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Scalping with a target less than stop


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Scalping with a target less than stop

  #11 (permalink)
 Michael.H 
CA
 
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nobody said it was impossible. My first target is more like a scalp when i trade, because like you said, i can get it 90% of the time. But my second target is more like 3x my risk. Your going all in and all out, and if your stop is 2x of your target, then you won't make money at the end.

Your trying to go for small ticks, and there's very little room for error. Its very stressful to trade that way.

I would highly advise you to not trade the dax if you have no experience. I know someone who lost $20k trading a 1 lot in one month.. Thats not the instrument you want to start with.
Your doing exactly what every new traders does when they start, think about how much money they can make trading a highly volatile instrument like that.
Start learning about market profile, footprint... Do NOT use oscillators, candlestick patterns or chart pattern formations to make trading decision( i know im gonna get burned for that)... These esoteric methods don't have a big enough edge for intra day trading.
Even big mike uses simple price action, such as double top, higher high, and higher low..etc
He doesn't trade head and shoulders pert plus patterns.

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  #12 (permalink)
 Twiddle 
Sydney, Australia
 
Experience: Beginner
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Thanks for the advice Michael H.

The reason I have picked the DAX is due to the time it is trading. It fires up exactly when I start my trading hours. Living in Aussie there is a limited choice of things worth trading. Not the best of reason i know.

But you are right, it is not the instrument for beginners. So I am kind of stuck, to trade it, or not to trade it.

I have spent a year studying it, and my trading methods are based around high probability scalps, and lower probability large moves but with a huge payoff if they turn out. What I focus on is what I feel the sentiment behind the market is, and what it "tends" to do in certain timeframes. I do not use any indicators, as I feel the are just one dimension of what it already plain to see.

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  #13 (permalink)
 Michael.H 
CA
 
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if you honestly have a years worth of trading experience on this instrument, and your making money on sim, im not gonna stop you, just follow the same rules. Start out with 1 car, and move up....

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  #14 (permalink)
 
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 trendisyourfriend 
Quebec Canada
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Twiddle View Post
Scalping with a target less than stop

Does anyone here do it successfully? Or is it strictly a no no?

I have a question for you. Why would you use a stop bigger than your target considering that when an opportunity occurs it should offer a bigger reward. A classic example, price makes a certain move to the upside at the opening, it retraces 61.8% (approximately) and you get a reversal bar to the upside. The 61.8% matches with a daily pivot. A quick visual evaluation would reveal that if you enter here to the upside, the risk may be small (a few ticks below the daily pivot) but the reward if price re-test the previous high may be seducing. This type of evaluation is quickly done and if repeated should provide a high level of success consequently adding to your long term edge. There is no reason to use a stop larger than your target, never unless you like russian roulette.

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  #15 (permalink)
 Twiddle 
Sydney, Australia
 
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Michael.H View Post
if you honestly have a years worth of trading experience on this instrument, and your making money on sim, im not gonna stop you, just follow the same rules. Start out with 1 car, and move up....


Cheers, I have started trading live using CFDs, $1 per tick, going well so far, despite giving the CFD provider 3 ticks of any trade. Ouch. (CFDs are not worth trading in my opinion, I am only doing so for the chance to trade tiny amounts to learn, and also the provider has the SPI (Australian index) which I have noticed has regular patterns I plan to exploit)

Definitely planning to take it easy for the first few months of live futures. Really don't wanna lose 20k in one month.

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  #16 (permalink)
 Twiddle 
Sydney, Australia
 
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trendisyourfriend View Post
I have a question for you. Why would you use a stop bigger than your target considering that when an opportunity occurs it should offer a bigger reward. A classic example, price makes a certain move to the upside at the opening, it retraces 61.8% (approximately) and you get a reversal bar to the upside. The 61.8% matches with a daily pivot. A quick visual evaluation would reveal that if you enter here to the upside, the risk may be small (a few ticks below the daily pivot) but the reward if price re-test the previous high may be seducing. This type of evaluation is quickly done and if repeated should provide a high level of success consequently adding to your long term edge. There is no reason to use a stop larger than your target, never unless you like russian roulette.


I completely agree for 90% of trading. And probably for 100% in fact. What I am trying to work out is this; on a highly volatile instrument there exists within the noise an up and down frequency that can be captured extremely easily if profit targets are miniscule. What I am still trying to work out is whether or not it is worthwhile trying to capture this. I have literally thousands of these trades on sim, and it has been extremely profitable. But... live, with lag times, different fills etc.... I don't think it is gonna happen.

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  #17 (permalink)
 
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 Silvester17 
Columbus, OH
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Michael.H View Post
nobody said it was impossible. My first target is more like a scalp when i trade, because like you said, i can get it 90% of the time. But my second target is more like 3x my risk. Your going all in and all out, and if your stop is 2x of your target, then you won't make money at the end.

Your trying to go for small ticks, and there's very little room for error. Its very stressful to trade that way.

I would highly advise you to not trade the dax if you have no experience. I know someone who lost $20k trading a 1 lot in one month.. Thats not the instrument you want to start with.
Your doing exactly what every new traders does when they start, think about how much money they can make trading a highly volatile instrument like that.
Start learning about market profile, footprint... Do NOT use oscillators, candlestick patterns or chart pattern formations to make trading decision( i know im gonna get burned for that)... These esoteric methods don't have a big enough edge for intra day trading.
Even big mike uses simple price action, such as double top, higher high, and higher low..etc
He doesn't trade head and shoulders pert plus patterns.

can you feel the heat? lol

no, there are some very good points. nothing to argue at all.

but I do like to look at certain chart patterns on longer time frames. it helps me to find important key levels. but also I'm not using those pattern to take a trade, it's more like an alert.

also I would be a little careful about choosing a bigger target just to have a better r/r ratio. maybe it would be smarter to have a smaller stop. it all depends. it can be very frustrating to have a target of 12 ticks and the market goes 11 ticks and then turns around and you end up with a loser. that's why I like to trade multiple contracts. with es my first target is 3 or 4 ticks (depends on volatility) and then I can move the stop to -3 or -4 ticks. and the second target is about 10 to 12 ticks.

two of my important rules are, never let a winning trade turn into a loser and never add to a losing trade.

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  #18 (permalink)
 mainstream 
Chicago, IL
 
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Why not go for a 1:1 ratio? If you're going for 3 tick make your stop loss 3 ticks and enter the market with 3 or 5 tick off set on your dom? So you pull the trigger and you won't get immediately filled you'll place a limit order off set from the Bid/Ask. If you're direction is correct, long or short, there's a good chance for a fill and less distance to travel before your target.

Since you're trading intrabar noise that might just work for you. And skew the risk reward a bit in your favor.

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  #19 (permalink)
 
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 alejo 
madrid spain
 
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mainstream View Post
Why not go for a 1:1 ratio? If you're going for 3 tick make your stop loss 3 ticks and enter the market with 3 or 5 tick off set on your dom? So you pull the trigger and you won't get immediately filled you'll place a limit order off set from the Bid/Ask. If you're direction is correct, long or short, there's a good chance for a fill and less distance to travel before your target.

Since you're trading intrabar noise that might just work for you. And skew the risk reward a bit in your favor.

could you take a look to my journal on zn, to give me your opinion about the difference i have between sim/live and what do you think about the 2 targets stategy i was testing?3l +2l +1 1l +2, and 4l 2l+1 1l+2 and 1l+3
thanks

alejo

La lucha es de igual a igual contra uno mismo
The fight is fair against oneself
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  #20 (permalink)
Godzilla
Brisbane, Australia
 
Posts: 206 since Nov 2013
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It can work as evidenced by the legendary trader Marty Schwartz....in his book he mentions 0.8R returns but his winning percentage is 70%+.....if you cannot get your percentage Win rate above 50% is a sure way to the poor house.

It can be done by "normal" guys as evidenced by my last 2 days trading with 80% accuracy over 15trades....not sure if I can sustain that pace.
I'm not sure if it's really the best way to trade but only you will know that.

All the best.

G

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Last Updated on November 20, 2013


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