Why, What & How to Short-Term Trade!!!
For this post, let's take short-term trading as intra-day trading that last from seconds to minutues. It's commonly termed as scalp, intrad-day swing trading. I'll use scalp here.
Why Scalp?
-- If you have a positive expectancy strategy, how do you make more $ from the strategy? One way is to generate more trades, the more the merrier! Why do casinos give you "free" goodies (cheap rooms, meal, drinks, etc)? To attract as many people to play (ie. trades) in the casino as possible! The more trades, the more they make; it's a number game.
-- Since scalping is so short-term, there is no need to trade many different instruments/symbols. No need to scan the thousands of stocks, options, etc. Save all those time scanning. looking at many charts, company fundamentals . Just focus on trading that 1 symbol. More productive use of your time, right?
-- No over-night risk. After you finish scalping, go sleep without fear of any nasty surprises when you wake up the next day. No position in the market = no market risk.
Why Scalp?
-- If you have a positive expectancy strategy, how do you make more $ from the strategy? One way is to generate more trades, the more the merrier! Why do casinos give you "free" goodies (cheap rooms, meal, drinks, etc)? To attract as many people to play (ie. trades) in the casino as possible! The more trades, the more they make; it's a number game.
-- Since scalping is so short-term, there is no need to trade many different instruments/symbols. No need to scan the thousands of stocks, options, etc. Save all those time scanning. looking at many charts, company fundamentals . Just focus on trading that 1 symbol. More productive use of your time, right?
-- No over-night risk. After you finish scalping, go sleep without fear of any nasty surprises when you wake up the next day. No position in the market = no market risk.
What to Scalp?
Must choose a instrument that has sufficient movement, daily range & liquidity. That movement should translate to good profit, ROI. So what do I scalp? My favorite is the emini index futures, specifically, symbol ES which is the S&P500 index futures. 1 tick (minimum price move) is 0.25 points for ES, & has a value of US$12.50 per contract (all dollar value is USD). You can get fee for a round-turn trade/contract of about $4 from discount broker. So, with just 1 tick profit, not only cover fee, just got profit (12.50-4.00) For example, On 7 Dec (Thur), during RTH (regular trading hours, meaning when the US stock market is open), the ES has a range of 50 points with 1.4 million contracts traded (very liquid). 50 pts translate to US$2,500/contract. Intra-day margin/contract about $500. 2500/500=500% ROI ! This is the power of a leverage product, which the ES is.
How to Scalp?
Trade mainly technically, although high impact news could move price. So must have good technical skills. Like other types of trading, the 3M of trading is important. Method, Mind, & Money Management.
I'll stop here for now; don't even know whether ppl will read it. If u did, thanks for time.
Have a great day!
Must choose a instrument that has sufficient movement, daily range & liquidity. That movement should translate to good profit, ROI. So what do I scalp? My favorite is the emini index futures, specifically, symbol ES which is the S&P500 index futures. 1 tick (minimum price move) is 0.25 points for ES, & has a value of US$12.50 per contract (all dollar value is USD). You can get fee for a round-turn trade/contract of about $4 from discount broker. So, with just 1 tick profit, not only cover fee, just got profit (12.50-4.00) For example, On 7 Dec (Thur), during RTH (regular trading hours, meaning when the US stock market is open), the ES has a range of 50 points with 1.4 million contracts traded (very liquid). 50 pts translate to US$2,500/contract. Intra-day margin/contract about $500. 2500/500=500% ROI ! This is the power of a leverage product, which the ES is.
How to Scalp?
Trade mainly technically, although high impact news could move price. So must have good technical skills. Like other types of trading, the 3M of trading is important. Method, Mind, & Money Management.
I'll stop here for now; don't even know whether ppl will read it. If u did, thanks for time.
Have a great day!
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Biggy168 : Well written, thanks for sharing this trading method.
Evelynne : The analysis is very thorough, I have learned it，thanks
非鱼非蝶 : You only talked about ideas, no methods of operation, and no risks
Cow coming Home OP 非鱼非蝶 : * Risk for instrument ES is $12.50/tick/contract, as given in my post. How much risk one can take is dependent on that person. U can control this risk by using Stop Lost order.
* Yes, I only mentioned I trade ES technically. This post isn't a detail description of trading methods. Basically, technical trading is about Support/Resistance. Buy at support; sell at resistance.
---Have a nice day---