[windsurfer]

To follow up on my promise to discuss scalping SI:

To bring others up to date, I was not doing true scalping. I waited for a trend to be established (e.g. up) and waited for a reversal (e.g. a dip) and then went with the trend (e.g. bought 2 contracts). My scalp was for 4 cents with 2 contracts. I averaged 3 trades per day.

The SI is volatile. Auto-trading is too dangerous, because if there is an error in getting the stop executed, it can cost you $5,000 quickly. (The SI is $5,000 per $1.00 change in the price of silver, and I scalped 2 lots at a time).

Scalping it for $400 per trade was profitable, and I had over 85% winners, but getting stopped out was brutal- an average of $1400. My loss in one trade was $2400 in a fast market. And I once had 3 losers in a row!

How does this apply to those who thinking scalping is easy? Give an awful lot of attention to your stops. Focus not on how much you will make, but on how much you could lose. And make sure you are flat whenever you know that news that could move the market may be upcoming.

[bobcollett]

Dear Windsurfer
Can you please test the following. BBC (born before computers)
Only trade the breakouts. In any direction. As long as you see higher highs and higher lows in an uptreand and visa versa.
And your stop is a mental $100.It feels like if it goes against you , you are out!!!
5 minute chart.
Dont trade the dips.You must get out in the dips.And get back in on the upthrust.
Kind regards
bobc

[windsurfer]

Bob,

You can't be talking about Silver- a $100 stop is only 2 cents!

My responses in this thread have been about scalping- that is the topic here.

FWIW, I have found that breakout systems on the indicies are losing trades on 5 minute charts. (This my my personal view- others may dissent). One b-o system I just ran on the last 100 days for the ES lost $45 per trade.

In comparison, a simple (modified) scalping system on the same ES chart showed a profit (before commissions and slippage) of $70 per trade. (Personally, I dislike the ES, but that is a different topic). My recommendation to index traders is to take a look at scalping, rather than trading breakouts.
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Note: re b-o systems on non-index products, I just ran one on the SI with an $1800 stop, and it averaged $900 per trade, but with only 30% winners. I'm not sure I could trade that way, but I'll monitor it for future trades.