I agree $300-$500 margins are insane The S&P 500 only moves maybe 2 point on average in 15 minutes. At $1000/contract, that's 10%. Not exactly mind numbingly risky.
Thanks again for all the help guys. I havent been this excited about trading since I first started. Hehe. I have been demo scalping using stoch and supp/res and doing well. But I heard somewhere that your order gets filled at the next tick. For example, if I want to buy at 1097, it would get filled at 1097.25. And if I wanted to sell at 1097.25, it would fill at 1097. The sim fills at the price you at the price you set. Anyone using Firetip for real trades? Also, I see most scalpers go for full points, is not profitable to go for 2-3 ticks? What is the total cost of a round trip with exchange fees for an S&P emini contract?
No. Always assume buying the ask and selling the bid for scalping. Sim trading that let you buy on the bid and sell on the ask instantaneously are not 'simulating' the order book queue. If it's 1097.00 bid x 1097.25 ask, and you see a short opportunity forming in the next couple seconds you should sell 1097. If you put a order to sell 1097.25, sure, often times price ticks up to 1097.25x1097.50 and fills you before moving lower. But the worst is all of a sudden you see price go to 1096.75x1097, 1096.50x1096.75 and you are chasing. Then you see the volume pickup (ever see a declining volume gradient as price approaches a level and then a 1-min volume bar hits 10k in a couple seconds? the scalpers were there) as it breaks through the s/r level and the move left you behind. You can go for 2-3 ticks, but then make sure you have a high winning percentage because, presumably your stops would be 3-4 ticks minimum. Round trip with exchange fees for the ES depends on your broker and also you can negotiate based on your volume level. Guys that move weight probably have CME memberships. The real scalpers do, anyway.
It is not the average move (say 2 points per 15 minutes) that kills the trader. It is the outsized move, which happens quite often. At $1000/contract, that represents 50:1 leverage for the ES. A 2% move can wipe out the trader. The market lost 23% unleveraged in one day on 10/19/87