Nothing to something scalping system

[tech/a]

From what Ive seen it really is something from nothing.

Or appears that way.

People Like T/H can be likened to Tennis players/Boxers (In my view).
Lets take the tennis analogy.
Various markets are Roger Federer,Rafael Nedal,John Mc Enroe and so on.

If we step up to play these guys/markets we will generally be flattened.
But if your a T/H you'll be a formidable opponent as you will have observed your opponent and youll be able to stay in the rally and win multiple points but also be able to pull out of the rally and lose very few points.

At the end of the day your aim is to have more points than your opposition.

To be able to pass this skill on in written form is nigh impossible,but for those who have ever Boxed/Played competitive sport or traded we should be able to at least have glimpses of what T/H and those like him sees more clearly than we do.

Now I maybe well off the mark and I'm sure T/H will correct me if I am.

Sometimes your in sync
Other times your not.
Sometimes your daily equity curve looks fantastic.
Somethimes you wall away from it.
But the continual Equity curve "should" be showing
"Income > Expenditure"

 

[SmellyTerror]

Half the reason I find TH so helpful is that he's not TOO helpful. You need to go and think hard about what he's said, play around a bit, not just frown and nod and stroke ya beard. :

Make a list of the stuff he's said that makes no sense to you. Play around, research, practice, then come back and see if anything does make sense. A lot of it only does when you've screwed up first.

Anyway, here's what I've deduced that could help answer your questions (and which may be so wrong it's not even wrong):

Really don't understand this response. No suggestion was made that it was. So the bid/ask volume in the order book is irrelevant?

The important thing about the book is how it changes. Think of the stuff sitting there as terrain, but the movement as the battle. As I said once before, Little Big Horn was a factor in the battle, but it was the injuns that Custer needed to worry about.

What's coming into the book, and where? What's hitting straight into the bid? What's being renewed, over and over? Are those bids two points below the spread pulling up stakes and being put back on LOWER, or are they pulling up stakes to hit the ask?

A lot of the volume in the book is a mile away, will not get touched for a week, and has been sitting there for a month. Not terribly relevant.

Are there any people out there who trade off the market depth able to confirm they use it incorrectly?

I can. I've had maybe 100 hours experience. I don't know squat, and a lot of my "sure things" blow up in my face. All I get is the occasional hint of a pattern, a little thrill to think ah-HA! I see you, you bastard, shot-gunning little pebbles into the waves.

And then I'm wrong and I lose all my money, but it's still fun.

...and it's even wrong to completely ignore what's been in the book for days. That stuff, like a hill in a battle, can make a difference. It's a little "resistance point" that the TA folk can't even see. When that big blockade that's been sitting there, unseen by the chartists, suddenly melts away with a corresponding number of fills, it's action time! Because if there's some clear space (small orders) behind it, there's a real chance that people hitting at market are going to blast the price right to the other side of the open area, before everyone comes to their senses and it blasts right back again. Couple of seconds, half-a-dozen ticks each way. Good wage.

On smaller stocks with just enough volume, I can be a big-boy. You can see the ask drying up, but it's all because they're falling down into the bid. Now the bid is getting eaten up by more orders hitting it - no-one is even looking at a price above the gap. It's going down, right? But that leaves the area from the ask and up a couple of points bare naked. $50,000 (spread into a few randomly sized orders placed a few moments apart - thank you IB - and day-traded, so (depending on platform) only requiring $12.5k free in your account, right down to zero upfront required) can blast right through that bare spot, right through an old calcified blockade, knock down three more more price points after that, and suddenly everyone's stops are being triggered, half the guys lurking under the bid (and these guys, although looking for a better price, would not be buying if they didn't expect the price to be heading up) crap themselves thinking they're missing the boat and try to jump on, and the poor numtpies hitting the price at market just push it harder. A couple more price points are likely to go down.

Then you can be the first to leap for the life-boats (crash your holdings down onto the bid for a few seconds, then drop what's left in at-market to clean up the book before people freak out and pull their orders or the rest of the herd wake up and stampede), and even go short if there's any volume left after you've escaped, given you're about the only one who knows why the price just spiked...

Now I don't actually do that anymore - it's too risky to try while I'm still so green, and you sure as hell can't sim it - but I'm certain big-boys do the same in bigger markets.

And the lesson: the book LOOKED like it was going to fall. It looked certain. The bid was being hit hard, the near asks were giving up and falling down into it. Volume was coming in straight into the bid, reducing the total on that side, and the ask was still strong.

Three seconds later it had shot up 9 ticks.

So along with all those "rules" you're trying to come up with is the ability to see opportunities for someone else to do something underhanded. "What I am seeing is not a falling book, it's a set-up for a sledge-hammer, because of the following signs...".

That's one trick. How many tricks are there? How will you learn them? Whenever things go the opposite way you think, you MUST go back and try to work out why. Because a global rule like "scalp against the volume" is not going to teach you what the other bastards are doing.

People are trying to take your money. Devious arseholes are doing everything they can to trick you into making the wrong decision. Coming to the game armed with "always do this" doesn't work on this time-scale. I guess that's what TH is trying to say, with one millionth of the words.

If you're not swearing at your opponents, then (IMO) you're not doing it right. This 'aint a church picnic. People are trying to take your money.

Okay so maybe scalp against volume in the bid or ask.
And finally I think this sentence is the nothing to something scalping strategy.

As above.

A lot of the orders on the book are "dead". Their owners aren't looking. They might have been there for a week - hell, the owners may acutally be dead! : They sure as hell aren't reacting to anything today.

The more active people get scared of a gap though, right? So it's actually comforting for a lot of people to see a fast move that's filled on good volume right the way up. Less "coming to their senses" panic as above. So a steady rise is one that'll generally go further. It's also one that's easier to be on - you don't need to see it before it jumps (like the blue-sky hill I was talking about above) - other factors can suggest this will be a decent shift (people who've been faffing about well down the book giving up and hitting the ask, increase in filled volume without a decrease in the lines under the bid, etc), so you can get on early and hold on, with lots of volume all around you to keep you safe. Nothing more comforting that seeing a fat bid line following you up.

So, and happy to be corrected, there's a million things going on with this stuff, which is why it's never in books. Too hard to explain. Impossible to even seriously try unless you're happy to write epic f'ing sagas like this. Better off playing the game yourself to get better. Then come back, and the cryptic remarks will make more sense.

No-one ever got good at tennis by reading.

---
Having said that, if TH ever writes Part 3, I'd read it.
:

 

[nomore4s]

No-one ever got good at tennis by reading.

This is the best bit of your post SmellyTerror.

Too many people in this game think they can read a few books or posts on forums and understand and then try to replicate what TH can do. That is never going to happen.

Only way to learn & improve in this game and that is - Deliberate practice in a real market (even if it is on sim),trying real strategies & methods in the situations that you will be employing real money with.

Too few are willing to do the hard work and learn how to implement their own strategies & make them successful.

 

[tech/a]

No-one ever got good at tennis by reading.

Really---depends on what your reading.

Ill bet Nadal and Co spend months
"Reading" opponents!

Its the one they havent had enough experience in reading thats the "Outlier threat."

 

[SmellyTerror]

Yeah, I shouldn't overstate it. Study is a huge factor, and I wouldn't write so much if I thought there was nothing to be achieved.

...but then get stuck in. That's it. Everything makes more sense when you do.

Read.
Frown.
Play.
Get **** kicked.
Re-read.
Slap forehead.
Repeat.

 

[nunthewiser]

Too few are willing to do the hard work and learn how to implement their own strategies & make them successful.

BINGO!

Hence all the posts in various forums on the various get rich quick schemes/trading courses/magic boxes/ magic systems etc etc.

Everyone wants to be a superstar but dont wanna sweep the floors first .

 

[Wysiwyg]

Humourous yarn that Smelly, thanks.

So, and happy to be corrected, there's a million things going on with this stuff, which is why it's never in books. Too hard to explain. Impossible to even seriously try unless you're happy to write epic f'ing sagas like this. Better off playing the game yourself to get better. Then come back, and the cryptic remarks will make more sense.

No-one ever got good at tennis by reading.

Oh I think theory is an integral part of any learning of cerebral dominated activities. Not much physical activity required in trading apart from mouse clicking. :

As far as reading the market order book goes, knowledge and experience is necessary. I have seen quoted many many years. I would not attempt a DOM scalping approach until a simulated situation is proficiently covered.
Excerpt from camron.business.systems.

This section examines volume. How the market behaves in response to supply.
Individual components comprise, the volume of contracts traded, market depth, and supply and demand. Two main characteristics are: Selling volume and Buying volume. Market depth displays only the "sitting" component, whether it be buying or selling. Further characteristics are opening (entry) volume and closing (exit) volume. Volume is the umbilical cord that joins supply and demand together. When participants are enthusiastic, the volume traded will determine price. If unenthusiastic, price will determine volume.

Smelly Terror typed ....

So along with all those "rules" you're trying to come up with is the ability to see opportunities for someone else to do something underhanded. "What I am seeing is not a falling book, it's a set-up for a sledge-hammer, because of the following signs...".

One cannot see the iceberg orders nor know the dummy bid is so. Dare I say scalping on DOM is an educated guess with a tight stop and a let run if you guess right. This is not too dissimilar to different trading over longer time frames.

 

[tech/a]

One cannot see the iceberg orders nor know the dummy bid is so. Dare I say scalping on DOM is an educated guess with a tight stop and a let run if you guess right.

Thats the way I see it.

 

[Trembling Hand]

Until you guys can trade 500 times and can achieve an average loss = to brokerage (ie virtually no adverse move) with guesses you Muppets are not worthy of my time.

 

[SmellyTerror]

I'm not sure how people read a long and convoluted set up for a large "contrary" but predictible movement and conclude it's a guess...

The sledgehammer I described above... happens. It's rare, but I've seen it and even DONE it. The set-up lasts a few seconds, and unless you're looking for it you'll think it's the opposite of what it actually is. You'll go short and wonder why you just got slammed up into your stops. And then you'll see it taking off and go long, just to be slammed back down to where you started.

But if you see it coming you can go for a ride on someone else's ticket. And there's no way to see it without watching the DOM.

I'm not sure how that's a guess.

Knowing one trick means there's got to be more. A lot more. So it's pattern recognition combined with rat-cunning. And you don't get either without a lot of screen time and a healthy desire to win this game by kicking people's ****. Not numbers. People.

IMO.

 

[tech/a]

Until you guys can trade 500 times and can achieve an average loss = to brokerage (ie virtually no adverse move) with guesses you Muppets are not worthy of my time.

Can I use an educated guess or just a plain bogan variety pure guess.
By the way
Why would I want to just cover brokerage with 500 trades?

 

[Trembling Hand]

By the way
Why would I want to just cover brokerage with 500 trades?

Tech when your losses average no more than brokerage come back and talk.

Until then I'm not going to waste my time arguing with the blind.

 

[tech/a]

You've improved then?

 

[SmellyTerror]

Wouldn't making a profit, where the brokerage is already in the spread, count as "making more than brokerage"?

If I make $240 on a "bad" day, I will not cry.

...could be very wrong, but I'm genuinely confused now.

 

[sammy84]

Tech when your losses average no more than brokerage come back and talk.

Until then I'm not going to waste my time arguing with the blind.

What about when you winners make your losses seem insignificant......Minimal losses seems like a pretty poor way to measure one's success.

 

[Trembling Hand]

......Minimal losses seems like a pretty poor way to measure one's success.

Not true. The muppets claim that I have no edge. If its anything its simple trade management, that is really tight stops and trail them if I luck out with a winner.

I would like to see anyone who can enter approx 500 times and average close to no adverse move without a HUGE edge. Not just a stop. We aren't talking 2 ATR stops here we are talking less than a tick loss per trade that goes against you including spread/brokerage etc.

And then getting better than 50% winners and make a huge % return. But the muppets will not accept that nor comment on it because they have their agenda and it hurts them too much to even think let alone acknowledge.

 

[tech/a]

I gotta be missing something.

 

[Trembling Hand]

I gotta be missing something.

No as usual you're being selective. Over all the trades on this thread the average loss was 2.6 points.

the brokerage per trade is 2 points.

So the average move against me on bad trades was 0.6 points. Less than the minimum tick. I'd like to see someone demonstrate that with guesses.

 

[tech/a]

No as usual you're being selective. Over all the trades on this thread the average loss was 2.6 points.

the brokerage per trade is 2 points.

So the average move against me on bad trades was 0.6 points. Less than the minimum tick. I'd like to see someone demonstrate that with guesses.

Average was around 3 if you add all together and divide out.
Each trade isnt $25 each way?

Your average win is 3.66 its only trade frequency which gives you a profit--scalping. This is your edge.

Income exceeds expenditure.

 

[Trembling Hand]

Average was around 3 if you add all together and divide out.
Each trade isnt $25 each way?

Your average win is 3.66 its only trade frequency which gives you a profit--scalping. This is your edge.

Income exceeds expenditure.

trade started @ $5 a tick, went up to $50 a tick on the last day.

Average loss expressed in points was 2.678 including brokerage. excluding brokerage it was 0.678 points.