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Scalping Verdict

  • #21
  • Jul 1, 2009 6:16pm Jul 1, 2009 6:16pm
Trading is a Learning Curve that requires forensic examination of All Trades Taken and Averted.
Let me just say that Long Term Traders DO HAVE Scalping Skills & are often persuaded to use them.
Scalpers, on the other hand do not, neccessarily, have the skills required to Trade Long Timeframes.

If anyone is just starting out on this career path & Trading {DEMO} Monthly, I hope you are young & planning only to supplement your retirement income, 'cause that's how long it's gonna take to learn this business & profits kick in.

My Personal View of a Trader's Path:
Scenario; Opened an Account. {Demo I hope}

1) 1 min:
"Oh boy, this is sooo cool. I finally found what is going to make me rich and allow me to do all those things I dreamed about." {don't {nea; Never} forget the philanthropy bit}.
Why would I Leave a Trade 'Open' for such a long time that it Ebbs & Flows. I should be riding every wave whether it be up or down. Yeah! That's the way to do this.
I'll have my eyes glued to the screen and watch every single pip. That way I'll know Exactly how much MONEY I made & know when to flip."{I'm young, my heart is strong & I am resolute!}
Pi$$ on that 1 Minute Chart: I need Ticks.

2) 5 min:
"This works. Now I can see where it thinks it's goin'. I'm gonna &ape that Ticky thingy. woohoo Lambos and beach front here we come.....$HIT WTF just happened...."

3) 15 min:
"OK; that's a little better. Now I have more understanding of how much I will make on this one. F#ck that tick & minute $ht. I have arrived. (Do Not Erase Your 15 Min Charts! but you know what's coming...)

4) 30 min:
"Only matters {personally to me} 30 min before Major News."

5) 1 Hour:
"Holy $ht. Now I'm trading an 1/8th of a day {session actually} I'm getting good at this. Raise the Risk."

6) 4 Hour:
"Looks like we're headed toward some resistance. Maybe I should place one of those Orders I thought were for Real Traders? Limit In?
WAIT... Let me check my 1 Min Chart to see if that says Now is a good time to enter.
Wow; Glad I did that because it says we're continuing for just a little more. {pheww. that was close. Glad I know how to scalp.}

Need I go on?

Personality: "I am {honestly} Willing to learn." will serve you well in this realm.
  • #22
  • Jul 1, 2009 6:21pm Jul 1, 2009 6:21pm
Quoting doblece
Here I come again with my boring minutious calculations...

Let's assume you have a $6000 equity and use 1:66/1 true leverage
You set a short position on EURUSD entering at 1.4000 with TP at 1.3900 for a 100 pip profit target.

Here would be a sample equivalent through scalping:

1.4000 to 1.3900

1.4010 high
Trade 1 - 1.4000 to 1.3990 = 5 pips
Trade 2 - 1.4000 to 1.3990 = 5 pips

1.3998 lower high

Trade 3 - 1.3995 to 1.3985 = 5 pips
Trade 4 - 1.3995 to 1.3985 = 5 pips

1.3992 lower high

Trade 5 - 1.3990 to 1.3980 = 5 pips
Trade 6 - 1.3990 to...
Your profits range from 3 - 15 pips, with an average profit of 7.15 pips.
That, in no way matches what you said on the other thread and confirmed earlier in this thread. First I had read that you had a risk:reward of 5:1. Then it changed to 4:1. Average profit 4 pips and average loss 16 pips. Along with a 94.25% win rate.
Your example seems to have a 100% win rate, along with higher average profits.

If your previous percentages, and win ratios were right then the above example would look more like this...

Win rate = 94.25%
Trades taken = 20
Lose rate = 5.75%
Average win = 4 pips
Average loss = 16 pips
Spread = 2

Profit = (Win) - (Loss) - Spread)
Profit = ((20*0.9425)*4) - ((20*0.0575)*16) - (20*2)
Profit = 17 pips

Thats too much of a gap from 103 pips like you suggested. The math just doesn't add up. Again, like I said before, this is something pretty common when I see scalping results. The numbers don't add, and there is usually a huge gap between what is real and what appears to be real.
  • #23
  • Jul 1, 2009 6:45pm Jul 1, 2009 6:45pm
Quoting Cherry362
There are several huge flaws in the above Hypothetical situation. So many that I will only touch the most glaring issues:

First off your entire premise focuses on being correct 30+ times. Statistically this not gonna happen unless you want to use some extreme stop loss in which case it will still moot your point.

Second scalping takes FAR more work than long term trading. With scalping you have to constantly be predicting the immediate NEXT move, which is almost a futile act in itself. You will constantly be in front of your screen and...

I hear this one often.

I don't know what long term is but for the last 4 years I've made more money scalping than I have 'long' term trading.
  • #24
  • Edited 7:22pm Jul 1, 2009 6:59pm | Edited 7:22pm
I'll answer in bold to keep your whole text in line.

Your profits range from 3 - 15 pips, with an average profit of 7.15 pips.

On this particular 20 trade sample.

That, in no way matches what you said on the other thread and confirmed earlier in this thread. First I had read that you had a risk:reward of 5:1. Then it changed to 4:1. Average profit 4 pips and average loss 16 pips. Along with a 94.25% win rate.

94.25% (which is in fact 94.33% at the end of June on the last 6 months as the previous percentage was calculated at the moment of the post) has been taken over 1009 trades (1023 now) total trades for the period. Average 4 (rounded) is now exactly average 3,64 pips per trade. 16 pips is NOT the average loss, is the maximum allowed loss. So 5:1 is also the maximum allowed R/R.
Your example seems to have a 100% win rate, along with higher average profits.

Indeed. On april I had 100% wins of 128 trades, and on may 99,15% on 118 trades. Depending on the size of the sample you will get different results, as for example I've had days with a 13 pips average on 25 trades, as well as others with a -5,43 average on 10 trades...

If your previous percentages, and win ratios were right then the above example would look more like this...

Win rate = 94.25%
Trades taken = 20
Lose rate = 5.75%
Average win = 4 pips
Average loss = 16 pips
Spread = 2

Profit = (Win) - (Loss) - Spread)
Profit = ((20*0.9425)*4) - ((20*0.0575)*16) - (20*2)
Profit = 17 pips

Thats too much of a gap from 103 pips like you suggested. The math just doesn't add up. Again, like I said before, this is something pretty common when I see scalping results. The numbers don't add, and there is usually a huge gap between what is real and what appears to be real.

94.25% (which is in fact 94.33% at the end of June on the last 6 months as the previous percentage was calculated at the moment of the post) has been taken over 1023 (1009 originally)...I had many more losses in January, with much smaller pip per trade average. And please take that spread off the calculations as I don't take it into account in mine. It's 143 on my books

On the other hand: the data in the above post is more an example of the sequence of entries taken at a particular time and focuses on the entries, not the pips. Losses don't come as clockwork, like "every 31 trades one loss". I can go for 200+ winning trades in a row over a few days, then at another moment there will be several losses intermixed with the wins. The numbers on my previous detailed post are real as I keep a detailed track on Excel of every trading day as to pips, $, trades won and lost. Oanda's statement is too messy and hurts my eyes... BTW negative and positive interest gained or paid are included in the pip count. As those usually are more or less balanced one with the other, I think it doesn't make a great difference in the end.

So, as I would measure the accuracy of a sample in terms of average percentages over at least 1000 trades, the numbers are what I stated even if the last quarter was at a 96.91% win rate and 4,76 pips per trade (no spread included).

3,64 + 4,76 = 4,2 average (j/k)

(PS: I can send you my statement if you wish to audit it... it's only about 44 pages, if filtered by open/close trades).
  • #25
  • Jul 1, 2009 7:14pm Jul 1, 2009 7:14pm
Your entire post isn't posted Click edit and you'll see what I mean

Edit: lol, you got it right before i finished this post
  • #26
  • Jul 1, 2009 7:32pm Jul 1, 2009 7:32pm
I’m a scalper and I’m not proud of it but I learned trading only as short term in my own live lessons. I never had a mentor and my experience comes only from making mistakes in the past.

I wish I would be a good long term trader but it seems that it doesn’t fit my character yet.

Sometimes I’m faster out of a trade than others in.

I also don’t have the trading capital to resist long SL like 200 pips to gain enough, justifying the time that I spend trading, that’s why I have ultra short mental SL (never risk more that 2%) with relative high Pip value (not over leveraged !!!)

I use S&R, Fibonacci Pivots, Retrace Fibs and lately Bemac’s ICCE as possible return or TP points, my THV system as entry confirmation, higher TF’s with candlesticks as trend confirmation and triggering historical S&R.
  • #27
  • Jul 1, 2009 7:45pm Jul 1, 2009 7:45pm
Quoting doblece
Oanda's statement is too messy and hurts my eyes...
Hello doblece,

are you making your scalping trades through oanda?

also, for how long you are in a trade ? (seconds, minutes)....if it is seconds, then on average how many seconds ?
  • #28
  • Jul 1, 2009 7:49pm Jul 1, 2009 7:49pm
Quoting Bemac
Trading is a Learning Curve that requires forensic examination of All Trades Taken and Averted.
Let me just say that Long Term Traders DO HAVE Scalping Skills & are often persuaded to use them.
Scalpers, on the other hand do not, neccessarily, have the skills required to Trade Long Timeframes.

If anyone is just starting out on this career path & Trading {DEMO} Monthly, I hope you are young & planning only to supplement your retirement income, 'cause that's how long it's gonna take to learn this business & profits kick in.

My Personal View of a...
Bemac, to the one who can actually read this, that's a black pearl...

Cheers!
Many share my views with me. But I don't share them with them...
  • #29
  • Jul 1, 2009 7:56pm Jul 1, 2009 7:56pm
Quoting doblece
I'll answer in bold to keep your whole text in line.

Your profits range from 3 - 15 pips, with an average profit of 7.15 pips.

On this particular 20 trade sample.

That, in no way matches what you said on the other thread and confirmed earlier in this thread. First I had read that you had a risk:reward of 5:1. Then it changed to 4:1. Average profit 4 pips and average loss 16 pips. Along with a 94.25% win rate.

[b]94.25% (which is in fact 94.33% at the end of June on the last 6 months as the previous percentage was calculated at...
Taking the spread out of the equation changes the story around a lot! It's alright my friend, I don't require your statement. If your profitable, in the end thats all that matters right? The whole idea behind this thread, was to kinda show that scalping may not be the best way to go.

Looking at your numbers, 94.33% - 99.15% win rate looks to me like a very difficult task. I mean its impossible for a trader to have 100% wins all the time. But 95%+ is not that far away from the impossible. Along with the amount of work that is required. You strike me as an individual who has studied the markets extensively along with testing. I can't imagine how many endless days that must have taken you. Im going to attach an excel sheet that I made, to test whether a strategy is worthwhile. Especially scalping strategies. Spread costs also also included in the excel document, because like I said before, spread is definitely a large player in scalping. The document is simple, but for anyone who's looking for some probabilities or chances of succes, take a look.
Attached File(s)
File Type: xls Trading Probabilities.xls   16 KB | 363 downloads
  • #30
  • Jul 1, 2009 7:57pm Jul 1, 2009 7:57pm
Quoting Bemac
Trading is a Learning Curve that requires forensic examination of All Trades Taken and Averted.
Let me just say that Long Term Traders DO HAVE Scalping Skills & are often persuaded to use them.
Scalpers, on the other hand do not, neccessarily, have the skills required to Trade Long Timeframes.

If anyone is just starting out on this career path & Trading {DEMO} Monthly, I hope you are young & planning only to supplement your retirement income, 'cause that's how long it's gonna take to learn this business & profits kick in.

My Personal View of a...
Very well articulated
  • #31
  • Jul 1, 2009 8:01pm Jul 1, 2009 8:01pm
Quoting ForexSV
Hello doblece,

are you making your scalping trades through oanda?

also, for how long you are in a trade ? (seconds, minutes)....if it is seconds, then on average how many seconds ?

It will depend on the momentum of the move. Now that I use the pending orders and alert system (and IF I am in the right direction) it will often last less than one minute on a high volatility session, more like 2-5 minutes on medium volatility for AUDUSD (EURUSD is better on this, but less trendy for a steady direction assessment). I try to keep the longer time I can just in case I could get flagged for such a high frequency trading, though I have read that Oanda allows extreme scalping but as I also trade on other 2 platforms, I want to accustom myself to some more "patience" in this (besides the fact that it would be great to increase a bit the average ppt...) though the usual "range" on 5 sec/1 min charts and between levels is about 7 to 15 pips.
  • #32
  • Jul 1, 2009 8:09pm Jul 1, 2009 8:09pm
I think it's not so much the technical part which makes a scalper difficult to trade long term.

For me it's more the psycological part.

When I'm 50 pips in favor in a longer term trade, I can kick me in the a$$ when I see that PA bounce back 30 pips.
I could have TP and get back into the trade when PA follows again the trend and the only I have to spend is the spread,. at the end I make about 70 pips when PA gets back to the previous price, if not I cashed my gains.

Quoting Bemac
Let me just say that Long Term Traders DO HAVE Scalping Skills & are often persuaded to use them.
Scalpers, on the other hand do not, neccessarily, have the skills required to Trade Long Timeframes.
  • #33
  • Jul 1, 2009 8:23pm Jul 1, 2009 8:23pm
Quoting cobraforex
I think it's not so much the technical part which makes a scalper difficult to trade long term.

For me it's more the psycological part.

When I'm 50 pips in favor in a longer term trade, I can kick me in the a$$ when I see that PA bounce back 30 pips.
I could have TP and get back into the trade when PA follows again the trend and the only I have to spend is the spread,. at the end I make about 70 pips when PA gets back to the previous price, if not I cashed my gains.
I understand that Cob. I just don't want to be continually deciding on Entry Points to Get Back In.
{Unless I have to.}

To each; His Own:
This is where the "What works for You" bit comes in.

Trade in the Zone you You Understand.
  • #34
  • Jul 1, 2009 8:26pm Jul 1, 2009 8:26pm
Yep
Quoting Bemac

To each; His Own:
This is where the "What works for You" bit comes in.

Trade in the Zone, you Understand.
  • #35
  • Jul 1, 2009 8:31pm Jul 1, 2009 8:31pm
Quoting Ace284
The whole idea behind this thread, was to kinda show that scalping may not be the best way to go.
I absolutely wouldn't recommend scalping as a trading strategy, and especially NOT to newcomers. So, on this particular, you're right.

It happens that, for some of us, extra short time spans of a highly focused attention and action are easier to sustain than long periods of watching the charts. Especially when one gets interrupted frequently so it's like trading between the potential interruptions... (be it the grand-daughter or the electric company). I traded for a long time based on 4h charts but hadn't discovered yet the behaviour (and I have to sincerely thank Acumen as being the spark that led me to investigate the "sweetspots" levels... to which "I added" 33 and 66). Thing is that I tended to fall into hypnotic trance while analyzing MTF charts for the best possible entry, there was always "something" wrong, the respective "interruption" showed up and boom, I missed many many entries... I had a negative prejudice about scalping thanks to my first mentor (for whom anything below 20 pips was a shame for a "real" trader) and I am glad that I finally overcome it as, like you say, in the end what we're here for is to make some money.

So after walking all the road that Bemac so witfully describes, I went back to what was highly successful in my beginnings (M5), with a doubtful eye glancing at M1... thanks to Cobraforex... but the "aha" moments came by merging Acumen's theories watching them develop on the 5 second charts (thanks to a poster I don't remember the name of but was so enthusiastic about 10 second Oanda's charts that I HAD to check out). That's price action to the pip. I wouldn't go so far as tick charts, though.

In the end, I am theoretically convinced that any TF goes by similar rules. I am now determined to prove it to myself and find the corresponding proportions and equivalences, starting from the bottom.

Although the spread issue is "over", may I add this last finding (won't be mentioning it any more, promise!): except for the losing trades, where spread adds to the loss on the negative side only, on winning trades it cancels itself out: taken from bid to bid (or ask to ask), the 2 additional pips made even out the 2 pips lost, so what's left is only the net pip gain...

I apologize for any disturbance.
  • #36
  • Jul 1, 2009 8:33pm Jul 1, 2009 8:33pm
Quoting cobraforex
I think it's not so much the technical part which makes a scalper difficult to trade long term.

For me it's more the psycological part.

When I'm 50 pips in favor in a longer term trade, I can kick me in the a$$ when I see that PA bounce back 30 pips.
I could have TP and get back into the trade when PA follows again the trend and the only I have to spend is the spread,. at the end I make about 70 pips when PA gets back to the previous price, if not I cashed my gains.
Tal para cual! (birds of a feather)
  • #37
  • Jul 1, 2009 8:38pm Jul 1, 2009 8:38pm
Quoting doblece

Although the spread issue is "over", may I add this last finding (won't be mentioning it any more, promise!): except for the losing trades, where spread adds to the loss on the negative side only, on winning trades it cancels itself out: taken from bid to bid (or ask to ask), the 2 additional pips made even out the 2 pips lost, so what's left is only the net pip gain...

I apologize for any disturbance.
Before we go on and bury this spread issue, let me correct one thing. You always pay the spread. Long, short, win, lose, you pay the spread. Unless you enter when the spread is 0 and then exit when the spread is 0 you pay the spread. Death, Taxes and now Spreads... you can't avoid them.
  • #38
  • Jul 1, 2009 8:43pm Jul 1, 2009 8:43pm
Quoting Cherry362
Before we go on and bury this spread issue, let me correct one thing. You always pay the spread. Long, short, win, lose, you pay the spread. Unless you enter when the spread is 0 and then exit when the spread is 0 you pay the spread. Death, Taxes and now Spreads... you can't avoid them.
Of course... but if spread is being taken into account on the "cost side", it is also true that when the trade moves (bid to bid or ask to ask) you have to earn the spread back to get to B/E, so it also should be counted on the positive side!
  • #39
  • Jul 1, 2009 11:10pm Jul 1, 2009 11:10pm
Quoting doblece
Of course... but if spread is being taken into account on the "cost side", it is also true that when the trade moves (bid to bid or ask to ask) you have to earn the spread back to get to B/E, so it also should be counted on the positive side!
Not trying to be stubborn here, but I don't see how you can ever consider the spread a positive thing... that is unless your a broker hidden in disguise, like some sort of Forex Transformer...






(yes i know lame its a lame joke)
  • #40
  • Edited 12:25am Jul 2, 2009 12:15am | Edited 12:25am
Quoting Cherry362
Not trying to be stubborn here, but I don't see how you can ever consider the spread a positive thing... that is unless your a broker hidden in disguise, like some sort of Forex Transformer...
LOL ! sure wish I were hahaha!

I didn't say the spread was positive (nor is it "negative" as any business imply business costs and paying someone for using his/her services... software, server time, support staff, and a long list of etc.)

I just said (no problem with stubborness as I also have the quality ) that:

1. You open a trade at ask price and have two pips to "earn" before breakeven. From the open price to, say, a 10 pip TP, price will have moved (from bid at open price to bid as close price) 12 pips. Thus the trade has "made" 12 pips.

2. Now as the net pip count from B/E to TP is only 10 pips, you deduct the 2 pips spread from the pips that have been made: 12-2 = 10 net pips (in the same way if you had made only 2 pips on the trade the result would be 0 or break even).

Thus, spread cancels itself if the trade is a winner (not so on a loser).
This means that, if you are counting 2 pips spread on the negative side (as in Ace's calculations) you also have to consider the same 2 pips "made" to B/E on the trade's total pips count.

Examples: LONG 1.4010 closed at 1.3980 = -30 = (-28)+(-2)
SHORT 1.4130 closed at 1.4090 = +40 (42-2)
ANY DIRECTION opened at 1.4000 and closed at 1.4000 = 0 = -2 (at open) +2 (recovered) on both cases
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