SNP, swap over to DOW

[SanMiguel]

I have been trading the SNP for a quite a while and a lot of my strategy relies trading for 2pts (equiv to 20 pips or so) trades with occasional swing trades for around 20-40pts.
I'm wondering if I should swap over to the DOW as the spread is much smaller for almost the equivalent movement.
On the SNP, I pay 0.5pts, which is ridiculous to trade for a target of only 2pts really. The SNP moves about 20pts a day - that's 2.5% in charges.
The DOW moves about 170pts a day for a 2 pt spread, that's 1.2% 9 some brokers even have 1 pt spreads on DOW).
There doesn't seem to be much difference in price action between the 2 instruments - any thoughts?

 

[robster970]

2pts sounds like somewhere between scalping for a pt and hanging around a bit longer for 4+ pts - you get the worst of the spread/slippage and the min of the move. Go for a bigger move or learn to scalp.

Alternatively knock it on the head and swing thus freeing up more time for faffing around on here.

 

[SanMiguel]

2pts sounds like somewhere between scalping for a pt and hanging around a bit longer for 4+ pts - you get the worst of the spread/slippage and the min of the move. Go for a bigger move or learn to scalp.

Alternatively knock it on the head and swing thus freeing up more time for faffing around on here.

Not sure how you could scalp any less than that. 2pts when trading per 0.1pts is a decent scalp?
2pt scalp trading per 0.1 is same as
20pt scalp trading per pt on DOW
or 20pts trading per point on FTSE
or 20pips trading per pip on cable
for example.

just that a method like that calls for minimum spread doesn't it?
I do swing trade but medium term, it;s difficult to swing trade intraday for 10pts (100pips) though it can be done depending on the move.

 

[robster970]

Going for 1pt is not uncommon as I understand it with scalpers. Maybe I'm wrong. Maybe 2pts just sounds odd to me. I only trade ES and a 2pt move unless it is rattling around in a directionless state seems like an odd target to go for. It just seems to vibrate around for a bit or generally move >4pts at the start and end of the days where the volume usually is.

 

[SanMiguel]

Going for 1pt is not uncommon as I understand it with scalpers. Maybe I'm wrong. Maybe 2pts just sounds odd to me. I only trade ES and a 2pt move unless it is rattling around in a directionless state seems like an odd target to go for. It just seems to vibrate around for a bit or generally move >4pts at the start and end of the days where the volume usually is.

Where would you stop be in a 1pt scalp though - pretty dangerous to have a 1 pt stop on the snp.
I agree, 2pts seems to cut the trade short a lot of the time but 2 or 3 trades a day isn't too bad out of something that only moves 16pts

 

[robster970]

I wouldn't trade with a stop. I'd just get out if it's going to go against me under those conditions. I don't scalp though, too much like hard work. Maybe somebody who does scalp should answer.

On the other part about 2+pts, seriously man, let the PA take you out rather than have a fixed 2pt target - you know it's normal movements when not in a ranges are pretty large.

e2a - are you spreadbetting? If you are then I can see why trying to scalp for a point would be bonkers.

 

[timsk]

Hi SanMig,
It sounds like you're using a SB platform? If you can scalp either the ES or YM (or whatever the SB firms call them) on a SB platform - then you're a very talented trader, IMO! I scalp the YM on a good DMA platform and, just for fun, tried to do the same thing the other day on my 'play' ETX Capital SB account - just to see if I could do it. Nah, I couldn't, but that's not to say it can't be done. I would have thought that the YM is going to be 'easier' than the ES for the reasons you mention. I know a number of ES scalpers, and they usually go for 2pts (8 tick) targets as a minimum - and that's trading via DMA.
Tim.

 

[arabianights]

You're going to blow up. HTH.

 

[SanMiguel]

You're going to blow up. HTH.

Maybe, but seems to have been working for the last 6 months or more. They are all support and resistance scalps. That said, 0.5 spread going for 2pts (2.5 total) is a lot to pay. Hence why it might be better to trade the DOW in the same way.

 

[SanMiguel]

Hi SanMig,
It sounds like you're using a SB platform? If you can scalp either the ES or YM (or whatever the SB firms call them) on a SB platform - then you're a very talented trader, IMO! I scalp the YM on a good DMA platform and, just for fun, tried to do the same thing the other day on my 'play' ETX Capital SB account - just to see if I could do it. Nah, I couldn't, but that's not to say it can't be done. I would have thought that the YM is going to be 'easier' than the ES for the reasons you mention. I know a number of ES scalpers, and they usually go for 2pts (8 tick) targets as a minimum - and that's trading via DMA.
Tim.

The ETX system is not a good one for scalping IMO. Too jumpy and their charts also use the mid point. The spread is competitive sure at 0.3 but that's still more expensive than scalping the DOW.
Just wondering if the PA is that much different on the DOW.

 

[robster970]

Why don't you go DMA SM? Then you only have slippage and commissions?

 

[SanMiguel]

Why don't you go DMA SM? Then you only have slippage and commissions?

Never looked into it, presumably you don;t get DMA spread betters?
I've only used DMA on CFDs.
Only slippage and commissions
Commissions are what...£10 each way?

 

[robster970]

It's direct access so there is no spread to pay. You might get a bit of slippage if it's moving quick and RT for $4.

http://www.tradewithvelocity.com/commissions/product-commissions.aspx?productID=46

as an example.

 

[chris1976]

Hi san miguel

I've been having the exact same thoughts as you.
Lou (ITMS) put me in touch with craig at apex futures,if you tell them your with itms they have a special round trip rate,hell let you demo the platform for free which im currently doing.

But coming from SB ing i havent got a clue whats going on TBH

 

[chris1976]

robster,do any of these platforms provide free charts? even better ones that you can trade from?

 

[SanMiguel]

It's direct access so there is no spread to pay. You might get a bit of slippage if it's moving quick and RT for $4.

http://www.tradewithvelocity.com/commissions/product-commissions.aspx?productID=46

as an example.

So, the DMA for the emini would be pricing everything in dollars?
Opens me up to a bit of currency exposure in GBPUSD doesn't it, which I'd have to think about. Not an issue for scalps as long as it's converted back to £ at the end of the scalp?
So, 1 contract is $50?

Also, presumably it's taxable under CGT?
I wonder if anyone has done a comparison of
- SB spreads vs
- what you would pay in CGT going DMA + commissions

Hi san miguel

I've been having the exact same thoughts as you.
Lou (ITMS) put me in touch with craig at apex futures,if you tell them your with itms they have a special round trip rate,hell let you demo the platform for free which im currently doing.

But coming from SB ing i havent got a clue whats going on TBH

Thanks, will have a look.

 

[robster970]

E-mini is the S&P500 mini futures contract traded on CME. It's denominated in USD and it's movements are based upon 1pt = $50. The main S&P500 contract is five times larger ($250 oer point).

All spreadbetting variants of this are derived from this security and then hacked around to basically allow participants to spread bet using different currencies for different amounts per pt.

So trading DMA, you get no flexibility in what spreadbetting gives you when trading below $50 ppt. However if you're trading above this value and growing an account then you will have a lower cost of doing business in the long run as you don't have to handle spreads, SB'ing representation of price variations, etc.

You are right that you will end up paying CGT, corporation tax or some other mix if you are going to do this properly. However, when you arrive at this point you should talk to an accountant who will be able to help you sort this out.

Charting - look at Sierra or e-signal to go with your execution platform.

 

[SanMiguel]

E-mini is the S&P500 mini futures contract traded on CME. It's denominated in USD and it's movements are based upon 1pt = $50. The main S&P500 contract is five times larger ($250 oer point).

All spreadbetting variants of this are derived from this security and then hacked around to basically allow participants to spread bet using different currencies for different amounts per pt.

So trading DMA, you get no flexibility in what spreadbetting gives you when trading below $50 ppt. However if you're trading above this value and growing an account then you will have a lower cost of doing business in the long run as you don't have to handle spreads, SB'ing representation of price variations, etc.

You are right that you will end up paying CGT, corporation tax or some other mix if you are going to do this properly. However, when you arrive at this point you should talk to an accountant who will be able to help you sort this out.

Charting - look at Sierra or e-signal to go with your execution platform.

Are there any UK based DMA platforms where you can hold the account in GBP but it is converted to USD? I guess they would charge a spread on the exchange rate too.
I could hold an account in USD but I'd have to be very aware of the GBPUSD rate at all times and open up hedges to cover the account.
For example, a move from 1.5 to 1.6 in the rate would have me down 6-7% if my account was held in USD.

 

[robster970]

You assume the currency risk when trading a contract in another currency. I don't think any broker would hedge this for you. With the currency spread, you are getting spot market rather than Thomas Cook rates though

If you're in for only 2pts (max 30mins), it would be some move that moved it 10c though and I think if the currency pair moved that fast that quick, that you'd probably have your stop hit on ES anyway.

 

[chris1976]

Hi SM

have a look at pro spreads,theres a (thread on this forum) same 0.5 spread but DMA.
theres a decent discussion on that thread wether its worth going from SB to futures and the tax implications.