A friend of mine came up with this... did a quick analysis to determine what I already knew in my head. Scalping definitely generates more Net Profit and for anyone with a calculator it is a no brainer. The following is a table from the analysis. The analysis was taken from the day session for the last 3 days on the Nasdaq E-Mini (see attachment - it's a Word Doc) The only way to have the potential to make more than a day trader is to position trade large size.
Change the strategy from whatever it was that was used to generate the results in the Word Doc... One could argue that another trading style is more profitable than scalping. Also, you can use a different set of 3 days in comparison to the most recent 3 days to your Word Doc and get results that another trading style beats scalping. Heck...change the trader...throw in some real money (no hypothetical theories) and get completely different results. Mark
I do not believe that I can get 100 % of all points possible in any kind of trading. My simulation of a day trading system suggests about 1/3 of total profit disappears as slippage. The day traders that visit EliteTrader.com might verify this. Is slippage about equal to 1/3 of daily profit?
NihabaAshi, lol, but a very good point. However this guy has been working on a black box for some time so I've been keeping tabs on him and his results have been consistent for many months. His selection of the past 3 days is only representative of the consistency of his methodology - he's running at 85%+ profitability after slippage. My own observation as a scalper is that I will almost always out perform a trader who is as good at picking set ups as myself but uses a higher timeframe. I benefit from the wiggles that would be random noise in his chart. By the way, I think this guy intends to rent his Black Box when it's ready and I might be able to get a trial for ET members. He's not happy with 85% profitable trades. Yesterday on 33 trades it was 90.91%.
Hook N Sinker - you missed the point but you are correct, 100% is impossible. The point is the swing from absolute high to low of the tradable wave. The shorter the timeframe the more waves appear that can be traded. The shortest I can go is a 3 range chart, so if the YM moves 4 points from a top/bottom I'm in. Someone using a 5 min chart could never take even half the trades I take.
The main premises of scalping are: Lessened exposure limits risk - A brief exposure to the market diminishes the probability of running into an adverse event. Smaller moves are easier to obtain - A bigger imbalance of supply and demand is needed to warrant bigger price changes. It is easier for a stock to make a 10 cent move than it is to make a $1 move. Smaller moves are more frequent than larger ones - Even during relatively quiet markets there are many small movements that a scalper can exploit.
I would have posted this earlier but I had a system conflict. This is typical of the auto system and I could post day after day of this stuff. I've told him it's good enough to release and he can then release an upgrade to satisfy his perfectionism, but the boy thinks he's almost there and wants it just right.
The shorter the time frame , the more you CAN make, yes. Only probem left is to find that perfect machine
Perfection results in ULCERS......... There is no perfection in trading, especially trying to "nick" the mkt all day long. Tell the boy to save himself. He will burn out before so called perfection. Software venders, YEE gads. Want perfection, admire classy Ladies.....
Of course to generalize like this is silly. If I make X% profit with 5 position trades in the same timeperiod while you made the same X% profit with 200 trades, who is the better trader? My commission will be obviously less.....