Scalping ideas

Hope we can share some ideas. I have read about a few traders making nice profits scalping but I haven't had much success. This is one idea I have for the YM. Use a 1min chart and a 4 RSI. Look for a recent high/low move and set fib levels. Buy when the RSI goes below 15, a fib level is reached and the index starts to bounce. Use a tight trailing stop. Do the opposite for Sells. This is just a rough idea and needs more work before I would trade it.

excuse me for my ignorance ,I am an ex institutional proprietary trader but I have been thinking a lot about scalping lately and I can't see why the reward / risk is higher than it would be swingtrading ?

scalping is only for professional traders who pay cents per side and who have direct access into the exchange

swing trading is only for those who are putting off the inevitable

stevet said:

scalping is only for professional traders who pay cents per side and who have direct access into the exchange

swing trading is only for those who are putting off the inevitable

Click to expand...

Retail commissions are viable enough for home-based direct access scalpers.

professional fees are a consequence of high volume trading - and scalping is high volume trading - so anyone who is making money at scalping is going to be on professional fees - so by extension - anyone paying retail fees is not scalping

Totally agree with stevet. If I run the figs it is clear that if I was paying even 15p/lot more than I do it would be very difficult to make money scalping. You really do need sub 50p/lot commissions to make scalping work and you need to be doing 20,000+ lots/month.
Suppose it depends on your definition of scalping. In my case costs are greater than my net PnL most months.

I know this was meant to be a dow thread but here is the FX scalping strat I am currently using. I dont see any reason whay you cant use it on the dow.

1 minute chart
macd standard or personalised (using bbmacs 8-12-8 suggestion)
looking for basic TA... support, resistance, trend breaks, patterns etc
MACD divergence to confirm turn (although this can be a separate signal in itself)
The bolly band are for show so ignore them

GBP chart shows my set up for the afternoon.
15 mn chart showed 1-2-3 target (which i missed) @ 8405 and expecting a sell off there.

1 minute chart shows price stall at that point (and a favourite round number trade)
Trend break & macd divergence to confirm turn
green circle for entry took profit on +10 (all i was going for)
With hind sight could have stayed with trend for a lot more.

Next entry, again using macd divergence, early entry long off the high of Doji bar (green circle) or on trend break.
Other long reasons would have been pivot reaction and also previous s/r area. I never took this particular trade as missed early entry as i was on the phone.

I intend to scalp trade price & macd divergences confirmation off s/r area's in this way and looks promising when combined with my other chart analysis and trading on other time frames.

Enjoy

Happy trading

NB

stevet said:

professional fees are a consequence of high volume trading - and scalping is high volume trading - so anyone who is making money at scalping is going to be on professional fees - so by extension - anyone paying retail fees is not scalping

Click to expand...

Its all a matter of definitions. I am a "retail scalper" and I make healthy profits.

If you are defining scalping as hundreds of trades (on the stock, not futures markets) a day then, yes, I agree with you.

I think of scalping as a rapid-fire intraday technique, but I don't do hundreds of trades a day. I am stretched to do more than a handful per day. Given that I am a futures scalper, I can trade the equivalent of thousands of shares, but pay tiny commissions e.g. I can trade a face value of $1 million for a commission of $50 each way (e.g. 10,000 shares of the spiders via the Emini). So retail commissions are not a major consideration.

its not just the number of trades - you pay per contract per r/t - so anyone scalping succesfully would be pushing size on each trade and doing professional volume

stevet said:

its not just the number of trades - you pay per contract per r/t - so anyone scalping succesfully would be pushing size on each trade and doing professional volume

Click to expand...

I added a note about the fact that I trade futures, not stocks. It changes the commissions equation.

I would add that I used to trade Nasdaq Level 2, prior to the SECs decimalisation of prices (decimalisation, which occurred a few years ago, spoiled the bid-ask spread scalping game).

I used Cybertrader in the good ole days. Even with their relatively high retail commissions (which, over the years, they reduced), I was still able to make a good living.

how much is the comms for 1 lot on the dow futures CBOT , retail ?

mr.marcus said:

......scalping here is being used with a broader brush stroke obviously....it doesnt matter what sort of trader you are...no label will make you a success...so from that aspect i argue the term is irrelevant(to me anyway).we know the sort of ideas were gonna discuss here within this lose definition. i would however be interested in a strict definition as a matter of interest.also hoping stevet/twalker can help with making the most cost wise personally......cheers mark j

Click to expand...

Very well put. I fully agree with you about "labels". No label will make a trader a success. Labels simply describe a mode of trading, which is why it is important to be specific about definitions.

wisestguy said:

how much is the comms for 1 lot on the dow futures CBOT , retail ?

Click to expand...

Depends on where you go. Don't pay more than $2 to $3.

OK , i've just spoken to an ex collegue of mine , and have found the answers to my own question.

Dow emini comms for Refco = $ 8 per order .

not sure what it is for the large contract , irrelevant in anycase unless you like trading 3 bid against 5 offer , ie ) illiquid contract.

The main thing in trading is to trade a positive expectancy method which you feel comfortable with. For some people, this is scalping (under its various definitions!). For others it is holding for days to weeks.

This is an excellent thread, and I am enjoying reading the contributions of the various members, be they newbie traders or those of us who are established, successful traders (regardless of our chosen trading style and however we choose to "define" it !!!).

wisestguy said:

OK , i've just spoken to an ex collegue of mine , and have found the answers to my own question.

Dow emini comms for Refco = $ 8 per order .

not sure what it is for the large contract , irrelevant in anycase unless you like trading 3 bid against 5 offer , ie ) illiquid contract.

Click to expand...

Sounds a bit steep.

steep ? I guess , how much lower can it go ? $6 ? that's still more than 1/2 a tic .

I've been at this about two years now, and was not successful at the "big picture" swing stuff using wide stops. I consistently lost money.

I'm now much happier with what I call scalping. I trade the FTSE future using DA and pay USD 3.00 commission and GBP 0.56 exchange fee per RT. After I enter a trade I wait with the ticket to put a stop for a half point profit - GBP 5.00. Sometimes I get stopped out almost immediately, other times I will trail the stop and then get out for anywhere between three and ten points. Unless it makes a big move in my favour, I will usually be happy with ten points and then wait for the next opportunity. (If I find myself 5 points offside I'll just get out).

For me, this is a much more comfortable way of trading. Most days now are profitable ones. But I don't suppose I'll ever be a millionaire!

a scalp trade is basicially a non-directional trade taking advantage of a technical aspect of the market, though in a stongly trending market - a scalper would tend not to fight the trend

a lot of learners pick up on the term as it sounds good - and they think that its an easy way to make money - they soon learn!

scalping is not possible at retail rates since the methodology works on doing a lot of scratch trades - and thats for stocks or futures