Money is money to me, you put 10 cars on any edge it gets serious enough.

sold already, wtf. I'm long gold THIS WeeK and u dump 11am monday morning... im dying laughing.

ha well yeah what can i say. don't get me wrong...i'm still looking this week for good spots to go long.

This is way off fwiw.

This particular subforum is super weird. There are some very smart people, some very successful at trading etc, but a lot who assume their own style of trading is the only possible way to trade.

I can tell you first hand from things I've done both in poker and trading that you have significant control over risk when trading. In poker you don't, because if you don't play enough hands you lose to blinds. You can't wait for aces and except to ever profit. In trading, you can. You can wait for the most beautiful, perfect setup with confluence on 10 different time frames right at s/r levels and land yourself a trade and scalp yourself a small profit 90%+ of the time. Of course, no one trading for a living could live off that, but that's not the point. You have complete control over the types of trades you take. If you're not sure what your edge is then you've failed to do your homework. It's not the market's inherent variance that's failing you, it's your lack of preparation to understand what you are doing.

If I run a style of trading that puts down wins with a W/L ratio above 1, and a winrate of above 60%, I'm already managing risk much more effectively than I am playing any reasonable stake of poker where I'm winning at showdown 48% of the time (HU anyway) and having to take 100BB risks to protect very small EV edges.

+1

i'd love to see a spreadsheet with a typical day's trades.

stay away from the plo imo

The problem with this line of thinking is that markets aren't static. Different market regimes reward different strategies, and it's impossible to tell whether your strategy is undergoing a drawdown or its edge has disappeared. The best traders run a "portolio" of strategies so that even when certain strategies are underperforming, the others will pick up the slack.

Furthermore, 99% of risk control in trading (assuming you've passed the hurdle of having an edge) centers around the 0.1% of the time when markets are going crazy. You can have years and years of "reliable" metrics get tossed out the window in a freak move.

A prototype day for me. Thats $220 per car after commish for an hour and a halfs work.

Not sure if this has been done already in this thread, but if not, can someone give me a hypothetical example of a Forex scalp?

I think you guys might be using the term differently than how I understand it. I am familiar with scalping from sports betting, which is an arbitrage situation where for example one book is offering +120/-130 and another offering +100/-110.

So you place properly sized bets on +120 and the -110, execute simultaneously, and you will have locked in a profit no matter what the outcome of the bet.

The risks are that the execution will fail (i.e. the price will move on one book before you can execute that side of the scalp), and the credit risk that one of the books will go busto before paying you.

But the theoretical risk on the trade itself is zero.


It sounds like you guys are using the term differently though.

^^ yeah ditto. Definitions aren't too important I guess, but could you say as long as you are using limit orders you are always scalping? Does it just depend on time frames or something?

step 1) identify tight intraday range
step 2) set limit order buy or sell right at the top or bottom of range
step 3) define stop as just below the range and limit as in the middle (for a long)
step 4) hope you're correct and you make a tiny bit more than you lose.
step 5) ignore what's really going on in the market so you don't get upset when you miss 1,000 pip moves
step 6) easy game

This sounds like low-variance 0 EV (pre-commission) gambling that gives the illusion of arbitrage.

Although maybe that's unfair, maybe there are structural reasons that currencies tend to stick in narrow predictable bands?

It doesn't really make sense though that this should be +EV when it's so easily exploited.

I dont do any of this and I doubt anyone does. I always prefer to trade in a "trending" environment.

Tony's example is an oversimplification, but in fairness, some (bad traders) people do scalp in a similar way. They are generally not very profitable and are the ones stuck in the never-ending search for perfect indicators and other types of sillyness. One of the first rules is to buy low and sell high, but to ignore what's going on with price is a huge mistake.

cwar just showed you guys that it's not neutral EV.

Tony,

You made the comment that scalping is for people with no confidence in the market. I really would have to disagree. You can't trade any strategy profitably without confidence/proof that it works.

MM,

It's highly profitable because it's almost unexploitable. Or at least it's not cost effective to go after scalpers. Why would you spend any time thinking about what the guy trading 4 contracts is doing? His effect on price is negligible. Scalping exploits market structure. In some ways it exploits the way market makers exploit the market.

There's a quote from a scalper's blog that explains scalping:

"When i trade at home, I often watch the sparrows in my garden. When I feed them bread, they take just a little piece at a time and fly away.They keep on flying back and forth, taking small bits of bread. You will never be able to shoot a sparrow, it is just too fast. That is the way I day trade". M. Weinstein.

EDIT: For those curious about scalping... http://forexbird.blogspot.com/search/label/setups

I'm not sure dude is particularly good, but he has decent long term performance. IMO it seems he trades a bit too much, but if you're curious about how scalping works he basically tells you everything he does.

i'll retreat from saying no confidence. it's just that if you're trading a trending market, follow the trend. i don't get the 6 pip stop 8 pip limit when you can trade with appropriate leverage and capture larger moves.

With the leverage available why is a "big" move important? Something that happens a higher % of the time could make you more money with a better sharpe ratio and fewer draw downs. I mean I trade a PA so maybe this is different from a firm perspective but these a very nice sums of money for me as an individual.

It's all just different flavors of trading.

The one thing you give up by scalping is the ability to play a ton of cars. Of course that's always relative, because you can scalp 100+ cars on the ES, but it's tough to do more than 10 on the 6E or whatever.

You longer timeframe traders have a much easier time playing big positions, but at the expense of more variance. Your sample size is going to be pretty small over a year, mine is going to be massive. How often do 1000 tick moves happen? A few times of year at best? 10 tick moves happen many many times daily.

Pretty much everything cwar said too. With an 80% success rate, you are literally printing money and are at very little risk for large drawdown. Even better, you know that when you do drawdown it's 99% something wrong with you and that's easy to fix. Whereas imagine if you had a tiny market edge... small adjustments in market conditions could make it disappear and you'd be stuck wondering whether it's your execution or a change in the market.

sounds too good to be true. 80% success rate? printing money? realistically if the success rate were that high and you were literally printing money you'd likely have a lot more money than you do now. not being a hater...just saying.

How do you know he doesnt have a lot of cash? I disagree its printing money in my case because its very involved and if you dont adapt correctly on any given day you start losing a lot more trades and end up with days down some ticks or break even. Its discretion based so its very dependent upon performance. I dont know though the two ways I judge a traders skill/methodology would be sharpe ratio and how much money they can perform it on. Trading like this definitely doesnt do well on large amounts of money on currencies but its a great sharpe ratio and very contained risk and exposure which are hugely beneficial. In fact this style is probably the highest sharpe ratio you can attain or very close Id bet.

he very well may be hugely rich and if that's the case that's awesome brah.

i'm just had a lot of experience trading the FX markets and would be super jealous of an individual who developed a method of trading FX that you could accurately compare to printing money.

So I guess it's my turn to take back my statement. Nothing in trading is so simple it's printing money, but again I defer to what cwar is saying. Afterall, this entire debate came about because someone was saying you have less control over risk in trading than in poker and then it evolved into a debate about the difficulty/merits as a strategy of scalping. I think it's fair to say that any method of trade with greater than a 70% winrate and 1 to 1 W/L ratio is a much better way to manage risk than poker.

There are a lot of performance related variables in a scalping style. Today for example, I'm 8 trades in and +10 ticks. Given that there were two general regions that I felt had a high probability of going my way, and that I missed the best trades from both of those, +10 ticks is pretty damn good. And for the record, both of those regions did turn into a ~45 tick move up and ~25 respectively. I screwed up a bunch today, but I still did OK.

The OP said that Forex seemed to be a smarter way to make a living than playing poker. I never tried to make it seem that risk was impossible to control in Forex. I was just trying to convey that I believed that it was much easier to earn a stable cash flow from playing poker (although I admittedly didn't do a great job of conveying what my actual point was). I agree that making 10 ticks here and there with little risk is pretty easy. Overall though, I think there are more people that rely on poker alone as a source of income, than forex (and also that it is easier to do so).

this thread is full of namby pambies. so much respectful discussion its making me sick.

where's thremp to call everyone blithering incoherent garbage squawking idiots?

sidenote: TL will be on Mad Money during the lightning round tonite 5/25. (might hear my real name)

This, is pretty freaking funny.

Don't get the mad money joke, u really on mad money tonight?