So with the Dow Mini, as long as you have $4800 in cash in your account, you can trade two contracts on margin?
and commision is around $5 per roundtrip. So you have to give in 1 point just to pay for the trade. We should come clean, this has to be targeted for at least 20 points target and SL otherwise is just a way of financing the broker and exchange at the trader expense.
asap... i pay under $4 per roundtrip i generally buy the spread (as opposed to pay it) by using limit order and i make a living doing this - scalping the YM for targets of (first target) 6, 9, etc. you do NOT have to target 20 pts etc. for this to be efficient. you have to have precise entries, be able to read order flow and have rock solid discipline that being said, it will be incredibly difficult for somebody (especially a newbie) to be successful with $5 and scalping futures. it takes a lot of skill and experience to scalp. and i don't want to get all 'game theory" on him, but you need to understand risk of ruin etc. and with 2 contracts on a 5k account, even with high positive expectancy, you have a significant risk of ruin. you can have a system with 75% positive expectancy, but given n=several hundred (which is not unusual over a month or more for scalper), 5 losing trades in a row are statistically almost a certainty. etc. can it be done? yes do i recommend trying ? no
whitster the fact is i am not a scalper and honestly i dont recommend anyone becoming one. thats why i recommended 20 points target instead of a couple of ticks. scalping is by definition an extremely negative expectancy activity because of the huge burden of comms and slippage which are tremendously amplified by the narrow PT and SL. i am sure there are ways of acquiring an edge to somehow reverse the initial odds but in the long run any edge will dissipate as the market adapts to any systematic approach. i sometimes trade the DAX and do great because i only pay â¬2 per roundtrip and one point is worth â¬25. My target is 8 points, which gives me â¬200 per unit with â¬2 in comms (just 1% of the trade). I would never think of doing the same in YM because I would pay at least $4 and 8 points are worth just $40 (10% of the trade). so my point is, one should setup a trading operation that is, by itself, very close to a fair game. this is accomplished either by finding the most liquid contracts with less comm burden or by increasing the PT and SL so that comms become a minimum fraction of the overall trade PL. so rather than thinking whether i am scalping or not, i am more concerned in knowing in advance what kind of operation i am running and how solid it is.
i scalp to generate income, but that is hardly all i do. my scalping account sits alongside longerterm accounts. heck, i've held some stocks from the day i bought them (10 yrs ago) look, most people are going to fail in trading PERIOD,and i agree that scalping is among the most difficult to master however, given a successful scalping methodology, there is no better way to generate an excellent income stream, from even a small account i am a discretionary trader, and i agree with you, generally, about the market adapting to inefficiencies especially when used rigidly, like many systems traders do. however... the market will always have inefficiencies, and there will always be opportunities where you can recognize a high positive expectancy setup, and take it the fact is i am not a scalper and honestly i dont recommend anyone becoming one. thats why i recommended 20 points target instead of a couple of ticks. scalping is by definition an extremely negative expectancy activity because of the huge burden of comms and slippage which are tremendously amplified by the narrow PT and SL. i am sure there are ways of acquiring an edge to somehow reverse the initial odds but in the long run any edge will dissipate as the market adapts to any systematic approach. i sometimes trade the DAX and do great because i only pay â¬2 per roundtrip and one point is worth â¬25. My target is 8 points, which gives me â¬200 per unit with â¬2 in comms (just 1% of the trade). I would never think of doing the same in YM because I would pay at least $4 and 8 points are worth just $40 (10% of the trade). so my point is, one should setup a trading operation that is, by itself, very close to a fair game. this is accomplished either by finding the most liquid contracts with less comm burden or by increasing the PT and SL so that comms become a minimum fraction of the overall trade PL. so rather than thinking whether i am scalping or not, i am more concerned in knowing in advance what kind of operation i am running and how solid it is.