If u r scalping , do u protect yourself from catastrophic events ? ie : If daytrading indices then trade shorts only , buy deep OTM puts , or u dont have any protection at all ?
If you're a scalper your catastrophic event protection is the same as your "Damn -- this thing is a loser" protection. You get the hell out.
The very act of scalping for retail traders is a catastrophic event. I used to be a scalper. It took a lot of energy and help from friends, market professional, to understand that it was more of an addiction than anything else to a retail trader and escape from it. I am not talking about market makers because those scalp by virtue of their job. The first step to trading success is understanding that you have to minimize the impact of slippage and commissions and maximize profit. This can be done only with position/swing and trend trading. I know many won't agree.
u could scalp to earn slippage and spread from impatient traders ... , this is not our topic anyway , what could be the best protection for scalpers ?
One protection scheme I used before was based on buying OTM options one month before expiration and you rollover 15 days abouts before expiration. This can protect you from a catastrophic event when you will go long for example and never see your price again.... It happened to me before when I was trading BP futures. I missed my limit to exit by one tick and the market plunged 300 ticks in a few seconds. P.S. by the way, nowadays I trade mostly near the money options but I use the same systems for the underlines. I can tell you I have never experienced a more easier market to trade. Even if someone has basic TA knowledge this market is very easy. But, most people lost their money in 2008 and have no margin to put down now.
purchasing monthly options is expensive , i was looking at yearly options which is expensive also , for example ESZ11 1150 put will cost 54*size
Dude..how can you make money as a scalper if you have to pay for crash insurance? If you need crash insurance as a scalper then I don't think you should be a scalper. The BP stock probably didn't tank before it could've been known by you that fundamentals were going to move the stock if you'd had a good news service.