FutureScalper Trading Software

Why Traders Fail, and How to Succeed

2011-03-04T06:23:00.000-08:00

Let's revisit the question Why Day Traders fail, and what can be done about it?

In a nutshell, there are 2 main reasons why Traders fail:

1) Poor or inadequate Analytics, and

2) Risk Levels which are too high to tolerate.

Focus now on Risk. In a EURO FX futures contract (6E) a trader is exposed to $12.50 PER TICK gross profit or loss. As EURO is volatile, it's easy for a market to move 20 ticks against the trader. The result is an open loss of $250 and that is far too much for the smaller trader to tolerate so... she STOPS OUT.

Any stop out is a devastating loss, as compared with the more modest gains of each Win, and one Stop Out can overwhelm quite a few Wins so the Trader gets further behind.

SOLUTION? FX Hyper Scalper allows this EURO trader to move from Futures into the domain of the Forex EUR/USD currency pair. RISK levels can thus be 1/100th of the risk associated with a SINGLE futures contract, and thus risk can be SPREAD widely to gain the benefits of Cost Basis Averaging or Scaling.

A trader exposed at $12.50 / tick in the 6E contract (let's for the sake of round numbers say that this is $10 / tick) has pegged her Risk to a single entry price.

IMAGINE how great it would be if that same $10 / tick risk could be achieved with 10 individual entries, each of which was only $1 / tick gross p&l. She could gradually Modulate her risk, up to the $10 / tick level and also she could take PROFITS incrementally on any entries which came to their Target levels.

Now, not only can this Trader take $1 / tick individual risk entries, but it is possible to move down to as little as 10 cents per tick risk levels, or any levels in between.

FX Hyper Scalper forEUR/USD permits this wide range of Risk Management and Trading flexibility.

http://FutureScalper.com

Why Most Forex Expert Advisors are Useless

2011-02-28T18:38:00.000-08:00

FX Hyper Scalper has entered the Forex arena trading the EUR USD (EUR/USD) spot market.

The analytic power of FX Hyper Scalper makes it possible to win, and even to semi-Automatically Trade the Euro.

Experience has shown that the 6E Euro FX futures contract is way "too hot to handle" for the average trader. By execution trades in the Forex domain, we can decrease the risk by a factor of 1/100 vs the risk typical of a futures contract.

This makes Real Trading very much like Paper Trading. By reducing the Fear factor, a trader can learn, survive, and eventually thrive.

So FX Hyper Scalper has completely solved this problem. We provide realtime analytics which predicts trading in the very popular EUR USD pair.

http://FutureScalper.com to get involved with FX Hyper Scalper today.

This is the most uniquely powerful Forex scalping platform on this planet.

Good Trading!

WHY DO TRADERS FAIL?

2010-11-27T18:25:00.000-08:00

Take advantage of the Thanksgiving period to catch up on
some training, as well as new techniques in Risk Management.
You can't spend all of your time with the relatives !!! :)

There are many reasons for failure, many links in the chain.
However, let's talk about Risk Tolerance.

Imagine that you have infinite resources. You would never
have to stop out of the market.

As the market moved against you, you could add to your
position. As the market turned, you could take profits on your
entries. That's money in your pocket to offset your current
position.

The market nearly always turns, doesn't it? But before it turns
around, it can "shake the tree" and all the weak traders will
be shaken out of their positions.

In trading, the Strong Survive. You can enhance your strength,
even if you are a small trader, IF you have the abililty to withstand
"price adversity". That is when your position is underwater, and
you are tempted to Stop Out.

It all comes down to Risk Tolerance and Risk Management, as
well as Smart Analysis, of course. In the Forex world, Risk is
as little as 1/100th of the Futures world, so consider what
that will enable you to do by controlling your Risk Exposure.

Get involved in the FutureScalperFX Edition for EUR/USD Micro Scalping, which will allow you to explore (in DEMO mode) the benefits of Continuous Variable
Incremental Trading. Our designated broker is MB Trading, which is required.

For $400 you can establish your new MB Trading (non-metatrader) Forex account and, with a FutureScalperFX subscription, you are good to go, after considerable 1-on-1 familiarization training, included.

Be open-minded about trading. If you are an "all in" trader in
some markets, consider the benefits of exploring an "incremental"
strategy in the EURUSD market. There are a FEW ways of
making money trading, and MANY ways to lose it !! :)

Become involved in Trade Manager
and also the world of FutureScalperFX.

Good Trading !

The DOM Radar

2010-08-06T09:52:00.000-07:00

NO LONGER AVAILABLE. FX Hyper Scalper platform is our featured platform, because futures trading is too risky for normal traders. With FX Hyper Scalper, trading is 1/100th the risk of futures.

FutureScalper uses the DOM (Depth of Market, sometimes called The Book) as a source of major predictive indicators. Until now, we've had only 5 tiers to use.

Transact will shortly upgrade at least its CME Globex feeds to a 10-wide DOM. Software development is currently underway to integrate this wider feed.

This is like having a longer range "radar" to be able to reach further out and help determine where Market Maker is intending to move the price.

No other platform analyzes the DOM in this way, so if you are a short term daytrader or scalper, consider FutureScalper.

NO LONGER AVAILABLE FX Hyper Scalper for EUR USD Forex is our featured product.

Why does Trending Exist?

2009-10-13T12:05:00.000-07:00

Why are price movements characterized by persistence of trending, sometimes thought of as "momentum" by traders?

The answer is fairly simple. As price rises, Market Makers crowd the DOM tiers at the BID price, thus "masking" the ability for a trader to get the BID price.

So, if the trader wants to enter the market (assuming one tick between BID and ASK), then he must "pay up" and hit the ASK with his limit BUY order or, more frequently, enter a MARKET order to BUY which, of course, gives him the worst control over price.

The Market Maker wants to sell to You, the Buyer, at the worst (highest possible) price, thus making his volume weighted average selling cost against You, as High as possible, so that his price break even point is as high as possible.

By continuing the upward trend, it's a bit like getting on a moving Bus. The Bus Conductor (well, there used to be conductors) is happy to let you onboard, but you must pay the fare, plus give him a Tip to allow you to jump onboard while the Bus is already moving. The Conductor has to make it worth his while to break the rules and let you on board an already moving bus, of course !!

So it is with Markets. If you "pay up", pay the "retail" price, then you can get on board. MM's are very happy to Sell to you at a price THEY determine, which is always the worst price they can give You at that instant in time.

The persistence of Trending both tempts us to enter, hoping the trend will continue far enough for us to profit, and also it serves to line the pockets of the Market Makers who force YOU to pay "top dollar", the worst price, to enter the trending market.

And then, what's even worse -- Oh, Horror! -- as soon as you've entered, the Trend starts to reverse and you can't make any money.

Such is the life of a trader. There are solutions to handling this ubiquitous situation, and FutureScalper offers many of these solutions.

Trading is Never easy !! How many times have I said that?

Good Trading!

Untradable Conditions

2009-10-05T09:39:00.001-07:00

What are "untradable" conditions? Because we'd rather not "guess", we are relying upon various technical indicators and anticipating movement.

Clearly, there may be times when no movement is forthcoming. The price "grinds" around and never really moves anywhere in the short term.

During these conditions, indicators will suggest movement one way or the other, but that movement may not be forthcoming as there's just no "energy" in the market.

What can you do? Well, there are often "micro-channels" during these conditions. Their identification requires continually marking up candidate support and resistance levels from Price Micro Detail Charts or other charts.

We know that prices move in channels, and that support and resistance are proven to be major factors in price movements.

So, your strategy would include using more contracts, in order to make smaller movements more profitable. Always be careful not to get in trouble and allow positions to get too far out of control. By adding contracts incrementally, and removing them in the same way, we can modulate our risk, take partial profits when available and trade these "untradable" markets.

Or, perhaps better yet, take a break and return when there's more energy in the markets !!

Good Scalping !

Surviving against Market Makers

2009-07-24T09:41:00.000-07:00

It's about time to say some more about Scalping, and how Market Makers (MM's) trade against the rest of the market.

Both smaller Buyers and Sellers, and even the very small ones, like ourselves (!) are at a distinct disadvantage when trading against MM's.

They have "deep pockets" and are dominating the DOM quotes. So what hope do we have of trading against these powerful MM's?

Part of the answer is NOT to trade against MM's. When there is a 2 tick Bid/Ask spread in a market, the MM's are deliberately keeping it wide. After all, we retail Buyers need to buy the ASK price, and sell to the BID price, and MM's are only to happy to take the opposite side of our trades.

But, MM's will NEVER give you a good price. So what's a Trader to do?

Smaller players will occasionally "step into" the open spread. These are the contracts you want to trade with. These small players make mistakes, but MM's never make mistakes.

Consider a market trading BID 98 and ASK 100. Nobody's at 99. You're a Buyer, wanting to get Long, but at a decent price. You don't want to pay 100. FutureScalper Virtual Limit Orders can wait until a small player offers a contract or two at 99 for sale. IF that lower ASK price is not joined immediately by the MM's, then FutureScalper will quickly hit that small players's OFFER and take the contract.

Why does this work? If the market were going down, then MM's would be willing to join the ASK (OFFER) at 99. If the MM's willingly join the smaller player, then it is because the market is going down, and they want the action. The fact that MM's do not join a seller at 99 is some evidence that the market is moving up.

If the market is moving up, then you want to buy that contract off the poor fellow who's just selling it. He will lose, and you may win.

One thing you should never do after hours is to place a limit order inside the Bid/Ask. Now, it's not the end of the world, and it can place you in a good position to get a price, but is has some serious downsides:

1) Everybody sees that you're inside. This can affect the market's behavior in low volume situations. MM's may join you. And actually this can give you some information, whether or not they join you !!! But, in general it's not good.

2) You have to wait, like the MM's for someone to hit your bid or offer, and this exposes you longer than necessary to get a fill. MM's have all the patience in the world, but you may not, and you'd rather get a fill quickly than to sit and wait for one, and tell the world what you're doing.

So, in general, we want to wait until a smaller player makes a bid or offer we're interested in, so long as the Bid/Ask spread is not too wide, and then hit that with a preloaded Virtual Limit Order, which evaluates whether MM's are interested in that price or not.

GOOD SCALPING !!

FutureScalper on Transact

2009-06-26T07:29:00.000-07:00

Until now, FutureScalper has been available only for Interactive Brokers clients. RSN (Real Soon Now, as they say) FutureScalper for Transact(tm) will give scalpers many brokerage choices on the extremely high performance Transact data network service.

Many brokerages, including Transact, Infinity, Apex and a host of others offer the TransactAT(tm)* platform and Transact's data feed as one of several options. This platform uses a DOM Ladder style for order entry, which is suited for most traders.

FutureScalper uses highly specialized Analysis and Order Entry techniques, which only a very few scalpers should consider. FutureScalper is by no means a replacement for TransactAT as the reference platform. Both platforms will generally be used side-by-side, with TransactAT as the reference for positions at the brokerage.

Read more at http://FutureScalper.com/transact

FutureScalper calculates the COT (Commitment of Traders) in real-time in order to determine Market Makers' aggregate position against the rest of the market.

Since Transact has a full Time and Sales feed, the accuracy of COT is enhanced, with no trades missed in the T&S feed. Thus, "tape reading" is far better as a predictor of short term price movement.

DOM is 5-wide, which is more or less the same; however, soon a 10-wide DOM will become available for exchanges which publish that information. FutureScalper's DOM analysis will thus be able to "look ahead" at MM's size patterns further away from the current market as a predictor.

Order Entry will also be much faster. Exact timings are dependent upon various system settings, but very high performance and reliability are expected.

An Analysis and Training version is already available.

If you are interested in FutureScalper on Transact, email FutureScalper@gmail.com with the subject line "FutureScalper on Transact".

So, if you are determined to scalp, which is a dangerous game; consider whether FutureScalper could improve your bottom line. The learning curve is high, and you should demonstrate experience in scalping in order to qualify.

Good Scalping !

* (The Yes network, YesTrader, TransactAT(tm) are possible trademarks or service marks of Transact Futures http://TransactFutures.com and affiliates.)

Price Adversity -- Trade with Trend

2009-06-11T06:04:00.000-07:00

Small traders cannot tolerate a losing position, and may be forced to liquidate by stopping out or closing "gracefully". Of course, losing is always more devastating than winning is rewarding. The odds are stacked against you, as a small trader, because we have to pay the spread and the commission.

Price adversity is when your position is currently open, but losing. The Market Maker (MM) can tolerate a huge price adversity in positions for several reasons: 1) huge resources, 2) operating on averages and 3) continuous profits across the spread which offset position losses. Without going into all of this, just let me say that YOU CANNOT tolerate significant losses. That's stating the obvious.

There are two approaches to trading, given the old adage that "The Trend is your Friend". You can go 1) with the trend, or anticipate a change in trend and enter 2) against the trend (counter-trend).

Small traders simply cannot survive by using a Counter-Trend strategy. The problem is that she cannot survive the market run against her, while waiting for the market to turn. Small traders must use a With-Trend strategy, in general.

If you, as a small trader, must use a Counter-Trend strategy, then FutureScalper offers several mechanisms, and some advice, as to how you should do it. First of all, NEVER take the market price where it is, but Bid and/or Offer outside the market, and make the market come to you. In this way, you have a higher probability of a small retracement you need to profit.

But, in general, don't bet against trend. COT may tell you, and RISK may tell you that MM's will turn the market. But they may continue in trend direction for a long way before that turn takes place. Why? By pushing in trend direction, especially downwards, they are able to create PANIC in the market place and induce players to SELL, where MM's true intentions are to BUY. Of course this allows them not only to "shake out" traders by running their stops or pushing them beyond what they're willing to tolerate in Price Adversity; but it also allows them to BUY against those sellers at the lowest possible average price.

What features can we use in FutureScalper to help us enter in Trend direction? Here's a small list:

1) Having identified the trend, use Relative Order placement to place your Limit order a couple of ticks outside the market behind the trend, and perhaps catch a retracement to get yourself in with the trend. Problem here is that often there is NO retracement, and so you can't get in. MM's don't want to give you an opportunity for a good entry, so they often won't retrace enough to allow you in. Or you can "chase?" into an open spread, with a backtick in your favor and gain commission costs through a better entry.

2) Use Virtual Limit Orders with Run Length protection so that you enter only when the counter-direction stops and price moves in trend direction. For spikes against you, this is a great approach, because it will not trigger during the spike. However, you need to know what additional vLimit conditions can be used in order to better identify the trend, such as Depth of Market (DOM) Outer Book Pressure (OBP) conditions which you will want to factor into your decision to strike.

3) Support and Resistance points are those well-known levels which just about anybody can see on the charts, where traders anticipate breakout or breakdown of price, or anticipate that price will stop rising ("resistance") or stop falling ("support"). At these points, which you manually mark up as micro-channels, you can anticipate using FutureScalper Virtual Limit BREAK-OUT and/or BREAK-DOWN triggers to give you a few ticks profit. Using BREAK modes, you are already moving "in trend direction" with your trigger, so your stops can be closer.

FutureScalper is a complex product which helps you to negotiate the sort term Scalping environment in futures contracts. There are NO hard and fast answers, and only using good judgment with Best Practices, can you hope to succeed.

Good Trading !

Order Entry for Scalpers

2009-03-15T15:22:00.000-07:00

First of all, there is no platform suitable for close scalping, other than FutureScalper (FS). Traders use woefully inadequate tools in an attempt to scalp futures. These traders are generally doomed to failure. What is needed in a true scalping platform? Realtime analysis, obviously, but in this article we concentrate on Order Entry features. FS ties Order Entry to Analysis in an integrated system.

Ability to strike automatically when the Bid/Ask spread is open at BEST price. This means BID+1 tic to Buy or ASK-1 tic to sell, but only if the spread size is 2 tics or more. Without this precision you can't make commission on entry, and you do not wish to pay the full retail price when entering all the time. Some instruments such as S&P 500 emini almost never offer a Bid/Ask spread, so you're doomed to pay up. For many futures contracts, a spread is available, but you can't strike manually because the opportunities are fleeting.

No market orders. Market Orders spell "loser" for Scalpers. You must retail price control with Limit orders.

Complex conditional orders. Not only is the Bid/Ask spread important in scalping, but here are some other factors commonly relevant to good entries:

1) Whether price is moving against you. FS allows you to inhibit trading until the run against you stops.

2) Striking when the DOM (Depth of Market) trend is favorable.

3) Striking when the Market Maker COT (accumulation and distribution) is favorable.

4) Being able to use Pre-Loaded Live Orders to strike, which avoids overhead of initial margin checking on order entry.

5) Ability to "chase" a run with a very fast Trailing Stop to get the most out of fast movements.

6) Obviously speed and precision are important. Orders must be entered or modified in well under 100 milliseconds.

7) Ability to manage multiple Live orders and to adjust any of them quickly and without errors. This allows incremental profit taking and adaptive Order Entry techniques, where you can react to realtime indicators which tell you whether or not your trade is favorable.

8) Ability to "chase" effectively. If buying, you want the ASK to remain stable, and the BID to drop in your favor. Then you want to go BEST BID. FS does this automatically. This buys you a part of the spread and usually pays commission on entry. When selling, you want the BID to remain stable, and the ASK to uptick in your favor so that you can go BEST ASK.

The only platform which offers these advanced features is FutureScalper. So consider subscribing today, and taking the long journey to mastery of daytrading and scalping Futures contracts.

http://FutureScalper.com

Daytrading as a Career

2008-10-30T04:58:00.000-07:00

With the recent collapse of the housing price bubble, coupled with the economic misery and unemployment which foreclosures will bring, there is no better time for you to consider your career in trading.

As a trader, you can generate income from a relatively small base of cash with which to operate. The key is having the right technology and training which enables you to respond to the many moves which a market makes during the day.

On each transaction, your goal is to take a modest profit, and to be correct at least 80% of the time on the opportunities which you decide to take. You will lose on some of these, of course, and keep your losses tightly controlled. But, with experience, you should be able to achieve a fairly high percentage of small wins.

During the day, these wins and losses should gradually increase your account. By the end of the day you should be able to make more than the average living wage and, depending upon the capital you have available, considerably higher than a salaried job.

It is not possible to guarantee favorable results, because each trader's activities vary greatly. However, the approach advocates relatively small risk on each transaction, as well as relatively small gains or losses.

By keeping transactions "bite-sized", we remove the high risk aversion psychology which can often result in a trader's being unable to "pull the trigger". Losses in trading can be debilitating to the trader, and can result in a profound sense of hopelessness and helplessness.

By reducing the overall risk and reward for each action we take, we can avoid the intense fear which can be involved with other strategies. The daytrader ends the day "flat", with no positions and no risk. The swing trader has overnight positions, and may wake up with some disastrous results. Knowing this, the swing trader may be unable to sleep well. However, the daytrader has no risk, and tightly controls the risk which is taken during the trading session.

With a capital base of $5,000 or so, and FutureScalper software, you can work toward your career goal. Naturally, the more capital which we have to work with, the stronger is our position as a trader. $5,000 is a realistic minimum amount for training purposes, and is just enough to deal with a single contract, or perhaps two contracts in today's trading environment.

Access to realistic Paper Trading through the software, is the key to learning before risking real money.

If you are able to access much more than this minimum base capital, then your trading approach will change, and you would be able to take advantage of cost averaging and other advanced strategies.

Being independent of the job market, and being able to set your own hours during the day are ideals which can be achieved through hard work and training.

Good Trading !

Fixed or Variable Targets?

2008-07-18T11:17:00.000-07:00

Scalping involves such precision that the easiest strategy is to use a fixed target distance in ticks from your fill point, and take profits at that point.

However, there may be an "opportunity cost" to doing this, because price might continue to run in your favor and you got out "too early".

Smart Target function is part of the Virtual Limit Order subsystem, and it meets your fixed target first; then switches into "smart" mode where it carefully evaluates the "Run" of the Bid or Ask as appropriate.

When the Best Ask Price retraces (drops) on an uptrend, or the Best Bid Price retraces (lifts) on a downtrend, we use this as a criterion that the "run" or "micro-trend" has ended.

But there's a further complication (several actually), because Market Makers very quickly "pull" price when they are turning. If we wait until they pull it, they can take several ticks away from us.

Therefore, we use a "timeout" function on the Smart Target run length analyzer, so that when the run "pauses" long enough, it is considered to be over, and we take our profits right then and there.

Micro-scalping, of the sort which FutureScalper does, certainly requires innovation in various techniques. We can't just use a "trailing stop order" because it is much too imprecise.

Good Trading!

To Trend or Not to Trend ?

2008-06-03T20:55:00.000-07:00

Traders are constantly confronted by the question whether "the trend" will continue or whether it will change, reverse or pivot.

"The Trend is your Friend" and we all know that, but what does that mean?

Setting aside the basic question of just what "the trend" is, and why "trending" is part of market behavior; what should a trader do?

Chasing the Trend is like jumping aboard a moving Bus. The Conductor may let you onboard, but you have to pay the price. Normally, that means buying the Ask price to enter a long position. Market Makers (MM's) are very happy to let you onboard, but you must "pay up".

If you're just watching Price, then you have to figure Price has something called "Momentum", because you're hoping that when you do jump onboard the trend bus, that the bus keeps going and doesn't turn around !

FutureScalper is able to help explain WHY there is such a thing as trending, and what trending represents from the MM's perspective, but that's for another day.

Counter-Trend trading is considered "dangerous" because most traders have little or no way of determining when trend is weakening, and it is difficult to determine just precisely when price movement will reverse.

FutureScalper allows you to bet on a trend change by knowing that MM's are in a position where it is advantageous for them to turn the market the other way.

Why do MM's turn the market? Because they have Accumulated Long, and are losing money; or have Distributed Short and are also losing money. It's all about the money. MM's turn the market when they have taken enough from the rest of us, and are ready to take profits on their positions.

Therefore, Risk (losses by MM's) is the driving force which causes MM's to pivot. FutureScalper measures MM's positions and Risk, and therefore allows you to trade against the trend much more intelligently.

Precision Scalping After Hours

2008-03-13T05:06:00.000-07:00

This is a strategy which profits from the mistakes made by smaller traders who are essentially clueless about market direction.

The most challenging environment is attempting to trade profitably after hours or outside "RTH", regular trading hours. Let's call it non-RTH trading.

This is a universe unto itself, but MM's activities are magnified and brought into focus in this environment.

The key here is getting a price which will enable you to profit. And trade volume is nearly zero, so you need to find someone to trade with, and at a price which will enable you to win !

Most traders believe the smart thing to do is to step inside an open Bid/Ask spread, and to "play Market Maker". This sounds like a smart idea but, in practice, you may have to wait a very long time for a trader to hit your price.

A better approach is to use FutureScalper features which effectively enable you to monitor the size available, and to Accept Bids or Offers from SMALL PLAYERS ONLY.

MM's will never make a mistake and offer you a lower, better price. They know the game, and are always in total control of price. But, suppose you are buying, and there's a Bid/Ask spread open, there's always that SMALL TRADER who thinks we're at the top. He wants to "play Market Maker" (ha ha), and OFFER to sell a contract under the MM's best offer price.

His size is 1 or 2 contracts, maybe, and you want to HIT his price and take a contract or two from this SMALL PLAYER. He's probably made a mistake, and you are benefitting from his mistake.

You have a preloaded order outside the market, ready to strike this price as soon as it's detected. So you let the system work for you, and you just wait for the event you want.

You have the DOM Delta Monitor Activity display which tells you the uptrend is unlikely to stop anytime soon, so you know that you need to buy in and ride it up.

That guy doesn't know what you know, so he made a mistake and you took his contract at a better price than MM's would ever have offered you !!

Good Trading!

Micro-scalping YM (the DOW future)

2007-12-21T04:21:00.000-08:00

The DOW futures contract trades on the eCBOT exchange, and many traders attempt to profit through daytrading. But how can we find a way to keep our Wins up and our Losses down, consistently?

FutureScalper has many sophisticated measures which help in this task, but let's focus on "chasing" YM based upon movements in the Russell 2000 (ER2 at Interactive Brokers).

Every time I say this, traders make fun of me, and I'll admit it's difficult to explain, but here it is again.

For the purposes of micro-scalping, the Russell 2000 futures contract (ER2 at IB) follows YM, virtually tick by tick during most of the regular day trading session. ER2 FOLLOWS YM. But here's the oddity.

Although ER2 (according to my analysis) is truly "following" YM, it is following it "ahead of time" or "in anticipation". Thus it can be used as a trigger for YM trading.

Let me explain it this way. You're an Employee, so ultimately you need to follow the direction of your Boss. But you want to get ahead, and so you start projects even before your Boss gives the go-ahead. You are so Eager to Please your Boss, you want to start getting results even before the green light. Most of the time you're right, because you know your Boss's needs so well.

In micro-scalping, ER2 is exactly like that Employee who "moves" before its Boss, YM in this case, begins to move. ER2 is really following the YM DOW futures, but it seems to be "leading".

Trust me, ER2 is not the leader, but the follower. However, ER2 FOLLOWS YM AHEAD OF TIME. So it can be used as a "leading trigger" for YM micro-scalping trades.

When ER2 "lurches" or "runs" decisively; YM will be moving in that direction as well. This happens FAST, and so FutureScalper provides for automated trade entry in YM, based upon ER2's analysis. Generally there is enough of a lag time for the YM trade to be entered, based upon a FutureScalper Pre-Loaded Order to get in as fast as possible.

Using FutureScalper's eXtreme Trading (XT) Virtual Limit Order (vLimit) system, all we have to do is to configure vLimit parameters, including:

1) Always pre-load or "park" the live order.
2) Require trigger when ER2 "runs" 3+ ticks.
3) (set a few other DOM-based "safety" parameters)
4) Activate an aggressive vLimit order to Buy, to Sell, or Both.
(this allows you to "chase" the market from either side.)

Then we just sit back and wait for the trigger. When ER2 runs, YM is entered, and we go for a "run" to a modest target, such as 4-10 ticks profit. We're in and out in a short time.

I was going to say "what could be simpler?" but in fact this does require a lot of judgment and practice, and no trading is ever easy, all the time.

Good Trading!

Xtreme Trading (scalping)

2007-11-04T18:07:00.000-08:00

Before I mention some of the improvements in FutureScalper's XT (extreme trading) vLimit (Virtual Limit) orders, let me just Thank IB for coming to their senses and putting intraday futures margins back where they belong.

So, Thanks IB ! NO, you didn't over-react; you were just keeping us Safe. :)

Extreme Trading is a way of creating Complex Conditional Virtual Limit Orders which combine a number of conditions prior to triggering.

Using XT vLimit conditions, I can do any combination of the following:

1) Defend myself against price running through my vLimit order, but strike when the price "pauses" so that I can get the best price.

2) Require that the Bid/Ask spread open to a specific number of ticks before I go "best" bid or offer to strike.

3) Preload a Limit order into the market, but keep it away from the market, so that it is already there to strike quickly when the vLimit conditions are met.

4) Require a specific COT (Commitment of Traders) prior to striking.

5) Require a specific RISK prior to striking.

6) Use ER2 as an additional trigger or guard condition while trading ER2 itself, or when trading others such as YM, ES, etc.

6a) When ER2 runs, it's usually an indication that YM, ES, etc are going to move in that same direction, so triggering on the ER2 can be a very effective way of cashing in on some quick moves.

There are many other such conditions.

4 presets are available to hold combinations of conditions, so you can "shift gears" as trading requirements change.

There can be a Buy vLimit and a Sell vLimit active simultaneously, of you like, so that you can strike the market from either side and use the opposite preloaded order as your target, when one of them fills.

If that made any sense to you, then maybe you're enough of a scalper to want to try FutureScalper.

Good Trading !

Using the DOM to Predict Price

2007-09-16T09:53:00.001-07:00

Most traders are aware of the DOM (Depth of Market). I just like to call it "The Book". But nobody really knows what to do with this baffling data, so it's virtually useless for most traders. Yes, they try to "interpret" it, but it's virtually impossible.

Most traders say the DOM is "random". But the problem is that you cannot analyze this "by eye", and even if you could, you probably wouldn't know what you're looking for, nor how that predicts price movement.

FutureScalper specializes in analyzing the DOM. Patterns of size placement on the DOM predict both short and medium term price movements.

If you are a daytrader of futures contracts, your eyes will be opened by using FutureScalper as part of your trading and analysis toolkit.

Multiple TimeFrame Analysis

2007-09-11T09:33:00.000-07:00

Trading takes places on many simultaneous timeframes. We are seeking to find a "natural" rhythm of the market, as well as our own preferred scalping trade frequency or duration.

FutureScalper now offers TFM (TimeFrame Monitor) which evaluates Inventory and Risk over multiple simultaneous timeframes and presents them all in one place.

Instead of looking at one timeframe at a time, we can now show the entire "landscape" of timeframes and whether the market is long/short, at risk or not, rates of profit per minute and other key values.

For example, if you see that the ES market is $3,000,000 underwater on tens of thousands of contracts long, then you can anticipate some support and lifting, as MM's need to lift to their break-even price and above to sell off that excess "at risk" inventory.

Watching risk in these liquid markets like the eMini S&P 500 will open your eyes to the "deep pockets" which the Market Makers have in trading against you.

And what's even more important, if you know they're in a risk situation, then you've just been able to "Read their Minds", and make intelligent short term trading decisions.

And that's "a good thing". :)

Why be a Trader?

2007-09-08T05:35:00.000-07:00

Well, duh..., to make money, of course! Many traders feel that need to know the "fundamentals" and to be an economist in order to make the right general decisions to trade profitably. Still others, watch "news events" and hope to trade on the right side of those events.

There are many ways to make that money, or to approach the discipline of trading. Just because there's one word, "trading", don't be fooled into thinking there's only one general method of trading. It's a vast landscape with many "niches", and your career goal is to find that niche where you can be profitable every day.

Traders speculate: Will it be an up day or a down day today? That's because their ability to make money depends upon predicting some major move.

FutureScalper traders don't speculate about the future, but allow subtle fine-grained indicators to guide their decisions about where price is likely to move in the short term.

This doesn't invalidate thinking in "traditional" terms about support and resistance. But, with more fine-grained information about short term action, our expectations and interpretations of these traditional concepts are transformed.

In the end, it's all about making money consistently. We strive to make frequent, correct decisions, and to tightly control risk. Profits (and losses) are kept small and "bite-sized", so that each decision is more manageable and there are "no surprises" most of the time.

Yes, it's all about making money consistently, and about transforming trading from a "guessing game" to more of a systematic indicator-driven activity which, hopefully, consistently delivers profits.

Traders are very good about taking responsibility for their outcomes, because we make the decisions, and either reward or punish ourselves. Learning from every outcome, and being open-minded is what distinguishes successful traders from those who just can't seem to "get it".

The Problem with Limit Orders

2007-09-01T06:25:00.001-07:00

Limit orders? The greatest thing since sliced bread, you may say. I specify my price, and force the market to come to me. Gone are the crude days when I used to submit "market" orders, and take my chances on my fill price.

What self-respecting scalper would ever use a market order? In fact FutureScalper cannot even submit a Market order. It uses aggressive Limit orders when the "market order" behavior is desired.

But, wait a minute! For scalpers, while the Limit order is the essential tool for price control, and we could never survive with "market" orders, the Limit order has one great disadvantage. It is still just a bit "stupid" and it triggers at the price level where you've set it. (Duh, of course, it triggers where you want it to, maybe with some price improvement, but generally you get the price you want.)

"What's wrong with that?" you may ask.

MARKET RAN THROUGH MY LIMIT AND STOPPED ME OUT !

Tell me, how many times have you set a Limit order below the market, to buy, and the market has Dived right through your limit, which dutifully buys for you, but then the market keeps diving so far against you that you stop out ? How many times has that happened to you? Frustrating?

(By the way, I'll discuss a Stop strategy which is less traditional, in a future bloglette.)

That's why FutureScalper offers a "smarter" vLimit order type. Actually it's a synthesized order, as you'll quickly see, and it gives you "price protection" while sharing many of the usual characteristics of the Limit order.

THE VIRTUAL LIMIT ORDER

The vLimit type is a threshold level which FutureScalper allows you to manage, and that level is your "limit" price. The real LIVE Limit order is preloaded into the market, but keeps itself outside the market. It is preloaded so that when the vLimit mechanism says "strike", it can be bumped quickly into place on the exchange.

A vLimit can be configured NOT to trigger if price is diving toward its threshold, and is likely to run beyond it. It recognizes that a "down run" is in progress, and it will wait until the run is finished, before bumping the limit into place to buy for you.

This "price protection" or "run through protection" means you get a better price, and therefore that you are stopped far less frequently because your buy or sell points are much better.

So, FutureScalper offers the "smart" conditional "vLimit" order type to help you get better entries.

VLIMITS CAN BE MADE EVEN SMARTER

Going into the many other conditions which can be configured into the vLimit system using FutureScalper XT, is beyond the scope of this little bloglette. If this interests you, get in touch and discuss whether FutureScalper might help your trading.

Good Trading !

Traditional Support and Resistance?

2007-08-29T05:03:00.000-07:00

SUPPORT AND RESISTANCE?

Whatever happened to traditional Technical Analysis (TA) since FutureScalper came along? FutureScalper measures many other dynamic factors, but doesn't focus directly on concepts of price support and resistance themselves. Well, obviously, they don't disappear as useful concepts.

Evaluating traditional Support and Resistance (S/R) is still an important activity. FS does not directly show these levels, but the ability to add in such price levels is on the feature request list.

In the meantime, please use a simple IB TWS Realtime Line Chart over the past hour or two, and identify likely support and resistance points visually.

Be watching and factoring these into your decisions while trading with FutureScalper.

MARKET MAKER TRICKS

Breaking down and forcing buyers to sell is a strong pattern. GREEN bubbles in FutureScalper indicate retail buying (MM selling against them), and you can expect that a critical Support level may be violated if a significant cluster of "bottom fishing" appears.

With traditional S/R analysis you cannot know whether MM'sare buying or selling. But FutureScalper provides you with that valuable information, which makes S/R analysis much more powerful.

Are you SOH all day long?

2007-08-27T05:34:00.001-07:00

As a professional trader, the biggest problem is being SOH most of the time.

What's SOH? "Sitting on hands", meaning actively refraining from participating in the market until some big "signal" comes along.

FutureScalper was designed to eliminate SOH by permitting the identification of frequent smaller trading or scalping opportunities throughout the day.

So the idea is to make the risk and reward more "bitesized" and frequent. Of course, the objective is to keep your "hit/win rate" high and your "miss/loss rate" as low as possible. (Hey, some losses are part of the "trading game")

So instead of using 1 minute or 3 minute bar charting, FutureScalper uses "hyperactive" realtime "net aggregation bubbles" for Inventory Analysis and short term Commitment of Traders (COT); plus analyzing the Market Depth (aka "The Order Book") for clues as to where the market is moving short term.

It's completely original. There is no experience like it out there in any platform.

Couple this with extremely fast and precise multiple simultaneous live order management (trading off the charts) and specialized modes, and you can (hopefully) avoid being SOH all day long !

Continuous day trading or scalping isn't for everyone. But if you're the kind who wants to be "up close and personal" with the futures market, then why not inquire? It makes trading a bit more like video gaming. :)

Good Trading !

The Sub-Prime Lending Panic and IB's Reaction

2007-08-26T07:24:00.000-07:00

Notwithstanding what I am about to say, Interactive Brokers remains probably one of the best choices for an international multi-currency brokerage. But, and perhaps partially because of their now public corporation status, they're no longer as lean and mean as they used to be.

Intraday margin costs reflect the buying power of day traders in futures contracts, and scalpers are simply frequent daytraders.

IB suddenly announced early in August that volatility concerns were leading them to sharply increase intraday margin costs (the cost to a trader to control a contract). But they hastened to say in BOLD TYPE that the margin increase policy would apply ONLY TO EQUITIES BASED FUTURES AND OPTIONS.

OK, we all said. There are still other futures where intraday margins remain at about half of overnight costs. We'll just shift some of our trading to maybe a commodity like Gold futures, or currency futures or agricultural or energy futures.

BUT WAIT !! It suddenly becomes clear that intraday margins are virtually eliminated for ALL futures products. Well, not exactly eliminated, but capped to the overnight margin rates if the formula causes them to exceed overnight margin rates.

This virtually means that ACROSS THE BOARD, intraday day trading margin costs are just about the same as the overnight hold rates.

Actual formula results in various margin costs, but always capped to the overnight rate (cannot exceed the overnight rate). WHY? I can only speculate, but here's one important point: They didn't mess with margin costs for their Swing traders or medium term traders. That would have caused a real customer uproar.

But why should overnight margins remain stable if volatility is such a big issue? Aren't overnight risks even greater than short term day trader's risks of huge price fluctuations?? Probably the real reason is that there would have been a huge customer revolt if they had altered overnight margins. So they left them untouched.

And to make things worse, they make people think (even their own Support Staff) that the intraday margins listed on the website reflect actual prices. They are ALL incorrect for intraday margin, and support staff can't even give a correct answer what the costs are.

There's that "formula" which is Price times Multiplier times 4%, capped to the overnight margin rate. As I say, their customer support staff even give incorrect answers to the question "What is the current intraday margin for X". I asked about ZG. One answer was $2025/contract (correct); and another answer was $1023/contract (incorrect !). Yes, it's doubled !!

Well, I've started looking into alternative technologies for FutureScalper but the reality is that this is going to take a very long time.

For now, Interactive Brokers has effectively cut out buying power in half for futures daytrading.

And I should also mention that $2000 was the initial funding level for a new account but now, they lifted that to $5000.

BUT YOU'RE GONNA NEED THAT EXTRA MONEY WITH THEIR INFLATED INTRADAY MARGINS ANYWAY. So, what the heck?

And there's no end in sight to their current intraday margin policy, even though the "Sub-Prime Crisis" is practially over, as shown by recent trading. When (if ever) will these intraday futures margin costs come down again?

You can't play a New Game with Old Tools

2007-08-14T18:48:00.000-07:00

Surgeons don't use tools from the local hardware store, right?

Using "generic" analysis tools and traditional trading techniques can't cut it against Market Makers controlling price movement in futures contracts.

1) Your analysis is too slow. Three minutes is an eternity: I make 3 trades in 3 minutes while you're waiting for the "bar" to close !

2) Your charting is too crude: Open Close, High Low? Really? Come on.

And 3) your Order Execution is completely outdated, and way too imprecise. So, how can you succeed? Can you split the bid/ask spread, and play "market maker"? I doubt it.

But, you say, everybody else is using that package. They must know something I don't. Everybody else is trading "support" and "resistance", so that's how it's done. Really?

Make a bold decision and use a completely different approach, and run circles around your colleagues. While they're "sitting on their hands" (aka SOH), you're busy pulling profit out of the market.

Don't believe it? Give it 6 months of hard work with FutureScalper, and then you'll understand.

(I was only joking... go ahead, keep trading like all your colleagues -- you're doing just fine...)

Your Trading Career is a Process

2007-08-14T04:57:00.000-07:00

Any career development or change is a continuous process. This process begins with tools, training and hard work to gain experience.

With trading, experience can come through realistic simulation so that techniques can be learned without risk. But, as we all know, when there's no risk of real loss, the excitement and fear factors are absent.

As techniques are learned, you must begin to risk real money. Doing so in small increments gradually introduces you to the heart-pounding psychological stresses of trading, so you can master your own emotions and function profitably in the "battlefield conditions" of trading.

Markets are never static, so the process involves experiencing the "moods" of the market and learning how to respond instinctively.

No career change takes place without at least a year or two of consistent work on your part.

So, get started today on your new Career as a Trader !

http://FutureScalper.com

The Great Thing about Trading

2007-08-13T06:48:00.000-07:00

Futures daytrading, or scalping, is simply immune to general problems with the economy. We traders make money whether the market goes up or down; we just need it to move ! The ability to scalp precisely makes even "stopped" markets profitable, although it's better to have "normal" trading conditions.

Buying low and selling higher. That's the trick. For you non-traders, those two actions can simply be reversed in time; you can first sell high, and then buy low, which we call "covering" the initial short position.

In futures contract scalping being "long "or "short" are exactly symmetrical and there is no reason to prefer one over the other. My personal bias is to work the short side, as prices drop much faster and more reliably than they lift. But long trades simply require a bit more time to work out.

As a home business, immune from economic fundamentals, short term trading or scalping is simply ideal !

Some scalping videos

2007-08-12T14:22:00.000-07:00

Here are 3 videos showing FutureScalper. The YouTube format is a bit restrictive, but you should get the idea.

http://www.youtube.com/watch?v=Mo8dVabH1Qs

http://www.youtube.com/watch?v=RZQJyBJKr6U

http://www.youtube.com/watch?v=zaMkAXqqoHQ

Enjoy, and Good Trading!

The importance of scaling in and out

2007-08-12T13:21:00.000-07:00

Short term traders, or scalpers, in futures contracts need to understand that they shouldn't buy a bunch of contracts all at the same price ! Statistically, this is stupid, because you're unlikely to have picked the best price at which to enter the market.

Buying is all about "volume weighted average buying price"; and selling is all about "volume weighted average selling price". The difference is profit; or loss.

Rather, let's say you wanna buy 3 contracts, buy the first one, then defend it with a second bid maybe 3 tics lower, and at the same time bracket a target at maybe 5 tics higher for that contract. If price continues to drop, the 2nd defending contract is purchased, and you set another defensive buy another 3 tics lower, and of course place a target 4-5 tics higher. Of course if price lifts enough, you want to take an individual contract away, thus putting money in your pocket, and possibly putting you flat by selling out your full long position.

FutureScalper enables you to do this very easily.

So, when you close out an individual contract "inside" your 3 contract position limit, those profits go into your pocket to offset any losses.

So, to summarize, incrementally enter and exit the market continuously, until your position works out, or you are forced to admit you made a bad entry which is not worthy of defense.

Good Trading !