es profit on 1/4 point can it be done?

Discussion in 'Order Execution' started by saxon22, Oct 4, 2006.

Thread Status:
Not open for further replies.
  1. Would it be possible to make a profit by scalping 1/4 of a point on ES??
    Since 1/4 is $12 less $ 5 fees, that would still leave $7 on the table. Can it be done?:confused:
  2. Maybe the better question is, "why limit yourself so minutely?"

    It's a whole lot easier to pick off +2pts or greater than it is to profit from .25 moves, unless your win rate is 90+%
  3. I doubt that it is easier to catch the market like ES for 2 points (than again I am new to this thing so feel free to stomp me). However, it seems to me that having the market move 1/4 happens more frequently and therefore it would be easier to achieve a fill. I would rather get 10 fills for 1/4 points than wait for that 2 point set up that might or might NOT come my way. :( ) Anyway, can it be done at a profit?:confused:
  4. saxon - sure it can be done. You may need an automated strategy to do it, but it could be done.

    Like austin I would rather go for a larger move and trade less, but to each his own. There's plenty of liquidity there for you to scalp .25 all day. And if you trade all day you'll get a great commission deal eventually with the amount of trading you'll be doing.
  5. I was thinking that eventually going for 100 to 200 contracts per trade I could wrestle a nice amount from the market at the end of the day. Correct my math, but according to my calculations 1/4 = $12, less $5 fees = $7 multiplied by 100 contracts would produce $700 a fill. If I coulf do it 10 times a day the end result would be a tidy sum.
    While I would love to get 2 o 3 point fills, I would rather pick the market "my way", that is in little bites but frequently. Call me greedy ...less:D . Please fell free to comment on my approach.:)
  6. Now doing it with 200 contracts .... that is greedy!!!!!!!!!!!!!!
  7. You mentioned nothing about what happens if you dont get your .25. How big of stop loss are you going to set? Since you are only going for a tick, the best risk/reward ratio that you could achieve is 1:1. (Risk=.25, Reward=.25). With a stop that close it appears that you hope that it will tick in your favor before it ticks against you. A .25 stop is incredibly tight, I imagine that you would get stopped out more often then not. However, if you are looking at "best case scenario" you will need to be at least 50% of the time. Probably more than that since you need to take into consideration of slippage and commission charges. Sounds easy, only winning 50% of the time, but thats using the ideal stop loss level.

    Doing a trade for 200 cts each time for a tick seems good on paper, but that seems more like fantasy than reality. If you use the .25 stop, you will probably get stopped out on the majority. If you use a larger stop, your win rate better be much higher then 50%. Utilizing a larger stop loss with the same .25 profit objective, 1 loss could wipe out 2,3,4 winners.

    Dont focus on how much you COULD make or SHOULD make, focus on how to protect what you already have.

    Risk control is the name of this game.
  8. Urkel


    this game/strategy is more difficult than you are making it out to be. what do u think your winrate will be with this strategy? what would your entries be based on? you will get burned alot, u are not realizing this. don't look at it onesided "do it 10x a day", need to think if i could do this 20 times a day and make a quarter point, and do this 10 times a day and lose a quarter point, net exchange fees I will make a tidy sum.
  9. <b>Saxon, Trader273</b> answered your question to completion. The odds of you booking +.25pts are exactly 50/50. There is no possible way to increase the odds of random chance, because you are asking for an either/or result at any arbitrary moment in the market.

    Please look at a one-tick chart and see for yourself how many oscillations between ticks the ES makes... it is a buzzfest. No retail trader can find an edge in that game, especially when equal trade costs are paid on both wins AND losses alike.

    Large hedge funds might be able to program computer-driven models to harvest one - two ticks from within specific situations, but none of us have their resources to build such a model.

    It is very possible to take +2pt and +4pt ES trades out of intraday market action on a consistent basis. That is something any retail trader can learn to do.

    Hope this explanation helps :>)
    Austin P
  10. Trader 273:

    Thank you for a long and logical post. You are absolutely right that it is easy to just see the what happens when I get filled scenario without thinking what would I do if it goes the other way.
    I agree that a 1/4 stop loss is extremely tight and I would get stopped out way too often for me to make money in the long run. Therefore my stop loss would have to be .75 or maybe even 1 point. That risk/reward is pretty high but from what I have observed the market fluctuates within 1 tick extremely often and I would get filled on 1/4 point a lot more often than get stopped out at 1 point.
    My philosopy is to be in the market for the shortest amount of time to minimaze any potential damage to my capital. It seems to me that the way i described my "system" would protect me from unwelcome movements in the market and would keep my capital protected.
    #10     Oct 4, 2006
Thread Status:
Not open for further replies.