Scalping Vs. Runners

Discussion in 'Trading' started by John9999, Oct 12, 2018.

  1. Handle123

    Handle123

    Even chop has a trend relative to where price is in within a swing of longer timeframe, so if longer trend is up, on longs add another lot using exact same SL of scalps. Trend trades are "potluck" anyway, don't make sense to me to extend risk.
     
    #31     Oct 14, 2018
    birdman likes this.
  2. vanv0029

    vanv0029

    #32     Oct 14, 2018
  3. Turveyd

    Turveyd

    Yep, obviously don't chop trade against the trend, only with the trend.

    Jumping on a trend too often turns into chop and chops you :(

    Realising, Trading Chop with Trend if any, only when the loss is kept to a Min is what's making good money, giving up on the hero trades :)
     
    #33     Oct 14, 2018
  4. Handle123

    Handle123

    Like with Megaphone pattern, chop is buy low and sell high, 2 with trend and one counter, there nothing left but losses if buy on momentum or breakouts,
     
    #34     Oct 14, 2018
    birdman likes this.
  5. SteveH

    SteveH

    What you're not taking into account are the losing trades. You're taking LARGE loses because you have your biggest bet on the very first entry. Your "runners" are going to force you to have A HIGHER AVERAGE WINNING PCT in order to compensate for your AVERAGE GAINS not being as high as they could by going all-out.

    You need to reverse your thinking. If you feel you are near the beginning of a good trend, take a standard lot position, let the market move favorably in your direction. Let it have a reaction against you. So long as that reaction stays at least X ticks away from your last position, you can take ANOTHER POSITION IN YOUR FAVOR. You will be able to do this with 2-5 add-ons in a good trend. You simply don't let the most recent add-on encroach upon (or close through) your 2nd to last position. That is controlling your leverage so it doesn't cascade against you. In fact, you expect the last reaction to, at worst, give you a breakeven on your 2nd to last position.

    If the market is going to move a total of X distance from your entry point then why are you willing to take your largest loss at the very beginning? It only makes sense from a math perspective if you are going all-in / all-out. If you want to trade 3 contracts max in a trade sequence and I do too, if you enter everything upfront then your loss is 3x what mine will be if I enter 1 lot initially and then add 2 more lots on the way to the same target. I will always take a 1x loss and you will always be taking 3x that amount. And for what? You have no greater certainty of the trend working out in your favor then I do.

    [I use the above as an example of adding to a trend. Most of the time I go all-in / all-out within the context of a trend]

    Your whole mindset is backwards. Your approach to taking losses on initial capital in a trade sequence is the wrong way to go.

    ------------------------

    Tharp's "Trade Your Way To Financial Freedom", page 265 - What to Avoid

    "There is one kind of exit that is designed to get rid of losses, but it
    totally goes against the golden rule of trading of cut your losses
    short and let your profit run. Instead, it produces large losses and
    small profits. This type of exit is one in which you enter the market
    with multiple contracts and then scale out with various exits. For
    example, you might start with 300 shares and sell 100 of them when
    you can break even on all 300 shares. You might then sell another
    100 shares at a $500 profit and keep the last 100 shares for a huge
    profit. Short-term traders use this type of strategy frequently On a
    gut level, this sort of trading makes sense because you seem to be
    “insuring” your profits. But if you step back from this sort of exit
    and really study it, you’ll see how dangerous this type of trading is.
    What you are actually doing with this sort of exit is practicing
    reverse position sizing. You are making sure that you will have
    multiple positions when you take your largest losses. In our exam
    ple, you’d lose on all 300 shares. You are also making sure that you
    only have a minimal-sized position when you make your largest
    gain-100 shares in our example. It’s the perfect method for peo
    ple with a strong bias to be right, but it doesn’t optimize profits or
    even guarantee profits. Does it make sense now?"
     
    #35     Oct 15, 2018
  6. qlai

    qlai

    OK, I understand what you are saying. I don't think we are talking about the same thing exactly. I agree with above for swing/trend trading (even some day trading). But if you are a scalper, you scalp. You do it with large size and small risk. Obviously, you need to have an edge where you are profitable doing it. So now you are doing your regular thing and reached your goal for the day. You can continue scalping but change it so that you leave some/more shares/contracts for runners which have lower odds of succeeding. You only let it ride if it's already at break even or better. If you are experiencing lots of losses on your entries while scalping, then you are obviously not doing a good job at it in the first place. I don't want to confuse things with adding to positions, because that's a different topic altogether, but what you describe makes sense to me.
     
    #36     Oct 15, 2018
  7. bone

    bone

    Just me - it is very difficult for a legit scalper to let a winner run. And I scalped in the Bond Pit and I have scalped on the screen. If you are legitimately scalping, you are buying bids and selling offers. A true scalper gets taken out of a position way too early for it to be called a "runner".

    Now, on occasion, when a market was really moving - let's say the market was selling off rapidly and the bid side of the DOM became very thin, I would step out and hit a bid and hold them. But that was not a common occurrence.

    Technical indicators are by design and definition lagging. They sample a historical pool of past price or volume prints. You have no way of knowing if what you just bought or sold will be good for one tic or fifty tics. That's why indicators for market "choppiness" are next to useless for a scalper. By the time you get a signal in the affirmative - you've been sodomized. Repeatedly. For some time.

    IMHO the only way for a scalper to have any sense that a trade may be good for more than a tic would be 'acquired art through experience'.
     
    #37     Oct 15, 2018
  8. Turveyd

    Turveyd

    New account nearly 2 weeks of history, +$966 or 48%, 37 positions average absolute Pt value is 6.02, biggest pt profit is 11.3, bigger pt loser is 23.2, 86.5% win rate.

    That's the kinda scalping I do!!

    No comms to factor in, All in the spread!!
     
    #38     Oct 15, 2018
  9. qlai

    qlai

    I think this kind of scalping is long gone to the HFTs. Maybe some thin instruments you can still do it manually, but you gonna get run over sooner or later. Just an opinion. There's been some discussion here on what scalping is. I'm thinking in terms of micro momentum bursts and seeing how far they can carry me.

    Percentages do not tell the whole story. If it's not scalable, it's not as desirable/viable.
     
    #39     Oct 15, 2018
  10. Turveyd

    Turveyd

    Why do I need to Scale it, I've made nearly 1K in about 2hours of actual trading time and had 1 bad trade wipe out a lot of my profit and still got back to +1K, 1K in 2hours is fine with me :)

    That's at $10 per pt DAX, I can go to $100 per pt so 10x's the profit, with 10x's the account size!!
     
    #40     Oct 15, 2018