Scalping Futures

Discussion in 'Professional Trading' started by Ramses, Sep 5, 2015.

  1. Ramses


    hey there traders, this will be my first post on ET. I've been extremely successful scalping futures the past 9 months (Works 95% of the time, i know, hard to believe)
    in SIM. Long story short, i got funded 6 figures to backtest my strategy on a real account the upcoming months. I make in average 5 ticks gain gains per trade on full sized contracts (CL, ES,TF, etc..) So here's my questions:

    -Supposed i get $5-6 round trip commissions; what other fees Should i be aware of from a scalping point of view..? (I'll be daytrading if this help)

    -Do brokers allow large order sizes when scalping? (Not that my orders are large just wondering if my strategy is scaleable from the retail point of view)

    -Since i'll be making 100s of trades a day, How exactly would my tax process work?

    -Due to the negative cognotations about scalping, what other variable should i be aware of before attempting this journey? (Hidden Fees, Brokers trying to screw me, etc)

    Feel Free to share your insight! This forum ROCKS and Thanks in advance :)

    tradingcomputer likes this.
  2. rmorse

    rmorse Sponsor

    I sent you a PM.

  3. EPrado


    There are a few really good Futures brokers out there. A few things.

    1) $5-6$ is on the expensive side for futures. I trade my PA though Amp ( and have been very happy so far. You can check out commissions. They are pretty much at the same level/cost as the others out there, maybe a tiny bit cheaper. If you use TT (Trading Technologies) to execute they have a great deal. I pay 4.34 RT for ES, that includes all fees (including the TT charge). If you don't use TT it's 3.34.

    The only fees you should have are :
    Exchange fees (vary per contract)
    NFA fee (.02 round turn)

    then obviously whatever your broker charges for commissions/software.

    2) Amp does offer pretty high leverage for day trading only. Probably the close to the highest out there, which is great if you know what you are doing and have very good risk management. Other firms also offer some leverage for day trading. Again, unless you know what you are doing, be careful when leveraging. Order size is tied directly to how much money you have in your account/margin level.

    Here's an article on the 60/40 advantage of futures trading. Make sure you apply this when doing your taxes.

    I think the things to look out for with looking for a broker are:

    1) Make sure their connections to exchanges are solid/reliable.
    2) Make sure they have solid support both on the technology end and trading desk end.
    3) Check them on The NFA website and make sure they don't have any major infractions.
    4) Make sure they keep customer funds in a segregated account.
    5) Make sure you have a 100% understanding of their risk management policies/limits. Make sure they stick to it.

    There are probably more.

    Good luck with everything.
    tradingcomputer likes this.
  4. You will need to apply for margin account, I am with Interactive Broker.
    When you said, you are extremely successful scalping future, is it on simulated trading? Is it backtested or forward tested, or both?

    Just curious how is your setup?
    My setup, execution on Java with IB API. Research, data exploration, strategy discovery in R.

    Good luck with your trading

  5. I'd forward test with small size in a LIVE environment first, then work your way up if it's working as it did in SIM . SIM doesn't do justice for real life slippage, fills, ect. The COST of comish, spread, slippage needs to be carefully understood in your market. Beating costs is huge for scalping strats. Good Luck
    wartrace and wrbtrader like this.
  6. wrbtrader


    He/she already has something limiting success in real trading...cost of trading (I'm not just talking about broker fees, slippage or spread) versus his average of 5 ticks gain per trade.

    I know guys that have the same and forgot to include the cost of any other service they're using that's involved in the process of trading. Costs that someone trying to run a business would understand. Simply, if he's only looking at the cost of commissions...all other costs of being a trader will get him/her as it has does for those before.

    Treat trading like a business or hobby...its our choice.

    Lots of profitable traders out there that can't do such for a living.
    Last edited: Sep 6, 2015
  7. EPrado


    Great point about slippage. I forgot to mention that. Most execution software on Sim mode are very generous on fills getting in (they might show lets say 400 lots on the bid in ES and fill you on a buy after the first two trades on the bid, regardless of the trade size, which most of the time isn't realistic). I believe TT's sim mode does take into account the trade size, but even that isn't always going to be realistic. As far as getting out of a trade on a stop, I am pretty sure none of the sim modes ever have slippage, which is definitely not true in a lot of cases, especially if you are trading bigger size.
  8. Ramses


    Thank you for your insight. As far as trading cost go, what else would you say is a big downfall for profitable traders? I took into accountability my charting, Platform, commissions, exchange and minor IT fees. Without counting taxes, should i be aware of other MAJOR fees? If so, what exactly?

    Thank you all for the great input :)
  9. Autodidact


    Scalping futures successfully and consistently is one of the hardest most challenging goals out there in the world of trading.

    Furthermore, comparing sim results to cash is akin to comparing masturbation with an orgy with Playboy bunnies.
    Visaria, Manuel, bone and 2 others like this.
  10. Ramses


    @Autodicdact, Thank you for your insight however i was asking for Fees and such. So far It's been working like a charm in a real account. It may be "The hardest" thing for you but not necessarily the most challenging in trading

    #10     Sep 7, 2015