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Mathematical reasons why MOST DayTraders & scalpers fail?

  • #41
  • Dec 2, 2005 8:26pm Dec 2, 2005 8:26pm
As for my trading performance this week, I am a little disappointed. I had 52 trades. 35 winners 17 losers for 68% win percent. I had a couple of discipline lapses, but I netted 48 pips. Made a decent weeks pay. Have to really focus next week and try and hit 80%.

The thing I like about this type of trading is, if you can stay fairly consistant in your performance, and if you want a pay increase, simply increase the number of lots you trade. Example: if you averge 50 pips net per week and are trading 20 mini lots, you would make $1000 for the week. Want to double that to $2000/wk? Simply increase to 40 mini lots per trade. (that's just an example). Another thing I would like to point out is that I trade all-in and all-out. I don't scale in or scale out. If I'm trading 20 lots then I enter @20 lots and take my profit by exiting the @20 lots. I like to make and take my profits quickly.

JohnFX
  • #42
  • Dec 2, 2005 8:35pm Dec 2, 2005 8:35pm
What kind of systems do you recommend? JohnFX explained his, though I'm sure it takes some discretion and experience. I'm curious about other scalping systems as well.



Quoting jimyland
JohnFX,
I agree with everything you have said about day trading. I'm an intraday trader and I know that there are mini-trends every day; especially 8:00am - 12:00 EST when Europe, London, and NYC are working. The right systems, reading them for the trend, and disipline make it all work.
JIM
  • #43
  • Dec 3, 2005 12:58am Dec 3, 2005 12:58am
Hi Dave
Quoting xxDavidxSxx
No trades? No idea what your saying there.
I'm saying that if you are not sure about a trade don't trade. Since you need a high percentage of winners you can not take trades just because you're a daytrader. Only go for high probability setups, and if there are none, stay out of the market. If you see more than one high probability setup, make more than one trade.
Quote
Average true range is found buy clicking on the atr indacater. If you don't want to do the math.
ATR is a good indicator. Point I was trying to make is that I would not use it to calculate target levels because the current days' range might be much bigger/smaller than yesterdays' range. Furthermore when entering the ATR might tell you what to expect on average, but not in which direction.

Here is my "rules" when scalping. Might mean something to some people, others might think it's a load of bull. Can not remember where I got it from so credits due to somebody.

1. I have no preconceived ideas or expectations of where the market is going to go. All that matters is that my trading is in agreement with the chart, what is actually happening, not what I think might happen. The chart is my friend and I must be flexible enough to follow where it leads me, changing my position as necessary to copy it.

2. All markets are simply lines on a page, nothing more, nothing less. Once I have surrendered any pretence of understanding the market and I can then accept that everything is in the price and so all I need to make my decisions is a clean price chart. (Cheating a little here, using an indicator to interpret the market, but not to predict it.)

3. Forget cheap, forget expensive. It is either going up, in which case I want to be long, or going down, in which case I want to be short.

Enjoy
Johan
  • #44
  • Dec 3, 2005 11:13am Dec 3, 2005 11:13am
Quoting JohnFX
As for my trading performance this week, I am a little disappointed. I had 52 trades. 35 winners 17 losers for 68% win percent. I had a couple of discipline lapses, but I netted 48 pips. Made a decent weeks pay. Have to really focus next week and try and hit 80%.

The thing I like about this type of trading is, if you can stay fairly consistant in your performance, and if you want a pay increase, simply increase the number of lots you trade. Example: if you averge 50 pips net per week and are trading 20 mini lots, you would make $1000 for the week. Want to double that to $2000/wk? Simply increase to 40 mini lots per trade. (that's just an example). Another thing I would like to point out is that I trade all-in and all-out. I don't scale in or scale out. If I'm trading 20 lots then I enter @20 lots and take my profit by exiting the @20 lots. I like to make and take my profits quickly.

JohnFX
A little disappointed? I'd be alarmed! 52 trades and a net 48 pips???!! So you averaged less than a pip per trade! Why intentionally chase so few crumps from a market that has a lot more to give? The scalper's approach to FX seems floored to me.
Life Is Not Like A Box Of Chocolates.
  • #45
  • Dec 3, 2005 1:17pm Dec 3, 2005 1:17pm
FXLogic,
First I want to say that everything that JohnFX and marejp have said above I think is correct. I watch the 4 majors plus CAD From 8 to 12 EST. I hope to see 2, or 3 at the most, pairs start a trend. My main chart is 5min. with SMA (close, 20,0,1); WMA (close, 10, 0); RSI (close,28); and slow stochastics (10,6,6). If all those indicators are pointing the same way for 3 or 4 bars I assume that a trend is developing. At the same time I'm looking at a 15 min. chart with SMA (21, 7, 1) and DiNapoli MACD (high). I never trade contrary to the money position on the 15min. SMA.
Now this part is my own technique and may not be suitable for everybody:
I never use stops. If I open a position and it turns on me to the tune of 20-25p; then I bail out. If I open a position and I gain 25p then the trend better look real strong or I bail out. I don't pay any attention to big "whipsaw" movements that can and do happen (for reasons beyond our control). If a trend stays strong I'll ride it beyond 25p but close it well before 12 noon EST. After I think a trend has started and I open a position I consider the 5 min. RSI my best indicator as to it's strength.
JIM
  • #46
  • Dec 3, 2005 1:34pm Dec 3, 2005 1:34pm
Quoting Ho Lee Foo
A little disappointed? I'd be alarmed! 52 trades and a net 48 pips???!! So you averaged less than a pip per trade! Why intentionally chase so few crumps from a market that has a lot more to give? The scalper's approach to FX seems floored to me.
Ho Lee, that's the style of a true scalper. And I would like to point out I'm not trading just 1 or 2 mini lots. Presently 20 mini lots ($20 per pip). Working my way up the eventually 50 mini lots per trade ($50 per pip). I "netted" 48 pips. Some of my 1, 2 or 3 pip gains could have easily turned to a losing trade had I not taken what you call a "crumb". So don't make ignorant statements if you're not standing here watching me trade live to see the circumstances.

JohnFX
  • #47
  • Dec 3, 2005 2:27pm Dec 3, 2005 2:27pm
Quoting JohnFX
As for my trading performance this week, I am a little disappointed. I had 52 trades. 35 winners 17 losers for 68% win percent. I had a couple of discipline lapses, but I netted 48 pips.

Welcome to the club.

I also had the worst week since the last 7 weeks
3 trades - no profit and no loss,11 wins,9 losses: so 23 trades and 29 pips profit. My goal is 40 pips and max I did weekly was 60. So last week was rather a bad one
time is money! Z
  • #48
  • Dec 3, 2005 3:31pm Dec 3, 2005 3:31pm
Having made 48 pips in 52 trades is still a bird in the hand. Where one “COULD HAVE” is still birds in the bush. Many factories in W. Europe do not want to produce with a small PROFIT where as the Chinese would still want to do it at 10% of that PROFIT margin. The attitude of the Chinese to work more hours and not minding the smaller pay is a winning economic strategy. Forex certainly does not ALWAYS return the daily minimum wage reward. Any winning strategy is worth considering. I suggest that one should try scalping on demo following the the steps JohnFX previously posted plus the additional comments from Jim. After that one can debate with concrete results.

Hey John, does scalping make us less patient or is scalping exposing our weakness in the area in patience ? Don’t take me serious. This is an area of my weakness.

Have a nice Sunday. Best regards

Highway
  • #49
  • Dec 3, 2005 4:01pm Dec 3, 2005 4:01pm
Quoting highway3000
Having made 48 pips in 52 trades is still a bird in the hand.
He is having a bird in the hand and he dares to say he is disappointed
time is money! Z
  • #50
  • Dec 3, 2005 9:29pm Dec 3, 2005 9:29pm
Quoting ElectricSavant
My definition of successful scalping is if you can take out more of the daily range that exists, otherwise you would be expanding your labor and wasting spread ineffieciently, just because its "your" style.

I also will say, that none of a Retail Traders trades see's the Interbank market if you talking about UBS or EBS... only the indirect bucketed amounts...

An ECN such as Hotspot Fx has other restrictions that you should know about...ask about the 10 pip rule if you do not have a sponsoring bank...

Michael B.

P.S. the total of all Retail Spot Forex trades amounts to a single speck of sand, in the "beach of total currency volume".
So what's your point? My goal is simply to make money the way I like to trade. How I accomplish that doesn't really matter, as long as I reach my goal. If I trade 20 or 30 hrs. a week and make $1000 - $2000, then I feel that my goal was accomplished. My goal after that? $3000 - $5000 wk. Sure beats working a normal job IMO.
  • #51
  • Dec 3, 2005 9:29pm Dec 3, 2005 9:29pm
My definition of successful scalping is the monthly return of the account. And perhaps a few measures like max drawdown, profit factor, etc. While I'm not a scalper, if I were I could care less how much of the ATR I took out.

My friend who scalps the ES sometimes has people joke with him about making his broker rich. He trades 10 contracts, i.e., controls $500 for every point the S&P moves, and pays about $5 for each round turn trade. If he makes 6 points on a day the S&P has an ATR of 14, I doubt he cares what the ATR is or about the almost marginal amount he pays in commissions... even if he makes 15 or 20 trades.


Quoting ElectricSavant
My definition of successful scalping is if you can take out more of the daily range that exists, otherwise you would be expanding your labor and wasting spread ineffieciently, just because its "your" style.

I also will say, that none of a Retail Traders trades see's the Interbank market if you talking about UBS or EBS... only the indirect bucketed amounts...

An ECN such as Hotspot Fx has other restrictions that you should know about...ask about the 10 pip rule if you do not have a sponsoring bank...

Michael B.

P.S. the total of all Retail Spot Forex trades amounts to a single speck of sand, in the "beach of total currency volume".
  • #52
  • Dec 3, 2005 9:33pm Dec 3, 2005 9:33pm
Quoting Zazzy
He is having a bird in the hand and he dares to say he is disappointed
LOL, I guess I'm a perfectionist. I would like to point out that my average win from the 35 winning trades was about 3.5 pips. My largest was 14 pips. Smallest was of course 1 pip. I'll take any winning trade. Even 1 pip. Better than a losing trade.



JohnFX
  • #53
  • Dec 3, 2005 9:46pm Dec 3, 2005 9:46pm
Quoting highway3000
Having made 48 pips in 52 trades is still a bird in the hand. Where one “COULD HAVE” is still birds in the bush. Many factories in W. Europe do not want to produce with a small PROFIT where as the Chinese would still want to do it at 10% of that PROFIT margin. The attitude of the Chinese to work more hours and not minding the smaller pay is a winning economic strategy. Forex certainly does not ALWAYS return the daily minimum wage reward. Any winning strategy is worth considering. I suggest that one should try scalping on demo following the the steps JohnFX previously posted plus the additional comments from Jim. After that one can debate with concrete results.

Hey John, does scalping make us less patient or is scalping exposing our weakness in the area in patience ? Don’t take me serious. This is an area of my weakness.

Have a nice Sunday. Best regards


Highway
I don't think scalping makes one less patient. Either a person is already patient or isn't. But I do have to admit that I am not the most patient person. Mybe that's why I prefer very short term trading. But, with this style of trading you also can't bee "too" patient with a trade. If I'm wrong about a setup, then I tend to get out and wait for then next one. I know there will be plenty more setups. Of course some days offer more than others depending on market conditions.

You also have a nice Sunday. I'll be watching football.

JohnFX
  • #54
  • Dec 3, 2005 9:58pm Dec 3, 2005 9:58pm
I don't speak for anybody else,but for me the first 5 pips are the sweetest, I grab'em,bank'em, ohhh yes it's sour when the trade goes other 10 or more pips in my direction and I'm out with small profit ,but trading 4 pairs & grabbing 5 pips on each I will get a champagne & ....you know the rest of the story.
  • #55
  • Dec 3, 2005 10:03pm Dec 3, 2005 10:03pm
Quoting FXLogic
My definition of successful scalping is the monthly return of the account. And perhaps a few measures like max drawdown, profit factor, etc. While I'm not a scalper, if I were I could care less how much of the ATR I took out.

My friend who scalps the ES sometimes has people joke with him about making his broker rich. He trades 10 contracts, i.e., controls $500 for every point the S&P moves, and pays about $5 for each round turn trade. If he makes 6 points on a day the S&P has an ATR of 14, I doubt he cares what the ATR is or about the almost marginal amount he pays in commissions... even if he makes 15 or 20 trades.
Yes I do agree with you. The monthly return is what's most important. All my talk about weekly earnings is just for reference. I don't withdraw profits weekly, only monthly.

JohnFX
  • #56
  • Dec 3, 2005 10:07pm Dec 3, 2005 10:07pm
Quoting hun83
I don't speak for anybody else,but for me the first 5 pips are the sweetest, I grab'em,bank'em, ohhh yes it's sour when the trade goes other 10 or more pips in my direction and I'm out with small profit ,but trading 4 pairs & grabbing 5 pips on each I will get a champagne & ....you know the rest of the story.
Have to be carefull when trading under-the-influence of alchohol. LOL Can be dangerous. I trade just one pair (eurusd). I like to focus and concentrate on one chart. But, if you can do 4 pairs at once, then good for you.



JohnFX
  • #57
  • Dec 3, 2005 10:32pm Dec 3, 2005 10:32pm
Quoting marejp
Hi Dave
I'm saying that if you are not sure about a trade don't trade. Since you need a high percentage of winners you can not take trades just because you're a daytrader. Only go for high probability setups, and if there are none, stay out of the market. If you see more than one high probability setup, make more than one trade.
ATR is a good indicator. Point I was trying to make is that I would not use it to calculate target levels because the current days' range might be much bigger/smaller than yesterdays' range. Furthermore when entering the ATR might tell you what to expect on average, but not in which direction.

Here is my "rules" when scalping. Might mean something to some people, others might think it's a load of bull. Can not remember where I got it from so credits due to somebody.

1. I have no preconceived ideas or expectations of where the market is going to go. All that matters is that my trading is in agreement with the chart, what is actually happening, not what I think might happen. The chart is my friend and I must be flexible enough to follow where it leads me, changing my position as necessary to copy it.

2. All markets are simply lines on a page, nothing more, nothing less. Once I have surrendered any pretence of understanding the market and I can then accept that everything is in the price and so all I need to make my decisions is a clean price chart. (Cheating a little here, using an indicator to interpret the market, but not to predict it.)

3. Forget cheap, forget expensive. It is either going up, in which case I want to be long, or going down, in which case I want to be short.

Enjoy
Johan
LOL I hear ya!

Mabe you haven't been waching my thread but I hold a 75%+ success over 2.5 months(mostly 80%+) I been here and average better than 100 pips per week. ATR works great. But the big thing I pride myself on is when every one else is losing I am winning. Please find some one else to try to discredit because my trades speak for themselves. Any system I post works well. And I can prove it. I can tell you wich direction the market will take when nobody else knows. My last trade I profited on is a perfect example of that. I can even tell you what direction news will send the market befor knowing what the news is. My last 2 completed trades are examples of that too.
Thanks for you input.

Dave
  • #58
  • Dec 3, 2005 10:58pm Dec 3, 2005 10:58pm
Oh no! This thread is starting to turn into pissing and bragging contest. LOL.

Well I see a lot of "I made x amount of pips",wether it be from traders in forums or on comercial pay-for-signal sites, etc. IMO the bottom line is, the ROI (return on investment). I'm looking for the highest return on the smallest amount of $$$$. I'm not interested in maintaining a 5 figure balance in a broker's account, because that is necessary to cover margin and drawdowns due to wide stops. As far as predicting the trends and where the market will go? That's very difficult. The market will go where the "big boys" want to take it. That's why I take what the market gives, in small pieces. I recall getting junk mail from Mr Pretcher (the EW expert), a few years ago predicting the huge DOW crash that was coming. I think it was supposed to happen last year or the year before? Something like a 5000 or 6000 DOW LOL. Not sure what his latest prediction is.



JohnFX
  • #59
  • Dec 3, 2005 10:59pm Dec 3, 2005 10:59pm
Quoting marejp
Hi Dave




1. I have no preconceived ideas or expectations of where the market is going to go. All that matters is that my trading is in agreement with the chart, what is actually happening, not what I think might happen. The chart is my friend and I must be flexible enough to follow where it leads me, changing my position as necessary to copy it.



Enjoy
Johan
Every trader is trading on what they "think" the market is gonna do. Based on a series of indacaters and educated guesses. Whats happening now might not be happening 5 min from now. We are all basically predicting the future. Weather its 5 min or 5 days its all in the future.
I can predict the market with absoultly no indacaters. Weather its 5 min or 4 hrs. Or any other chart. Price is king, and thats all you need to know.
The object is to make money any way you can. If you can scalp 50 trades a week for 100 pips or take 3 trades a week(like me) for 100 pips its all up to you.
But the "true" day traders don't scalp. They trade. And in the long term its the traders that will out last the scalpers.


There are no rich long term scalpers selling systems. There are no profetional scalpers selling systems. There are no signal providers for scalpers. WHY? In the long run, scalping will not out last a real trader. I make in 1 trade what a scalper might make in 20 trades.

Dave
  • #60
  • Dec 3, 2005 11:06pm Dec 3, 2005 11:06pm
Quoting JohnFX
Oh no! This thread is starting to turn into pissing and bragging contest. LOL.

Well I see a lot of "I made x amount of pips",wether it be from traders in forums or on comercial pay-for-signal sites, etc. IMO the bottom line is, the ROI (return on investment). I'm looking for the highest return on the smallest amount of $$$$. I'm not interested in maintaining a 5 figure balance in a broker's account, because that is necessary to cover margin and drawdowns due to wide stops. As far as predicting the trends and where the market will go? That's very difficult. The market will go where the "big boys" want to take it. That's why I take what the market gives, in small pieces. I recall getting junk mail from Mr Pretcher (the EW expert), a few years ago predicting the huge DOW crash that was coming. I think it was supposed to happen last year or the year before? Something like a 5000 or 6000 DOW LOL. Not sure what his latest prediction is.



JohnFX
every body knows where I started its all in my thread. I had less than 200$ when I started and now have over 5k. I have all the proof posted in my thread. (public documented trades). And alot of viewers can varify what they have seen me do. I am not in a pissing contest just tried to post my opinion and some one has to come challenge me and my systems.
I don't blow hot air. Every thing I claim is public info and predocumented.

Dave
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