Everybody argues about the definition of scalping. My mentor said that is what I do, and I am pretty much doing the same as you. My daily goal is 20 to 30 pips. And my mentor has steered me away from Futures simply saying you don't need the distraction. Trade 4 currency pairs and concentrate on that. With the platform I could trade down to a .1 lot, but that takes me down to about 12 bucks an hour.
There is nothing to argue about scalping. Buy the bid sell the offer. You need "Theoretical Edge" to do it (pros only).
When you start doing that with a regular Forex Account send me a post card. It ain't gona happen, unless you're a BANK!
Futurestrader71. Great threat, your replies have been very educational. {kuddos on the ghandi approach to flamers...} I´m currently learning how to scalp NQ, Im still working in sim mode till I can get consistent paper trading profits, and Im still looking at a few things I dont fully understand when it comes to scalping. A bit on my back ground, I manage a swift franchise, a big part of my job is exploring different trading techniques so that I can teach em to new guys that come work with us and we can diversify our risks. Most of my experience trading so far has been doing rebates, in that game Im used to winning nickles and dimes constantly and lossing dollars ocassionally {with the hope that at the end of the day the nickles and dimes add to much more than the dollars} In that game I would lose .01-0.02 at the most to win 0.0-0.01 at the most {I basically lived off commisions with a risk reward ratio is around 1:0.3}. I´ve also done some swing trading, looking for risk reward ratios above 1:3 for a few trades per day with stops far into S/R levels... I really didnt like it... I cant go all day doing 3 trades... I like doing about 100 trades on the first half hour... So when I approached scalping I did it thinking that since I was looking to make 100´s of trades per day {like in the rebate game} I should be looking for a small risk reward ratio, though not as small since commisions work against me on this game. In my average trade Im winning 2-3 ticks and Im losing a max of 4 ticks {usually 1-2 though}[risk reward around 1:0.7}. I´ve been getting some good and some bad days, nothing very good yet. I figure as I get to know the instrument {NQ} better I´ll get a much better hitting average on my trades and I´ll start seeing better results. My question is, do you think this is a sound approach to scalping, or perhaps Im I cutting my profits to early, my losses too late? Thanks in advance for any help you can give me on this subject.
I know the rebate game and I understand the basis for your approach. However, futures don't work like that any more. It is no longer a game where you can pound on it all day (even through lunch and the dead hours) and collect ticks here there and every where. Too many people and machiens are doing this now and it is hard to have an edge. Hence, you need to start taking a big picture approach. You will eventually have to learn to press winners (you can scalp in and out as you approach S/R but keep a base position on), etc. In this market, it is hard to get away without taking some heat. I'm allergic to heat, so it has been quite an adjustment for me as far as bread-n-butter scalping. This will likely continue this way unless we get volume and volatility the way we did in May/June this year. It was very easy to really scoop up good trades on those days just like before. However, beware of the idea that having a low risk/reward will get you ahead. My worst losing day was only about 1/40th of my best winning day and I have always hit with a high percentage. I find that this is much tougher now. The market cycles and things change consistently, so there will be something that you will likely find that works for your personality. I think the smart thing to do is to look to higher timeframes and find out what it is really trying to tell you in the big picture so that you can scalp the small stuff. I hope that helps. Good luck.
Thanks for the reply it was mostly helpfull. I tried to apply some of this at my trading, I scalped 2-3 ticks all day today pressing ocassional $2 moves whenever the market made them available. I also approached scalping by reading only the tape, no charts no lvl 2. It was a lot less stressing, I had to keep less things in my head... and I was focusing on what really matters... price. This gave me much better results than Lvl 2. Thanks again. PS. is amazing how most people discard the idea of scalping right from the start, consider it madness, foolishnes, overtrading and stupidity...
Hello FuturesTrader, your posts are very mature. Thanks I have a question. How much will the total cost be for a ES scalper who does 100 RTs per day approx ? I will be happy if you can even give me an average or not the best offer. For example is it $ 4 RT all inclusive ? What is the tax in the US ? On Gross after this ? I trade our Futures in india and there are many taxes even before we come to a gross figure. Scalping here is impossible unless done directly in a broker's office, sharing the profits. Thanks mishwar
If you do it while being a member of the exchange, your cost would be $34.50 for exchange and globex plus another $50 or so for commission to your clearing firm. Once you have traded more than 200 contracts, the Globex fee drops and it becomes $0.595 per round turn. Assuming you have a good win rate and make an average of $875 gross on 100 turns, you gross profit before fixed costs (trading platform, charting software, other services, computer equipment, telephones, office rent, phone lines, internet, etc) would be $790.50. Assuming you use X-Trader to trade with CQG and some news services, etc, you might have to pay around $80 per day in fixed fees. So let's assume you net $700 per day. That's around $175,000 net per year. Without further deductions, you would be liable for $20,000 for long term capital gains and probably another $40,000 for a total of $75,000 in taxes assuming you are trading through an entity. These numbers are higher for individual traders. With a good accountant and depending on your living situation and expenses, you can reduce that dramatically and keep more of your profits. Net profits can be around $100k after taxes. For retail-based rates, just run the same kind of numbers assuming $4.50 or so per turn. Your gross would drop to around $425 and your net wih daily fixed costs would be around $400 (assuming that you are not using X-Trader and CQG but are using the vendor's software instead). Taxes and stuff would just be prorated for those numbers. After taxes, your net would be around $57,000 or so in this case with the same assumptions as above. Good luck.