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Scalping the Mini Dow off the M1 Charts

  • #41
  • Jan 2, 2015 10:23am Jan 2, 2015 10:23am
Hey Lamer! Good to see a familiar face.

I personally don't watch the DOM, T&S or volume even, because they've proven to just be too distracting to me. Occasionally I'll use NT's data tooltip tool to check volume on a particular candle but that's about it. I'm staring at the M1 chart like a hawk on that 9:30 open and I'm usually able to get a good read just based on the movement of the candles as they form, so for me, the more focus and simplicity, the better.

Quoting LamerTrader
Hello Felix! Magnificent thread, congratulations. It's great to see somebody using a real platform and not that mt4 crap... Personally I prefer volatility and I trade CL and DAX on a daily basis, but the concepts are the same. Do you watch the DOM or anything lvl2 data? For me it added a lot. I.e.: In this post you describe the emotions / thoughts of traders that are trapped. In the middle of December I saw the EXACT same thing on the DAX. 1) I was lucky to be short, price went down from the high 30-40 ticks, and I had a decent 2-2,5RR trade...
If you can't tell what the herd is doing...you probably are the herd.
  • #42
  • Jan 2, 2015 10:29am Jan 2, 2015 10:29am
Quoting srt
{quote} Hi Lamer, Yes, I agree about the first 2 hours(9:30-11:30 EST) being the best. If you're going to trade the 1st 15 minutes though, I think you really need to be able to see & watch particular levels as price is moving so quickly that it's hard to see a trend to jump on. After the 1st 15 minutes, it seems the market finds some form of a trend so you can look to enter on retracements. If using tick(or renko/range) charts then the swings are more visible in a fast moving market. Just depends upon the type of trading you're comfortable with....
Yo. I watched his 7min video and I especially liked it when he went short on a break or something, but then as a pinar was formed he scratched his trade and went long. However what I like is that he doesn't trade setups - once he is short and then the other time long on a pinbar. So his trade (as I see) relies more on the actual order flow. And I think it's something that can't be taught, just as you can't really teach somebody how to draw or dance. You might show them the basics (=the basic concept of your trading), but the art teacher will never give you the order to draw a shape with Xmm distance, and X degree curve. It's more like experience. As I see you are more of the decent type so you already know all this...
It's all psychology...
  • #43
  • Jan 2, 2015 10:32am Jan 2, 2015 10:32am
Quoting felixcattus
Hey Lamer! Good to see a familiar face. I personally don't watch the DOM, T&S or volume even, because they've proven to just be too distracting to me. Occasionally I'll use NT's data tooltip tool to check volume on a particular candle but that's about it. I'm staring at the M1 chart like a hawk on that 9:30 open and I'm usually able to get a good read just based on the movement of the candles as they form, so for me, the more focus and simplicity, the better. {quote}
Okay, thanks for the input sir!
I assume you can see the "momentum" in the 1m candle as it forms too, since it's so low TF.
Cheers!
It's all psychology...
  • #44
  • Jan 2, 2015 11:57am Jan 2, 2015 11:57am
Thanks! Yup basically trying to get out in words all the things I wish people had told me early on Look forward to charts!

That is pretty much it - trading the reaction. I'm looking for instances where I can reasonably infer that the vast majority of traders have just taken the wrong side, and then look to do the opposite. Which of course becomes a setup in itself.

Regarding trade direction, the upper timeframes don't necessarily influence which direction I will take a trade (e.g. If the upper timeframe shows something bullish, it doesn't mean I will only look for long trades and avoid all short opportunities, if that's what you mean).

Quoting LamerTrader
Hi again! I read through the whole thread, and it's unique, unlike most of the FF crap. I love the way you analyze things and I hope I can learn some aspects from you. When I’m trading I tend to look out for the accumulation areas and stops. I’m sure you are aware of the traditional S/D basics - where price first accumulates (in the range) then shots out, and when it comes back some people still expect the accumulation going on, so they buy the retest. (As in the example of your last posts.) What I found interesting is watch how these "accumulation"...
If you can't tell what the herd is doing...you probably are the herd.
  • #45
  • Jan 2, 2015 12:16pm Jan 2, 2015 12:16pm
Trading is truly an art form. The market is the very last place I expected to find creativity, yet it exists and scalping in particular for me really does require using both sides of the brain.

Quoting LamerTrader
{quote} Yo. I watched his 7min video and I especially liked it when he went short on a break or something, but then as a pinar was formed he scratched his trade and went long. However what I like is that he doesn't trade setups - once he is short and then the other time long on a pinbar. So his trade (as I see) relies more on the actual order flow. And I think it's something that can't be taught, just as you can't really teach somebody how to draw or dance. You might show them the basics (=the basic concept of your trading), but the art teacher...
If you can't tell what the herd is doing...you probably are the herd.
  • #46
  • Jan 2, 2015 12:19pm Jan 2, 2015 12:19pm
Great to see a thread trading the eminis, subscribed.

Felix, are you exclusively trading the YM or do you also trade ES and NQ?
  • #47
  • Jan 2, 2015 12:31pm Jan 2, 2015 12:31pm
YM exclusively. Once in a blue moon I may trade the NQ if I feel I have a better read on it before the market open.

Quoting brightside
Great to see a thread trading the eminis, subscribed. Felix, are you exclusively trading the YM or do you also trade ES and NQ?
If you can't tell what the herd is doing...you probably are the herd.
  • #48
  • Jan 2, 2015 12:53pm Jan 2, 2015 12:53pm
Quoting brightside
Great to see a thread trading the eminis, subscribed. Felix, are you exclusively trading the YM or do you also trade ES and NQ?
I dont want to be a wise-ass or anything but most of today's prop. traders trade 1 asset as their main. Since they are scalping / trading this asset intraday, they really have to know it well, so they concentrate and trade usually only 1 asset at a time. I trade DAX at the London/Frankfurt for 2 hours and then Oil at the NY Open, thats it. Professionals say, every asset has a certain characteristics that has to be learned...
And turst me they are not trading FX. (Only if they are the Market Makers and they are clearing and skinning the house... )
It's all psychology...
  • #49
  • Jan 3, 2015 10:04am Jan 3, 2015 10:04am
Quoting LamerTrader
{quote} I dont want to be a wise-ass or anything but most of today's prop. traders trade 1 asset as their main. Since they are scalping / trading this asset intraday, they really have to know it well, so they concentrate and trade usually only 1 asset at a time. I trade DAX at the London/Frankfurt for 2 hours and then Oil at the NY Open, thats it. Professionals say, every asset has a certain characteristics that has to be learned... And turst me they are not trading FX. (Only if they are the Market Makers and they are clearing and skinning the house......
i understand your point...my only thought was that he was trading 4 contracts for a $5/tick instrument (YM), when the ES is $12.50/tick. One could cut trading costs quite a bit by trading the ES and the Dow minis are pretty thinly traded compared to the S&P. But, like you say trade the instrument you know...
  • #50
  • Jan 3, 2015 11:55am Jan 3, 2015 11:55am
Quoting brightside
{quote} i understand your point...my only thought was that he was trading 4 contracts for a $5/tick instrument (YM), when the ES is $12.50/tick. One could cut trading costs quite a bit by trading the ES and the Dow minis are pretty thinly traded compared to the S&P. But, like you say trade the instrument you know...
Scalping for small profits is easier in the YM than the ES simply because there are more exit & entry locations. For every 1 tick in the ES, there's 2.5 ticks in the YM. So if the ES moves 10 full points (40 ticks), the YM will move 100 ticks. If the percentage move is the same you'll have the same profit regardless of whether you're in ES or YM. So if scalping the YM you could set a take profit of $30, $35, $40, $45, etc... but trading the ES you would have take profit of $25, $37.50, $50, $62.50, $75, etc......
There's approx. 10 times the volume in ES as YM so @ every entry & exit there's usually over 1000 orders you're competing against when you try to get a fill in ES. In YM you might be competing against less than 100 orders trying to get a fill. As long as you're trading less than 100 contracts in YM the liquidity isn't an issue. So your comment about reducing commissions by trading ES doesn't work because you're not getting the same exposure if you trade less contracts of ES. If you trade 1 contract of ES & 1 contract of YM and both markets move 1% you'll have the same profit in both markets.
  • #51
  • Jan 3, 2015 12:28pm Jan 3, 2015 12:28pm
Quoting srt
{quote} ...... There's approx. 10 times the volume in ES as YM so @ every entry & exit there's usually over 1000 orders you're competing against when you try to get a fill in ES. In YM you might be competing against less than 100 orders trying to get a fill. As long as you're trading less than 100 contracts in YM the liquidity isn't an issue.

if that is how you view volume (competition vs. a liquidity pool), then you are in trouble...good luck to all, i won't bother you anymore
  • #52
  • Jan 3, 2015 2:40pm Jan 3, 2015 2:40pm
I personaly havent traded much the YM or the ES, but I think there is a bit more to it: It's true that the ES is more thick, however dont forget that the avarage (commercial) orders are also bigger. So a 1000 limit on the ES is might taken out like: 400 + couple 50-100s, while the 100 YN like 40 + 5-10s.

I tend to think that the thicker the market is the more volume information you need: ZN doesnt move much, so I might assume that the traditional technicals (price action etc.) might fail here at a higher rate. As far as I know people are more focused on the tape + DOM here. At the other side of the table there is the CL and DAX which move so fast back and forth, that it doesnt make sense to watch the DOM (according to my tape/DOM -reader friend). All in all at the ZN you are kind of forced to nail down the entry to the tick and this is usually achieved by watching the DOM/Tape or some kind of correlation whatsoever, while at the thinner markets you most probably wont nail it to the tick. So once again - it comes down to the personality of the trader. It is really an art to find an asset and a timeframe that fits the trader's style.
It's all psychology...
  • #53
  • Edited 3:41pm Jan 3, 2015 3:00pm | Edited 3:41pm
I was mainly commenting to correct a few points about ES vs. YM but I think the response focused on my poor description of volume.
The poster thought it would save commissions by trading ES so apparently he thought ES was a higher leveraged product which is not true. He thought the YM was thinly traded compared to the ES which is true but unless you're a larger trader there's plenty volume to trade YM with no problems. Most of the time there's bids/asks at each price level so doesn't matter to a small trader if it's 50 bids or 500 bids as long as there's bids to fill our small orders.

As for watching order flow & tape reading, I think if you're going to use those tools it's best to watch ES order flow & tape reading even if trading YM since ES is so much larger that market will pull YM with it @ key levels.

***I'm not arguing any points, just trying to correct the difference between ES & YM. I don't use volume in my trading so my opinion there is just MY opinion. I've done a little tape reading & order flow but takes too much concentration to try to trade with it IMHO. If you want to try it, I'd suggest just watching the tape @ key S/R levels & see if the filled orders are hitting the bid OR ask. Where are the BIG orders being filled? Watching order flow, are big orders piling @ key S/R levels? All orders need to be filled or pulled for a level to break.
  • #54
  • Jan 5, 2015 2:06pm Jan 5, 2015 2:06pm
@felixcattus

If the theory could be written down as an algorhithm, then it could be backtested, forward tested, optimized and it would make the entire process stress free.

Is there any chance to put it in a algorhithm?
  • #55
  • Jan 7, 2015 12:08pm Jan 7, 2015 12:08pm
IMHO this can't be backtested effectively and this strategy is very discretionary. That said there are rules and I will go over what mine are through the course of this thread. But I believe strongly that some things just can't be mathematically explained.

I've come from trying build an EA to auto-trade and although I do believe an EA can be successful for a period of time, what I've learned about trading is that it is a skill similar to learning a musical instrument. There are nuances that just can't be explained. There are general rules, of course, and you can teach a robot to play a violin, but there's much more to it than that.

Quoting MasterGuru
@felixcattus If the theory could be written down as an algorhithm, then it could be backtested, forward tested, optimized and it would make the entire process stress free. Is there any chance to put it in a algorhithm?
If you can't tell what the herd is doing...you probably are the herd.
  • #56
  • Jan 7, 2015 12:11pm Jan 7, 2015 12:11pm
Good to be back in the market. I'm posting my video for trading morning of Monday, January 5.

Inserted Video
If you can't tell what the herd is doing...you probably are the herd.
  • #57
  • Jan 7, 2015 12:30pm Jan 7, 2015 12:30pm
This is from Tuesday, January 6.

Inserted Video
If you can't tell what the herd is doing...you probably are the herd.
  • #58
  • Jan 7, 2015 12:50pm Jan 7, 2015 12:50pm
And from this morning, Wednesday, January 7.

Inserted Video


Today was FOMC day.

I was expecting the market to make a run towards the 500s near the open. It did, but, as the market proves time and time again, not at the time you're expecting it. I'm not proud that I gave back far too much on my 2nd trade, but, it is what it is.
If you can't tell what the herd is doing...you probably are the herd.
  • #59
  • Jan 7, 2015 12:51pm Jan 7, 2015 12:51pm
Quoting felixcattus
IMHO this can't be backtested effectively and this strategy is very discretionary. That said there are rules and I will go over what mine are through the course of this thread. But I believe strongly that some things just can't be mathematically explained. I've come from trying build an EA to auto-trade and although I do believe an EA can be successful for a period of time, what I've learned about trading is that it is a skill similar to learning a musical instrument. There are nuances that just can't be explained. There are general rules, of course,...
I would favor automation not because I am too lazy to trade two hours a day to make a comfortable living, but due to the emotional aspect of trading with large number of contracts, which volume would be needed to make a good living.
  • #60
  • Jan 9, 2015 9:14am Jan 9, 2015 9:14am
This morning's trading video.

Inserted Video


With my first trade, I was just a hair too slow on the draw resulting in my being in short 3 points too low. I had a strong case for continuation to the downside so I managed to catch the move on a re-entry.
If you can't tell what the herd is doing...you probably are the herd.
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