Scalping ???

Discussion in 'Index Futures' started by Hawker, Jul 28, 2003.

  1. Hawker


    I’ve read about it in some books, magazine articles and in the Web, however I don’t get it. Is not that I’m trying to be a scalper I don’t have the money ,the skill and the tools to become one but I’m asking myself how they do ?? How tight are the stops or how large are the profit target working on YM , NQ or SP ?? Specially the YM where the tick is 5 bucks?? Is a very hard work !! Somebody illuminate me please… :confused:
  2. Neither did most of them.... but they had desire and perseverence, and no doubt a good dose of common sense and intelligence too.

    The things you mentioned can be given to you.
  3. Scalping is periously difficult work. Strive to be more of a Swing or Position trader. You'll live longer.
  4. Nice that somebody finally started a thread on scalping :)

    Well, true. Scalping is absolutely the hardest form of trading, in terms of concentration and discipline.
    You definitely need nerves of steel, passion and determination to succeed.

    He's right also on the trading style. Start position, then go swing, and if you're getting good at that, you can have a look at day trading.

    Once you're really, and I mean seriously good at day trading - Have a look at scalping. Simulator trade for a few months and see what you can do.

    The point that you need "lots more money" in order to scalp the futures, I think is just plain nonsense. I just don't get it. From my personal experience, I can make a lot more money scalping with the same amount of futures I use when I'm going for a 5m-4h swing. The "scalpers need lots of money" thing might apply if you're trading stocks, but not futures.

    Unless you're a loser of course. If you're a loser at scalping, then you'll need -plenty- of money. You can lose thousands a day just trading 1 contract of the ES - Easy!

    All in all, however, scalping is an amazing discipline, and something that even many most excellent day traders don't understand. This is because they approach scalping like "ultra-short-term day trading". It isn't.

    Scalping is different. It's less about TA etc, and more about identifying emotional trading and professional trading on the T&S, as well as observing well and non-stop(!) what exactly the T&S and depth is doing. You look at momentum, sentiment, greed and fear, rather than price patterns.

    Essentially, you cannot deviate in any way. You MUST be watching the screen and focus. You often can't just go for the loo or make yourself a tea etc. -You know what I mean.

    Day Trading is a fantastic discipline and can be very rewarding. Also, it's comparatively relaxing once you get the hang of it.

    While I scalp a lot these days (ES, NQ and some Naz stocks), my scalping experiences have really made my day trading (mainly retracements, some breakouts) feel quite "easy". Going back to day trading from scalping is like being an NBA player playing in Europe.

    This, in itself, should give you an idea how difficult scalping really is. Unless you're well versed with all other forms of trading - Don't even think about it. Period.

    Besides, it is to be noted that all scalpers (including myself) have, commission-wise, a great disadvantage to the "professionals", who make a living scalping themselves, owning seats on the exchanges. This might be wrong, but I heard that all the pro's pay for trading lots of ES etc. is a $0.25 transaction (clearing) fee.
    Nevertheless, they paid ~300K or more to get the privilege by buying a seat. So if you really want to scalp seriously - Make sure you made your dough day trading in the first place.

    I'm considering maybe buying a seat sometime. My problem is that I'm overseas, so buying a seat on CME might not be such a good idea. (also tax-wise etc). And I certainly wouldn't wanna immigrate to the USA.
    Probably better off buying one on the SFE (Sydney Futures Exchange). Sydney's a nice place to live, too. :)

    Any advice or comments from ppl with similar ambitions / problems / experiences is very welcome here...

    Altogether, I think that scalping is probably the "best" or "final" of trading styles - Lowest risk (smallest stops), least time exposure, highest consistency (if you're seriously good, you shouldn't have losing days, for example) and as a result of all this, the smoothest equity curve, not to mention highest profits.
    But maybe that's just personal opinion. Feel free to flame me.

    In terms of what you can make in a day trading the futures - 1-2 points (average!) is good if you're day trading the ES, for example. But if you're scalping, you can theoretically double, triple, quadruple that. It's a completely different level.

    I should mention here that I don't consider myself an excellent scalper yet either - I'd really like to improve a LOT of things about my scalping. Any input or a discussion on this thread about scalping with other people (who actually do it!) I'd greatly appreciate.

    Also, I'd be hot on discussions about tape-reading, typical T&S maneuvers on the CME, fake-outs, fades, staggering etc etc...

    With my Compliments to all Trading Brothers,
    ~The Scientist :cool:
  5. Hawker


    Dear Friend Scientist,

    I want to thank you and the others for the insights !! Actually I'm just curious about the scalping issue I'm not planning to become one at least for now however I've learned it is a tough business risk exposure calls my attention. How many points you should looking for ( average) per contract??!! And how tight the stops should be ?? :)
  6. its simply labor intensive day trading,
    execution, concentration and discipline are keys, alot of ex floor traders are good at it because they have trained to stay focused sharp as a razor for hours at a time, stops are nonexistent, your out as soon as you know your wrong on the scalp or the signal you are taking, its that simple when you lose, move on to the next trade, dont look back......, commissions and tight ranges are the major issues confronting scalpers.
  7. Hmmmm
    in theory
    in theory communism works
  8. nitro


    There is only TWO things that matter:

    1) the barest bones commissions you can get your hands on
    2) the absolutely fastest executions. Since you often want to get filled on the bid when going long and on the ask when shorting in these cases, you better figure out a way to get in front of the line when you have an edge - enough said.

    Otherwise, think about it. If you pay the spread in, and the spread out, and now add say $5.00 per round trip, you are already down $30 on the get go per car [assuming ES.]

  9. I am a "scalper" on the nasdaq. i wouldn't say it's the hardest, most difficult way of trading. You just need, as nitro said, the fastest executions and the lowest commissions.

    The biggest difference with other forms of trading would be that you are so close to the market, you get to "feel" the orderflow coming in and out of the market. Instead of trading patterns of multiple "gusts" of orderflow, you trade the orderflow itself. If at a particular moment the buying orderflow is just a little stronger than the sellers, but you think it's just an thing of the moment, you try to short on the ask, and then you try to buy it back 1, 2 or max about 10 cents lower (on the most liquid stocks).

    Daytraders would look more at if combinations of buy or sell imbalances than at every single moment of imbalance itself.

    I hope I made a little sense..
  10. 1) If scalping isn't the hardest form of trading, then wtf is? Swing?

    2) 1, 2 cents? Does this atually work?

    3) You must have really low commission rates or deal with tickets and a very large amount of stocks at a time?

    The only scalping I do today (if I do) is Nas, aiming for 5-15 cents.
    I wasn't aware that people still scalp for just a single tick or two on the stocks. Must be a daunting task. 'Suppose it's easier than on the ES, I just don't understand routing / ECN's all that well...

    4) How well do you understand routing and ECN's ? Which ECN's do you use mainly?

    5) Do you scalp NYSE stocks at all? Are they still suitable for scalping?

    Cheers Brother,
    ~Scientist :cool:
    #10     Jul 28, 2003