

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  #26 (permalink)
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DionysusToast View Post
It is of course, entirely possible. I know people that do it. So it's not a theoretical question as far as I am concerned.

But the keys to making it work are:

1 - How will you decide that it's a safe time to trade?
2 - How will you decide to enter on the bid vs the offer?
3 - How will you decide to scratch a trade once you are in (in other words - you get in on the bid, you didn't get filled on the offer yet and you decide to exit because conditions are no longer right).
4 - How will you decide to let the trade run for more than 1 tick?
5 - How will correlated markets factor in your strategy?
6 - Who is on the other side of your trades when you enter?
7 - What is the appropriate ratio of commission fees to tick value on the instruments you see as candidates for trading. For example -this is a no go on the DOW but attractive on the Ultras

If you can answer these questions, then you will be able to make it work.

Can you elaborate by what you mean in point 6 and the implications? Also, how would you verify who is trading on the other side?

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  #27 (permalink)
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tpredictor View Post
The consensus wisdom is that this is a losing idea for the retail trader. Now keep in mind the consensus wisdom, aka common wisdom, also leads to mostly failed traders.

I've been thinking about similar strategies myself. With new commission free brokers like Tradeovate, there could be new opportunities for retail traders. I have seen in the ES (my primary market) that there are many more opportunities to capture 3 ticks of profit because most traders want that 4th (or 5th/6th etc) tick. If you can capture 3 ticks with 10 contracts in ES, that's $375. This type of strategy is probably most likely to work in a fashion where you enter on market and only capture one side of the spread. The catch is that you will probably have a low win ratio because you'll have to scratch or take many 1 tick losers.

Few potential catches: (1) your commission will make up a high percentage of your wins/losses-- this will make your win rate hurdle higher, (2) you will be incurring a higher "hidden risk" of trading so many contracts-- in event of a technical breakdown or something, if that combines with sharp market movement then it could lead to very large losses, (3) you will have to deal with uncertainty risk.. you might send your orders to exchange when you think you need too but faster traders might get filled before your target price, leading to you having to take a loss, (4) there will be a delay between when exchange reports you filled and you were filled, during the interim your trading platform may have issues reporting position correctly --not sure how that works.

My general feeling is that: 1 tick might not be worth the risk but that trying to capture a few ticks could be viable strategy. It is presumed that market makers, even those that are unofficial, capture the spread many hundreds of times by staying on the book at all times (and keeping top of book). They offset their risk by hedging using some other product such as a synthetic basket to replicate the market. Their edge is basically the volume that is traded multiplied by the spread. As a retail trader, you won't get top of book and you won't be able to do enough volume to make it work out and you won't be hedged. So, probably not..

great! Thanks tpredictor

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  #28 (permalink)
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You're welcome! I think for retail scalping what is more likely to work is to think of a scalp in terms of risk but not in terms of frequency. Think lower frequency, bigger size, higher R.

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  #29 (permalink)
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my ping to Chicago 213 ms .. is vps a must?

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  #30 (permalink)
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While many answers in this thread attempt to analyze what's possible or not, few are addressing the real issue: OP is scared to take a loss. Going for just 1 tick profits is where all beginners start out. They don't realize that they'll never be able to accumulate enough profits before suffering a 5 - 10 tick loss and so on until the account bleeds to death. Kudos to posters advising OP not to do this, but it won't help unless OP understands the reasons behind it.

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  #31 (permalink)
Dubai, United Arab Emirates
 
 
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Don't focus on the profit side (i.e. +1tick) because you cannot control it, your focus should be on the Risk side (that is what you can control).

Having said that what is your stop loss? -1 tick?

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  #32 (permalink)
Fort Lauderdale, Florida, USA
 
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DubaiTrader View Post
Don't focus on the profit side (i.e. +1tick) because you cannot control it, your focus should be on the Risk side (that is what you can control).

Sound advice. This is the hardest lesson to get when starting out.

A trader's journey hasn't really started until he grasps this concept.

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  #33 (permalink)
Toronto Canada
 
 
Posts: 41 since May 2020


module0000 View Post
This works if your entries are perfect and your win rate is incredibly high. It's highly unlikely to have both of these things(not impossible, just improbable). You'd want to do this on an instrument with very high tick values, like US treasuries.

I actually think this would be much more difficult . If we are talking about futures (ZN etc) the size of bid/offer is significantly larger than most all other instruments, which means you are at the bottom of the fifo sometimes 1000's of contracts deep. Therefore you are almost always forced to buy the offer and sell the bid. The spread can eat you alive. I honestly think less liquid, but not to an extreme, something like NQ makes it easier to get in/out.

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