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Mathematical reasons why MOST DayTraders & scalpers fail?

  • #21
  • Dec 1, 2005 8:45am Dec 1, 2005 8:45am
Quoting WTB
Errr 50 mini lots with a 6k account??? you sure you dont mean a 60k account? otherwise it's suicide!
Suicidal?? No. $50 a pip. less than 100:1 leverage. For scalping purposes it's fine if you use a tight stop and a reasonable target. That's what scalping is all about.

Read the previous posts. May not be for everyone. You have to know what you are doing when trading this way.

Thanks;

JohnFX
  • #22
  • Dec 1, 2005 10:04am Dec 1, 2005 10:04am
Quoting JohnFX
Suicidal?? No. $50 a pip. less than 100:1 leverage. For scalping purposes it's fine if you use a tight stop and a reasonable target. That's what scalping is all about.

Read the previous posts. May not be for everyone. You have to know what you are doing when trading this way.

Thanks;

JohnFX
With IB you'd need more than 6k to trade the 9 contracts as in displayed in demo account example.
Life Is Not Like A Box Of Chocolates.
  • #23
  • Dec 1, 2005 11:15am Dec 1, 2005 11:15am
Great thread on real brokers and plain old retail marketmakers. FXCM is just too popular for the wrong reasons.

Besides interbankfx,,,,,,,, at the Traders expo last year, COESfx says they send ur trade order direct to the interbank system as well.

Does have any exp or live account with COESfx to compare to Interbankfx. Please share. Thanks
  • #24
  • Dec 1, 2005 1:03pm Dec 1, 2005 1:03pm
Quoting JohnFX
How about this math:

5 trades for the day. 4 winners and 1 looser. (winners: 4 * 5 pips * 50 mini lots = $1000) (loosers: 1 * 10 pips * 50 mini lots =$500)

$1000 - $500 = $500 net profit for the day.

I have no problem trading 50 mini lots with a 6K account. That would be a greater than 8% return for the day. It CAN be done.

JohnFX
John FX you are my hero!!!!
This is how I am trying to learn to trade. My goal is 7 to 12 pips per day on just three or four trades. Small stops and only for catastrophe. So far over the past month or so I am only a little better than break even but I am getting better. My main method is M1 charts and ema 7 and 22 with filter of RSI over 60 or under 40 (long or short). I try to stick to the Euro so far. I am actually thinking about scalping on M15 charts....

I think the small pips method is more suitable to my personality than position trading.

John, what sessions do you usually trade? London and NY?

Don
Don Life is expensive, but includes a free trip around the sun.
  • #25
  • Dec 1, 2005 1:39pm Dec 1, 2005 1:39pm
The following is from a French gentleman.




1Profitable even with 1 spread to 3 or 4 pips. Must have high volatili. Upper bollinger band to lower band exceed 20 pips.


2. stop/loss: Half the pips between the bands. Sometimes no stop.


3. target: 1st target sur la MA20, second target on the opposite side of the bollinger band.
Normally he aims 8-15 pips and the move stop/loss to secure the minimum profit. If bands are far apart,

target 12-20 pips ( stop/loss in head only ) Get out on first alert.



1 st Year 75%. Success. 25% lost trades.
Since then 91% success by having a sense of probability which direction price is heading.

He enjoy the pleasure especially when he hits 50 pips in just a few minutes. Hardly lost any trade on Friday between 12h00 to 13h30 CET. Important ! ! DISCIPLINE

I just translate. I can't comment.
Highway
  • #26
  • Dec 1, 2005 1:46pm Dec 1, 2005 1:46pm
Quoting Ho Lee Foo
With IB you'd need more than 6k to trade the 9 contracts as in displayed in demo account example.
Ho, I'm not quite sure what you mean. But, with a 'real-money mini" account at interBankFX they give you up to 200:1 leverage and they will auto-liquidate you if your margin drops below 50% of the minimum required. Now I never leverage more than 100:1 on a trade. My example trade of 50 mini lots on a $6000 account would be leveraged at about 83:1

JohnFX
  • #27
  • Dec 1, 2005 1:56pm Dec 1, 2005 1:56pm
Quoting traderone
John FX you are my hero!!!!
This is how I am trying to learn to trade. My goal is 7 to 12 pips per day on just three or four trades. Small stops and only for catastrophe. So far over the past month or so I am only a little better than break even but I am getting better. My main method is M1 charts and ema 7 and 22 with filter of RSI over 60 or under 40 (long or short). I try to stick to the Euro so far. I am actually thinking about scalping on M15 charts....

I think the small pips method is more suitable to my personality than position trading.

John, what sessions do you usually trade? London and NY?

Don
Thanks Don. I primarily trade the NY session, starting around 8:00 AM. I am located on the east coast (near Boston). Once and a while I will trade the London session, especially if ther is an important data release.

I want to reiterate, that I'm not professing that everyone go out and start scalping a real money account, using high leverage, without developing your skill at it. I'm just saying that it can be done sucessfully once mastered, but it may not be for everyone. I just get a little annoyed when I read or hear from traders, especailly longer term traders, who say it is impossible to be successful at it. But of course, everyone is entitled to their opinion.
  • #28
  • Dec 1, 2005 1:59pm Dec 1, 2005 1:59pm
Quoting highway3000
The following is from a French gentleman.




1Profitable even with 1 spread to 3 or 4 pips. Must have high volatili. Upper bollinger band to lower band exceed 20 pips.


2. stop/loss: Half the pips between the bands. Sometimes no stop.


3. target: 1st target sur la MA20, second target on the opposite side of the bollinger band.
Normally he aims 8-15 pips and the move stop/loss to secure the minimum profit. If bands are far apart,

target 12-20 pips ( stop/loss in head only ) Get out on first alert.



1 st Year 75%. Success. 25% lost trades.
Since then 91% success by having a sense of probability which direction price is heading.

He enjoy the pleasure especially when he hits 50 pips in just a few minutes. Hardly lost any trade on Friday between 12h00 to 13h30 CET. Important ! ! DISCIPLINE

I just translate. I can't comment.
Highway
Thanks Highway. If this guy is trading a real money account, then it appears he knows what he is doing. And yes, Discipline is very important when scalping just like in any style of trading.

JohnFX
  • #29
  • Dec 1, 2005 6:01pm Dec 1, 2005 6:01pm
QUOTE=xxDavidxSxx]Hey guys.

Here's my opinion on this, in terms of percentages.

99% of systems and indacaters are ment for trend trades.

The market only trends (intraday) 10% of the time.

90% of the time it is in some kind of sideways action that throughs the indacaters off when used intraday. Resulting in many many headfakes.

They place so many trades and double down each time trying to make up for the previous losses. Biggest mistake at the blackjack table as with forex.

Most scalpers of 10 pips or less use s/l 2-3 times there target.

Best rules for intraday trades as follows...

1. trade 1 trade a day.
2. trade opposite direction your indacaters are telling you.
3. keep s/l no more than half your profit target.
4. target should be at least half of the average true range for a day.And pull profits at 1/4 of the days average true range.
5. NEVER scalp!!!!!!!!

I used this system for a while when going for 10-20 pips. I built my account up to be able to make real trades. Started with 200$ Now my account size on a mini account allows me to risk no more than 2%.
But I am the exception not the rule.


Dave[/quote]


VERY GOOD INFORMATIONS. THANKS
  • #30
  • Dec 2, 2005 9:24am Dec 2, 2005 9:24am
Quoting mibill
Great thread on real brokers and plain old retail marketmakers. FXCM is just too popular for the wrong reasons.

Besides interbankfx,,,,,,,, at the Traders expo last year, COESfx says they send ur trade order direct to the interbank system as well.

Does have any exp or live account with COESfx to compare to Interbankfx. Please share. Thanks
Laughable, to be perfectly honest.
  • #31
  • Dec 2, 2005 9:47am Dec 2, 2005 9:47am
Quoting MEF105
QUOTE=xxDavidxSxx]Hey guys.

Here's my opinion on this, in terms of percentages.

99% of systems and indacaters are ment for trend trades.

The market only trends (intraday) 10% of the time.


Best rules for intraday trades as follows...

1. trade 1 trade a day.
2. trade opposite direction your indacaters are telling you.
3. keep s/l no more than half your profit target.
4. target should be at least half of the average true range for a day.And pull profits at 1/4 of the days average true range.
5. NEVER scalp!!!!!!!!

I used this system for a while when going for 10-20 pips. I built my account up to be able to make real trades. Started with 200$ Now my account size on a mini account allows me to risk no more than 2%.
But I am the exception not the rule.

Dave
So..... am I correct in thinking that you are saying trades for 10 to 20 pips are NOT real trades. Hmmm. I must say they seem real in my account. ;-)

Don
Don Life is expensive, but includes a free trip around the sun.
  • #32
  • Dec 2, 2005 9:54am Dec 2, 2005 9:54am
I know successful traders who focus on 10-pip trades, perhaps one or two trades a day, gunning constant compounding at full throttle for great long term results.
  • #33
  • Dec 2, 2005 10:12am Dec 2, 2005 10:12am
Quoting traderone
So..... am I correct in thinking that you are saying trades for 10 to 20 pips are NOT real trades. Hmmm. I must say they seem real in my account. ;-)

Don
Yes especially when you hit 75-80% of them and trade some decent size. The pips add up to a nice payday. And you can sleep at night without thinking about some MM taking out your stop. Even hitting 5-10 pipers adds up.



JohnFX
  • #34
  • Dec 2, 2005 11:01am Dec 2, 2005 11:01am
Quote
Best rules for intraday trades as follows...

1. trade 1 trade a day.
Why, if no trades, make it 0 trades a day. If the market trend strongly trade as many pullbacks as you can, if the market range play the range as long as you can.

Quote
2. trade opposite direction your indacaters are telling you.
Good if this work for you. Personally I would get indicators that suit the market condition and trade them. Learn how the indicator react, ie Stochastics not the same in a trending market as in a ranging market.

Quote
3. keep s/l no more than half your profit target.
Rather look at what point your trade will not be valid anymore, then calculate the number of lots you can trade. Then take what the markets give you.

Quote
4. target should be at least half of the average true range for a day.And pull profits at 1/4 of the days average true range.
No idea what the range for the day will be. Once again pull profits when your rules say so or when the market decides so.

Quote
5. NEVER scalp!!!!!!!!
Now that depends on your view re scalping, your trading plan and what the market is doing.

One thing for sure is if you do have discipline problems don't even think about scalping. Do it for a while on demo and then know that when you go real account it is not going to be the same. You need to adjust your mindset for scalping, figure out what real fear and greed are and then scalp with real money. And be honest with yourself. There are a lot of people scalping for a living.

Enjoy
Johan
  • #35
  • Dec 2, 2005 4:07pm Dec 2, 2005 4:07pm
Quoting JohnFX
Ho, I'm not quite sure what you mean. But, with a 'real-money mini" account at interBankFX they give you up to 200:1 leverage and they will auto-liquidate you if your margin drops below 50% of the minimum required. Now I never leverage more than 100:1 on a trade. My example trade of 50 mini lots on a $6000 account would be leveraged at about 83:1

JohnFX
I was refering to demo account log posted on a previous post, if trading ES, emini SP500, $6k in the account wouldn't be sufficient margin to cover the 9 contract per trade demonstrated, I forget what IB requirements are exactly, but $6k would cover about 3 contracts.
Life Is Not Like A Box Of Chocolates.
  • #36
  • Dec 2, 2005 4:40pm Dec 2, 2005 4:40pm
Quoting marejp
Why, if no trades, make it 0 trades a day. If the market





No idea what the range for the day will be. Once again pull profits when your rules say so or when the market decides so.





Enjoy
Johan
No trades? No idea what your saying there.

Average true range is found buy clicking on the atr indacater. If you don't want to do the math.

Dave
  • #37
  • Dec 2, 2005 4:43pm Dec 2, 2005 4:43pm
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
  • #38
  • Dec 2, 2005 7:29pm Dec 2, 2005 7:29pm
Quoting Ho Lee Foo
I was refering to demo account log posted on a previous post, if trading ES, emini SP500, $6k in the account wouldn't be sufficient margin to cover the 9 contract per trade demonstrated, I forget what IB requirements are exactly, but $6k would cover about 3 contracts.
Ho, this discussion is about scalping and ultra-short-term daytrading in FOREX, not the stock index futures. Yes I know, I use to daytrade the ES, NQ, YM. Ther are some brokers who allow you to daytrade the indexes with $500-$1000 margin per mini contract. I like the EURUSD much better, but trading the DOW index "YM" can be lucrative if done with the right method.

JohnFX
  • #39
  • Dec 2, 2005 7:38pm Dec 2, 2005 7:38pm
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
Thanks Jim. A good analogy to my type of trading would be like a baseball hitter.
I like to hit a lot of singles, doubles and some tripples and bat for a high average. When you go for a lot of home runs you strike out a lot any many times have a lower batting average. Same holds true in trading. I like to get a lot of high probability small pipers instead of always going for the big pipers (home runs). It's hard to hit home runs all the time.

JohnFX
  • #40
  • Dec 2, 2005 7:59pm Dec 2, 2005 7:59pm
Quoting diallist
Thank you John for your post.

I suspect that if everyone here knew the details of how you scalp, most of us would still fall flat on our faces. I've never tried scalping, but I suspect the majority of the success lies within the trader himself rather than the tools or techniques he uses.

That said, I wouldn't mind giving it a shot using the same set of tools and techniques you employ.

So how about sharing a brief tutorial on how to scalp the way you do. Nothing extensive mind you. Just enough of the basics to point us in the right direction.

If you'll do that, I'd be happy to give it a go on demo just for the experience, but I think I'd suck at it. But, I could be wrong.

Dial
Hi Dial. Sorry I didn't get to reply to your post sooner.
Well basically at the present time I primarily use 1 & 5 min. charts. 95% of my trades are in the eurusd. I use EMA 10 & 20. Watch for a cross on both time frames. Try to trade with the short term trend bias. I use fibs for retraces. Like to see 50% retraces. I watch volume very closely. Now I have heard many say " Oh you can't determine volume in FOREX" . Well I disagree with that. I have Sierra Charts fed by TrackData. If you have a volume indicator from one of the larger brokers or data providers it can be used to gage the over-all volume. After a lot of observation I have determined a certain benchmark volume figure that I feel indicates good volume and not a thin MM type of market. That benchmark for me is anything over 50 trades per min. on a 1 min. chart for say 2 or 3 bars. Many of my trades involve riding momentum so I like to see "real" volume so I can take a piece of the resulting move.

Of course I also trade the News and Data release moves. But one has to be carefull and very quick on the trigger. I also pay attention to strong support and resistance areas. I like to ride a "stop trigger run", when they occur. (I think I mentioned that in a previous post). And I'm always studing short term charts for any other high probability occurances that could result in a profitable trade, but I like to keep things as simple as possible. Too many traders get wrapped up in "indicator overload". Sometimes just watching price action and the 2 EMA's can get you into a quick profitable trade.

JohnFX

JohnFX
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