Best Thread How To Make Money Trading The Markets.

[bennie83]

hi there!

I've been trading index futures (FTSE & S&P) on and off for 5 years I want to scalp these futures contracts (using level 2 platform). My problem is that I cannot find an optimal stop loss & risk reward ratio for scalping. For instance, I have placed my stops very tight i.e. 4 ticks on emini contract, but obviously this got hit too much, only to reverse 10 mins later. So I tried increasing the stop to 12 ticks, but this was too much risk considering I was only taking profit at around 6 ticks. I prefer intraday trading to position because I like to close my positions in the evening and sleep easy. Any guidance anyone? Many thanks.

 

[pedro01]

hi there!

I've been trading index futures (FTSE & S&P) on and off for 5 years I want to scalp these futures contracts (using level 2 platform). My problem is that I cannot find an optimal stop loss & risk reward ratio for scalping. For instance, I have placed my stops very tight i.e. 4 ticks on emini contract, but obviously this got hit too much, only to reverse 10 mins later. So I tried increasing the stop to 12 ticks, but this was too much risk considering I was only taking profit at around 6 ticks. I prefer intraday trading to position because I like to close my positions in the evening and sleep easy. Any guidance anyone? Many thanks.

your stop loss should be set at the point you know you were wrong about your original call in my opinion. Sometimes that will be further away than you like & you'll have to pass on the trade.

a fixed number of points/ticks on every trade seems very arbitrary to me...

 

[bennie83]

your stop loss should be set at the point you know you were wrong about your original call in my opinion. Sometimes that will be further away than you like & you'll have to pass on the trade.

a fixed number of points/ticks on every trade seems very arbitrary to me...

interesting point, thanks Pedro. So this would mean that scalping would not be possible with this kind of strategy.

 

[bfirth]

bennie83, this stratergy has nothing do do with scalping or index futures, which move totally differently, you will get a lot more help asking in a more appropriate thread or starting a new one.
bry.

 

[Mr. Charts]

Thanks, Bry.
Bennie, as you can see this thread is about day trading US stocks, not scalping futures, so your question is not in the right thread.
Richard

 

[Mr. Charts]

And Pedro is right - why on earth exit a winning trade just because it's hit an arbitrary target?
Exit when you have evidence the price is turning against you -or about to do so.
This applies to stocks as well - otherwise I wouldn't bother to comment.

 

[turnerbombs]

On page 36.

I just want to say that I am enjoying the read and appreciate the time each of you have put into this thread.

 

[pedro01]

This thread shows much promise...

It's going to take some getting used to - but in my opinion there seems to be gold in them there hills

 

[bangzilla]

Hey Mr.Charts
firstly thanks for the thread its been very insightful.

i have two questions

1. How often would you say you actually come across and are able to trade the types of trades youve been posting?

2. the reason i ask is because in the last two weeks of experimenting, ive been having trouble finding stocks that continue to trend past around 10AM . I was hoping you could comment on this.
Ive been finding alot of these types of stocks (using a very simple screen at about 9:45) that trend nicely in the morning but then loose all momentum very quicly.
I posted a chart of a typical example of my situation, it is a 3 minute chart.

any help would be great =)

 

[Freeman.ayres]

Hello Mr. Charts

I agree with Bangzilla, I have been experiencing this type of behavior for about a month o so, were a stock swings nicely for a very short period of time and then it just lingers. That can make me loss big time. I would appreciate your comment on this issue.

Thanks for your useful postings.

 

[Mr. Charts]

pedro01,
You've got it
Richard

 

[Mr. Charts]

bangzilla,
Yes, I know there have been choppy days - that comes with the territory.
You simply have to search till you find the right opportunity.
On choppy days I find one or two or three; on other days, I find several.
Of course, as I keep saying, this is just one of several techniques I use and I'm always looking for any of the different set ups I use to occur.
Many stocks develop momentum later in the US trading morning (4pm - 5.30 pm UK time), often as well in the US afternoon (6.30pm - 9pm UK time).
It really is about being persistent and not expecting something to trend all day, but part of the day - whichever part that may be.

 

[Mr. Charts]

Freeman,
The same answer to your question, but I'd be concerned about your statement,
"That can make me loss big time".
You do NOT lose "big time" if you concentrate on the tight stop loss and then trailing stop scenario I've described many times.
If you are losing frequently then your stops are either far looser than mine, or you are entering trades which are not exhibiting clear trends at the time of entry.
Hope that helps,
Richard

 

[Freeman.ayres]

Freeman,
The same answer to your question, but I'd be concerned about your statement,
"That can make me loss big time".
You do NOT lose "big time" if you concentrate on the tight stop loss and then trailing stop scenario I've described many times.
If you are losing frequently then your stops are either far looser than mine, or you are entering trades which are not exhibiting clear trends at the time of entry.
Hope that helps,
Richard

Actually, I was a happy trader, but lately, i have been losing, not to the extreme of having negative numbers but I am breaking even. So, I am now back to papertrading to find out what is going wrong.

Thanks

 

[vforce]

and of course - a pedro01 post would not be complete without a bit of automation - Tradestation screen with list of suspects, trend, high/low of day, position size & strength relative to $INDU...

I accept hearty pats on the back in exchange for software....

Hi Pedro,

I would be grateful if you wouldn't mind posting your radar screen.

Thanks!

 

[dubula11]

Just a few things i have noticed from your method mr charts (now i may have read your charts incorectly so correct me if i am wrong). A lot of the trades you take maybe over half are above your defined risk of 12 cents atr. Also I think you have mentioned that good volume for these trades are 300k to 500k but a lot of your trades are below 20k.

There still are quite a few trades to take if you stay within the defined criteria and as you have said obviously dont try high atr stocks until you have good experience. I do feel 50% of your trading, correct me if im wrong, is concetrated in level 2 info.

I have looked at this sort of strategy on forex with the 10ma on and it may seem to be profitable over the long term. However if using this on the forex or on us stocks, 1 thing is unbelievably important and obvious as you say, you have to wait for the clear trnds to form and stick to the strategy and be coldly effecient. Anyway thanks for the thread.

also, I could be talking completely out of a hairy camels **** so please correct me if i have deviated or said something incorrect.

 

[mEmmerrr]

Is there a minimum amount of capital required to trade these stocks directly? Spread betting is just not very good, but I do not have $25k. Can you open an IB account for 2k or so and adjust your risk accordingly?

Ta

 

[Mr. Charts]

Just a few things i have noticed from your method mr charts (now i may have read your charts incorectly so correct me if i am wrong). A lot of the trades you take maybe over half are above your defined risk of 12 cents atr.
I have never said my "defined risk of 12 cents atr".
People starting this method should restrict themselves to lower atrs, but I've been trading full time for a living for nearly 10 years but even then I lower my position size if trading very high atr stocks

Also I think you have mentioned that good volume for these trades are 300k to 500k but a lot of your trades are below 20k.

That isn't true either ! 20k what ? I have not said 20k total volume. You seem to be mistakenly assuming I'm talking about volume per minute. IN THIS PARTICULAR METHOD I like trading stocks which have already printed off at least 200-300k.

There still are quite a few trades to take if you stay within the defined criteria and as you have said obviously dont try high atr stocks until you have good experience. I do feel 50% of your trading, correct me if im wrong, is concetrated in level 2 info.

I prefer to see continuing momentum at entry on level 2 T&S - it is confirmatory, but not essential.
Sometimes level 2 indicates nothing but noise, other times it confirms an entry and sometimes warns me of an imminent reversal.

I have looked at this sort of strategy on forex with the 10ma on and it may seem to be profitable over the long term. However if using this on the forex or on us stocks, 1 thing is unbelievably important and obvious as you say, you have to wait for the clear trnds to form and stick to the strategy and be coldly effecient.
Correct
Anyway thanks for the thread.
I'm glad you've found it useful.

also, I could be talking completely out of a hairy camels **** so please correct me if i have deviated or said something incorrect.

That's ok, no problem. I hope I've clarified any slight misunderstandings
Richard

 

[Mr. Charts]

Is there a minimum amount of capital required to trade these stocks directly? Spread betting is just not very good, but I do not have $25k. Can you open an IB account for 2k or so and adjust your risk accordingly?

Ta

You are best reading the IB site for details of what you can do with what amount of capital deposit.

 

[Mr. Charts]

Got my eye on several stocks this afternoon, including POT and SVNT