How much $$ is required to be Scalp Day Trader ?

Discussion in 'Trading' started by hayman, Aug 21, 2003.

  1. Good point. But nothing sounds as "promising" to make you rich in the future as "futures", does it?

    I traded stocks for a while, then went to the emini's. I'm doing very well on the mini's these days, but the stocks might be the easier choice of path now, ditto less effort = less risk = more leverage = more money. Come on let's face it : At the end of the day we all just want to make more money.

    It's the darwinism thing. It's all about survival and procreation. Somehow, we now use the slang-words money and pussy for that, but essentially it's exactly the same thing.

    The most important thing about the "search for the holy grail" in trading however is, like anything else, to always take the road less travelled. We all know which roads are the most betravelled ones right now, so this is what pops up the argument.

    What do you trade brother vhehn?

    ~The Scientist :cool:
    #21     Aug 23, 2003
  2. i trade mostly stocks and a few leaps from time to time.
    #22     Aug 23, 2003
  3. Main advantage of mini's is the amazing liquidity. You really need to do a lot of size until you stop losing velocity, and you can always get in & out immediately, no routing, no limit orders as requirement (you really get filled at market - no manipulation).

    Main advantage of stocks would be less competition, less slippage (1T is quite a lot on the futures), etc ditto above. But also, you can have a lot more fun trading stocks. You can play with the MM's or shadow them, etc. You have little time for fun on the mini's - You need full, serious concentration, lightning-fast reaction and a bazooka-proof strategy before you can even start. At least in scalping, anyway...

    ~The Scientist :cool:
    #23     Aug 23, 2003
  4. I am staying with ES....I have never held overnight.....but now am switching to Swingtrading the ES and will hold overnight .....

    Probably never will trade stocks again, unless they make it electronic.....

    Michael B.
    #24     Aug 23, 2003
  5. Oh yes...will start Swing trading the NQ also......

    And cycle trading Grains is in the near future, if I have time.

    Michael B.
    #25     Aug 23, 2003
  6. i dont like scalping. i think pure scalping for a tick or two is a tough game. the shorter your timeframe the lower your margins become because the higher % your costs become of each trade. your commission cost alone can be more than 50% of the trade. then you have taxes, slippage, losses,ect. it doesnt leave much room for profit. the only way to overcome this fact is with size and that adds another element of risk.
    #26     Aug 23, 2003
  7. What do you mean by that? How about the National Association of Securities Dealers' Automated Quotron?

    It's all electronic - right?

    Best Compliments,
    ~The Scientist
    #27     Aug 23, 2003
  8. Never mind.....your right.

    Michael B.
    #28     Aug 23, 2003
  9. This is kind of a one-sided point of view - The point that all non-scalpers defend, so to speak.

    Commission costs: Yes, they can become quite a lot - but 50% of the trade? My god who do you trade with? Starting with $4.80 /RT at IB, you can move on to VelocityFutures and FFastTrade, getting $3.90 - $2.50 /RT depending on the kind of volume you do, and then you can move on to CME direct or lease a seat, which reduces your commission to a $0.25 clearing fee per trade, regardless of #of cars.

    Taxes are exactly the same, unless you're a long-term investor.

    Slippage, losses? Well, AFAIK, the losses are the smallest in the industry, and slippage doesn't need to apply if you hit limit and let your foes run into it. And if the thing is running, you can risk a tick slippage, anyway. Next, you can lock in partials with running stops to protect your downside immediately and lock in a small profit (bracket scalping platforms can automate that). All this said, this kind of trading isn't possible anywhere but in scalping, since you have to sit through retracements etc in any kind of day trading, which gives you a potentially unhealthy downside risk.

    Regarding size: You don't really need to do more size when you're scalping, particularly not with futures. Again: You're catching a lot of tiny fractals, which should amount to much more than trying to sit through larger fractals and offset these problems.

    Each one his own, but since this is a scalping thread, I'll defend my point here. It is to be admitted, though, that scalping is the most difficult form of trading. Which reinforces the argument that it's the most rewarding if done properly.

    #29     Aug 23, 2003
  10. One thing is for sure, scalping is an interesting way to make a living. I understand it is not suited to some people and that's ok, to each his own, but some following observations.

    First of all, statements like "you can't make money in scalping" or "the opportunities aren't there anymore" cannot be taken seriously. There are always opportunities there, and just because some people cannot identify or lack the skill to exploit those opportunities should not discourage people from trying their own ideas, not just for scalping, but for whatever style they are using.

    Second, scalping is simply trading in a shorter time frame and more frequently. It has been said that this cuts into margins due to higher costs, but the goal here is NOT higher margins, it is achieving the highest overall profit possible. This has nothing to do with margins, or percentage returns for that matter. All is judged on net P&L, if you are trading for money and not for ego, that is.

    In addition, it has been said that the only way to overcome the increased costs of scalping is by doing size, which introduces an increased risk. This is true about doing larger size. But the same can be achieved by doing greater frequency of trades, not necessarily increasing size. A commonly misunderstood fact is that greater frequency of trading is actually LESS risky than longer term holding. Many scalpers understand this, and it has been a crucial element in their decision to use a scalping style. The reason is that, you have less exposure (in time) to the bad event (ie bad news or halt in the stock, etc..) that could possibly wipe you out.

    To be successful as a trader, you want to have your success rely on your abilities, and not have yourself subject to the whims of chance. In short, you do not want "luck" being a factor. Or at least, you want to minimise as much as possible the impact of it, on your trading.

    All of us are trading, using past experience as a guide in our decision making process. (ie we keep doing what has worked in the past) I would argue that with shorter term scalping, you reduce the likelihood that luck is a factor, because with the larger sample size of past trades, you have greater assurance that your past success is based on your ability. For instance, if I won on 6000 out of 10000 past trades, I am more confident that I didn't just get lucky, as opposed to if I won on 60 out of 100 previous trades. This is vital, because if it is true that my past success is attributed to luck, then I will certainly fail some point in the future.

    Finally, what is the effect of this post. Do I want to encourage or discourage others from scalping? What's my hidden agenda?
    I'm not sure. On one hand, more newbie scalpers may make for more "suckers" in the game. (no disrespect.. we all play the role of sucker at some time) Or maybe, less scalpers helps keep out the noise and reduces shaving prices. I think it's a wash. So, scalp if you like, or not if your not comfortable with it.
    #30     Aug 24, 2003