Scaling Up Your Trading Business

[vivek.civil17]

hi nikil
thanks for ur immediate response . little more query .
it seems you trade 10 lots in the above trade .
1. all entered in same time or diff times ?
2. as it is scalps what is your SL points and how can we place the SL??
3. what is your maximum risk per day ?


your daily MtoM has large nos of volumes trade so you may use small SL i guess .

HAPPY TRADING

 

[Nikhil Dogra]

In scalping i would risk INR 2000 to make INR 1000 because its a high probability strategy.
1) Scale In - Scale Out Approach
2) Max SL is INR 2000 i.e In scalping i would accumulate 2 lots & sell 1lot & keep on churning like that +2-1+1-1+1-1-1+2-1-1 so on & so forth
3) Max Risk Per Day INR 2000. If i make profit of INR 1000 then my risk limit is INR 3000 [2000 initial risk & 1000 from profit]

The trade i took is 10 lot & not a scalp in family a/c.I entered on break of intra day low "at that time" 10515.1 on future [10330 was my level & new low gave confirmation to short] , max intradrawdown in the trade was 4 points on 10 lots from my entry & my SL was 10333 on futures (would have exited options irrespective of option price).In the end i closed almost 10 point on 10 lots.

In my family a/c i trade positional & in my personal a/c i do scalping , i made 1k in scalp in my a/c & 6k in family a/c.
Overall in grand scheme of things i am running 10 diversified strategies.

 

[vivek.civil17]

ohh 10 strategies . good going .

as for as i understood you ENTRY based on your OWN levels .

betn sorry fro the curious qns .

i just want to know the SL of your single failure trade ??
also about part booking points and reentry after the part booking ?

HAPPY TRADING

 

[Nikhil Dogra]

ohh 10 strategies . good going .

as for as i understood you ENTRY based on your OWN levels .

betn sorry fro the curious qns .

i just want to know the SL of your single failure trade ??
also about part booking points and reentry after the part booking ?

HAPPY TRADING

Max 3 point loss & 1.5 point gain.


On .50 delta options hypothetical situation
1st Lot +100 SL 97 TP 101.5
2nd Lot +98 SL 95 TP 99.5

Worst case scenario: - INR 450
Neutral scenario: -INR 112.5 to -INR 0
Best case scenario: +INR 225

In a high probability strategy worst case scenario happens only when reversal happens otherwise its usually a toss between neutral & best case scenario.

In 10 trades for example only 6 best scenario needed other 3 can be neutral scenario & 1 worst case i.e 225*6 [+1350] , -112.5*3 [-337.5] , -450 = INR 562.5 gross p$l & now deduct expenses -INR 150.5 so net INR 412 p$l

 

[vivek.civil17]

fine . got some inputs .
will have a homework and revert back

thanks
HAPPY TRADING .

 

[Nikhil Dogra]

This is why my volume is on the higher side because i make 30-40 trades like this on small volume multiple times. 1.5 point p$l TP is not fixed like in some scenarios after i enter near important levels market breaks day high or low & we can get 3-4 point as well on some trades

Two caveats -

• This type of trading is not possible with a traditional discount broker who charge per lot fees.
• I am trying to reduce the frequency of such form of trading.

 

[Nikhil Dogra]

Here is a good article on scalping - http://jonathankinlay.com/2014/05/implementation-of-a-scalping-strategy/

 

[timepass]

Interesting point about 2000Rs. SL for 1000Rs. profit for high probability trades.

 

[Nikhil Dogra]

Considering when majority of trades get over in less than 1min it is relatively less risk. My fastest trade has been 1 second at a days high e.x 100 i.e by feeding in advance SL buy limit (trigger 100.05 & limit upto 100.2) & sell limit 1 point above at 101.2

 

[Nikhil Dogra]

I took the liberty of framing some rules for scalping :-

• Know what the average daily price percentage change or range of your trading product is 68% of the time
• Know what the average daily P/L change per contract is for your trading product 68% of the time
• Know commissions of your broker (inclusive of taxes etc) and slippage, intraday margin and overnight margin requirements
• Understand cost basis
• Maintain discipline to stay small
• Have reasonable profit targets
• Recognize when the move has exceeded your expectation

Instead of scalping 750 shares at once, churn 150 shares 5 times & know that scalping is a mean for market engagement & staying active rather than waiting for opportunities on the sidelines so it is absolutely essential that one allocate only 25-33% a/c for scalping.


I will share a war story -
I was bullish so i bought 75 share every 1 point decline & i had 375 shares accumulated when it went down 3-4 points down without reaching any scale out level AND this gave me information for the opportunity instantly i.e markets usually trade in oscillations & this time it wasn't implying sellers were strong. -- further i lost roughly INR 2000 (my scalping risk limit) When i entered a 1500 share positional put & there was no adverse reaction on it & market tanked & i was sitting at INR 22500 gain. KEY is to use scalping as a strategy for market awareness on low size for sniffing out opportunities because technical analysis is not reliable especially the way it is used conventionally. I am willing to lose INR 2000 in sniffing potential INR 10000 trade


Resources -

• http://www.priceactionlab.com/Blog/the-book/