My biggest thing holding me back is not having the confidence(?) to hold on for big gains. I've been scalping so long it's engrained in my head and I need to find a way to wrap my head around holding trades, WINNING trades! Take a look at the 6E chart - only 1 trade for 5 pips but could have had 100+.
I've made the move to remove the auto bracket orders (target and stop) that get placed when I enter a position. Now I only have the stop order get placed with no target limit order. That way I can wait for price to make a nice move, in theory, before I place the exit order or exit with a trailed stop. But so far this week, that hasn't worked to well.
Scalping is okay for some traders I think, but I generally risk more on a trade (as many have observed through my avg.win and avg.loss stats) than I get reward for. But to make the numbers work the win% must be high and mine just hasn't been lately. Thus my 2009...
2010 will be the year of converting myself into a swing trader (or a scalper holding for points instead of ticks)!
No GCL system trades for me for awhile until much more forward testing can be done.
Net breakdown: ES $9, 6E $58, GCL $218, ZS -$58
| RESULTS FOR DAY | |
|---|---|
| Contracts: | 11 |
| Net $P/L: | 227 |
| Wins: | 9 |
| Losses: | 2 |
| Win%: | 82 |
| Avg$Win: | 47 |
| Avg$Loss: | -99 |
Posts
Scalping on ES is much more difficult than it looks. If you have a 4 tick stop and target then you need 55% winners to breakeven assuming $5 roundtrip commisions. And 60% winners only gives you an expectancy of $5 / contract. So to make $250 / day you'd need to be trading at least 50 contracts / day. I think many people who try scalping don't look closely enough at the numbers and what is required to make a living doing it.
ReplyDeletejzw yes 55% is needed to breakeven, but 5.5 contracts are all that you need to make 250$ if your winner/contract is 45$, its as simple as that, you have readed too many crappy books with that expectancy and you make confusions. 60% wins and 5 contracts/trade will get you a very healthy profit depending of course on what 250$ risk means in terms of % of initial capital
ReplyDeleteExpectancy is what you make on average i.e what is left over after you subrtact your losses. Look at it this way - 10 trades, 60% winners, 5 contracts / trade, $45 wins, $55 loss. Total win = 6 * 5 * 45 = 1350. Total loss = 4 * 5 * 55 = 1100. Net P/L 250 with 50 contracts traded or $5 per contract. So if you want to average $250 / day you need to be trading 50 contracts / day. Of course some days you'll make a lot more than 250 but some days you'll lose bringing your average down.
ReplyDeletejzw, really...i just cant argue with something like that.
ReplyDeleteJZW,
ReplyDeleteyour math is correct. And of course you will never make money with 4 ticks target. Every trade must be different. Let say your entry 5 ticks before S/R line. Then 1 tick is for slippage and 2 ticks before S/R line will give you only 3 tick room for high probability trade. Attempt to get 4 ticks in this situation will decrease probability probably close to 50/50.
Why not to try to get 6 ticks on strong trend if you entered 9 ticks before S/R? The other trick to increase profit is to risk more money on the higher probabilty trades and decease number of contracts on more riskier trades.
JZW, Paul, TB52, you are all saying basically the same thing. If it weren't for having to always pay the bid/ask spread and commissions, scalping ticks would be MUCH easier! That's the bottom line.
ReplyDeleteMBA,
ReplyDeleteI trade the DAX- 1 tick cover four trades. Commisions are not a problem for me.