scalping profit

How to Profit from Scalping: A Winning Futures Trading Strategy

Digitex Futures
Trading
• Adam Todd
April 2, 2021

Digitex CEO Adam Todd has made his career on the back of a trading technique called scalping. It’s a highly successful futures trading strategy for short-term traders – under the right conditions. However, when the conditions are right, you can learn to win at scalping in any market. Here, Adam shares his tips and insights for how to implement your own winning scalping trading strategy. 

As a successful futures and sports betting trader, my trading style was always focused more on avoiding losing trades than on riding the winners. And the way I did that was to make my trades as short-term as possible. I discovered that the longer I held a position, the bigger the risk that my position would turn into a loser. 

There seemed to be a direct link between my success, and how little time I held a position before going flat again. The shorter the amount of time in a position, the better chance I had of that trade not being a loser. This was most likely due to the nature of my trade selection process which was to be flat for most of the time, occasionally darting in and out of the market stealing single tick profits from larger moves when momentum picked up.

My scalping strategy basically involved judging when the momentum is high enough to keep the move going for another 30 seconds. If I didn’t get at least a single tick profit within that timeframe there was no reason to stay in that trade.

Successful Scalpers Don’t Get Tied Up in Learning About the Asset

As a young pit trader, I had no idea what a Bund futures contract actually was or why it moved around so much. Later, as a sports betting trader, I wouldn’t even know the name of the horse on which I was placing and laying hundreds of bets. Yet, I would go weeks and sometimes months of full-time trading as a scalper without having a single losing day. 

Short-term scalping requires no fundamental knowledge of the underlying instrument on which you’re trading. As soon as you have entered a position you’re looking to exit it, hopefully with a one or two tick profit but willing to scratch it or lose a tick without any emotional attachment to the trade. 

This style of ultra short term, manual trading is labor-intensive and requires the full concentration and attention of the trader. You can’t be checking emails and looking on Facebook and reading random crypto trading articles while you’re scalping to win. 

Besides, you don’t need to know what’s going on out there. It doesn’t matter why a price is moving when you’re a scalp trader because whichever way it goes you’re going to be following it. 

Scalping shouldn’t be a contrary style of trading because the active approach means you can get yourself in a huge mess very quickly. The safest style of scalping is simply following the price, jumping in when momentum is at its highest and then getting out quickly. 

It’s actually better to have no opinion or knowledge of the long term price direction of the underlying instrument so that it doesn’t affect your ability to go against that opinion in these short term scalp trades.

How Fees Ravage Profits

The scalping style of trading described here is the easiest to learn, requires no specialized knowledge about the underlying instrument and will give you steadier, less volatile results. But the big problem is that this style of trading is particularly susceptible to the ravages of the maker and taker fee model of crypto futures exchanges. 

It was possible for me to successfully scalp trade traditional futures markets in this manner because the futures tick value of one tick on the Bund was 25 Deutsch Marks and the commission to buy and sell one futures contract was less than 3 Deutsch Marks and I got a scratch trade rebate every time I bought and sold at the same price. 

All I had to do was make one tick for every 10 round turns to break even, and anything I made over that was profit. It was a lot harder than it sounds. But it was possible because the commission fee to buy and sell one futures contract was one-tenth of the value of one tick. 

However, the taker fee model used on every other crypto futures exchange has established commissions that are astronomically high. Currently, my style of short term scalping to win is literally impossible. The commission cost of buying and selling one futures contract with a taker order is more like ten times the value of one tick. 

That’s absolutely crazy. It’s literally impossible to beat odds like that running against you. At the exact moment you enter a trade, you’re ten ticks offside already. There’s a built-in mechanical edge that you cannot beat, and which guarantees you will lose over the long run. 

On Bitmex, the taker fee is 0.075% of the notional value of the underlying instrument. That may look small, but if you’re trading with 100x leverage that’s actually 7.5% of the margin you put down to enter the trade. If you exit the trade with a Taker order then your trading fees are 15% of the order value! 

For example, total fees on a $1,000 trade with 100x leverage are $150 [100 x $1,000 x 0.00075 x 2]. How can you ever expect to beat a 15% edge working against you?

A typical trade for a short term scalper might go like this: the price starts moving fast so I enter a trade quickly with a taker order that either smash the bid or lifts the offer. Then I immediately place a maker order to join the bid or offer to get out. If it’s not filled within seconds then I’ll cancel that and lift the offer or hit the bid with another taker order to exit the trade. 

I entered the trade with a taker order so now I need to make ten ticks just to break even. And if I exit the trade with a taker order I’ve got to make 20 ticks profit just to break even. That’s just impossible for a short-term scalp trade. 

I can still place trades as maker orders only but it’s impossible to trade profitably when you’re limited to only maker orders. This is especially true in very volatile markets – like crypto – and you will constantly not be getting filled on the good moves. 

Simply put, the maker fee and taker fee model generate large commissions for the exchange and makes it impossible for profitable short-term scalping. A huge number of traders are unable to participate and the massive liquidity they would provide is suffocated by the exchange’s need to charge high fees on turnover. 

As a scalper, I shouldn’t be paying a percentage of the notional value of the underlying instrument. I’m providing liquidity and should be encouraged, not squeezed out of the market entirely.

How Digitex Enables Profitable Scalp Trading

The Digitex Futures exchange is a short-term trader’s paradise. With absolutely no trading fees of any kind on taker orders, traders are free to pursue day trading futures strategies like scalping that are not viable anywhere else, creating massive liquidity in the process. 

That liquidity isn’t constantly drained by the exchange in the form of commissions. Instead, it continues to churn around in the trading ecosystem until it is won by the better traders. As a result, the chances of becoming a winning scalp trader on Digitex are far higher because we’re not siphoning off commission fees as percentages of the notional value of traded contracts. 

The viral marketing potential of a futures exchange that doesn’t have any built-in mechanical edge working against its traders is massive. The effective deployment of user-generated content combined with viral marketing techniques is starting to create a very large and active userbase, further increasing liquidity. 

Living a Traders Dream

Successful trading is a dream of many millions of people and Digitex wants to help make many of those dreams come true. We hope that many thousands of people will experience the unbridled freedom and excitement of becoming a profitable short-term trader who gets to live a lifestyle that most people will only dream of. 

Imagine if you can consistently make $50 a day or $200 a day or $500 a day from trading? How much would that change your life and the lives of everyone around you for the better? 

If you want to start implementing your own successful scalp trading strategy with zero fees, sign up for an account now and start living the trader’s dream.

April 2, 2021
Digitex Futures
Trading

How to Profit from Scalping: A Winning Futures Trading Strategy

Adam Todd
scalping profit

Digitex CEO Adam Todd has made his career on the back of a trading technique called scalping. It’s a highly successful futures trading strategy for short-term traders – under the right conditions. However, when the conditions are right, you can learn to win at scalping in any market. Here, Adam shares his tips and insights for how to implement your own winning scalping trading strategy. 

As a successful futures and sports betting trader, my trading style was always focused more on avoiding losing trades than on riding the winners. And the way I did that was to make my trades as short-term as possible. I discovered that the longer I held a position, the bigger the risk that my position would turn into a loser. 

There seemed to be a direct link between my success, and how little time I held a position before going flat again. The shorter the amount of time in a position, the better chance I had of that trade not being a loser. This was most likely due to the nature of my trade selection process which was to be flat for most of the time, occasionally darting in and out of the market stealing single tick profits from larger moves when momentum picked up.

My scalping strategy basically involved judging when the momentum is high enough to keep the move going for another 30 seconds. If I didn’t get at least a single tick profit within that timeframe there was no reason to stay in that trade.

Successful Scalpers Don’t Get Tied Up in Learning About the Asset

As a young pit trader, I had no idea what a Bund futures contract actually was or why it moved around so much. Later, as a sports betting trader, I wouldn’t even know the name of the horse on which I was placing and laying hundreds of bets. Yet, I would go weeks and sometimes months of full-time trading as a scalper without having a single losing day. 

Short-term scalping requires no fundamental knowledge of the underlying instrument on which you’re trading. As soon as you have entered a position you’re looking to exit it, hopefully with a one or two tick profit but willing to scratch it or lose a tick without any emotional attachment to the trade. 

This style of ultra short term, manual trading is labor-intensive and requires the full concentration and attention of the trader. You can’t be checking emails and looking on Facebook and reading random crypto trading articles while you’re scalping to win. 

Besides, you don’t need to know what’s going on out there. It doesn’t matter why a price is moving when you’re a scalp trader because whichever way it goes you’re going to be following it. 

Scalping shouldn’t be a contrary style of trading because the active approach means you can get yourself in a huge mess very quickly. The safest style of scalping is simply following the price, jumping in when momentum is at its highest and then getting out quickly. 

It’s actually better to have no opinion or knowledge of the long term price direction of the underlying instrument so that it doesn’t affect your ability to go against that opinion in these short term scalp trades.

How Fees Ravage Profits

The scalping style of trading described here is the easiest to learn, requires no specialized knowledge about the underlying instrument and will give you steadier, less volatile results. But the big problem is that this style of trading is particularly susceptible to the ravages of the maker and taker fee model of crypto futures exchanges. 

It was possible for me to successfully scalp trade traditional futures markets in this manner because the futures tick value of one tick on the Bund was 25 Deutsch Marks and the commission to buy and sell one futures contract was less than 3 Deutsch Marks and I got a scratch trade rebate every time I bought and sold at the same price. 

All I had to do was make one tick for every 10 round turns to break even, and anything I made over that was profit. It was a lot harder than it sounds. But it was possible because the commission fee to buy and sell one futures contract was one-tenth of the value of one tick. 

However, the taker fee model used on every other crypto futures exchange has established commissions that are astronomically high. Currently, my style of short term scalping to win is literally impossible. The commission cost of buying and selling one futures contract with a taker order is more like ten times the value of one tick. 

That’s absolutely crazy. It’s literally impossible to beat odds like that running against you. At the exact moment you enter a trade, you’re ten ticks offside already. There’s a built-in mechanical edge that you cannot beat, and which guarantees you will lose over the long run. 

On Bitmex, the taker fee is 0.075% of the notional value of the underlying instrument. That may look small, but if you’re trading with 100x leverage that’s actually 7.5% of the margin you put down to enter the trade. If you exit the trade with a Taker order then your trading fees are 15% of the order value! 

For example, total fees on a $1,000 trade with 100x leverage are $150 [100 x $1,000 x 0.00075 x 2]. How can you ever expect to beat a 15% edge working against you?

A typical trade for a short term scalper might go like this: the price starts moving fast so I enter a trade quickly with a taker order that either smash the bid or lifts the offer. Then I immediately place a maker order to join the bid or offer to get out. If it’s not filled within seconds then I’ll cancel that and lift the offer or hit the bid with another taker order to exit the trade. 

I entered the trade with a taker order so now I need to make ten ticks just to break even. And if I exit the trade with a taker order I’ve got to make 20 ticks profit just to break even. That’s just impossible for a short-term scalp trade. 

I can still place trades as maker orders only but it’s impossible to trade profitably when you’re limited to only maker orders. This is especially true in very volatile markets – like crypto – and you will constantly not be getting filled on the good moves. 

Simply put, the maker fee and taker fee model generate large commissions for the exchange and makes it impossible for profitable short-term scalping. A huge number of traders are unable to participate and the massive liquidity they would provide is suffocated by the exchange’s need to charge high fees on turnover. 

As a scalper, I shouldn’t be paying a percentage of the notional value of the underlying instrument. I’m providing liquidity and should be encouraged, not squeezed out of the market entirely.

How Digitex Enables Profitable Scalp Trading

The Digitex Futures exchange is a short-term trader’s paradise. With absolutely no trading fees of any kind on taker orders, traders are free to pursue day trading futures strategies like scalping that are not viable anywhere else, creating massive liquidity in the process. 

That liquidity isn’t constantly drained by the exchange in the form of commissions. Instead, it continues to churn around in the trading ecosystem until it is won by the better traders. As a result, the chances of becoming a winning scalp trader on Digitex are far higher because we’re not siphoning off commission fees as percentages of the notional value of traded contracts. 

The viral marketing potential of a futures exchange that doesn’t have any built-in mechanical edge working against its traders is massive. The effective deployment of user-generated content combined with viral marketing techniques is starting to create a very large and active userbase, further increasing liquidity. 

Living a Traders Dream

Successful trading is a dream of many millions of people and Digitex wants to help make many of those dreams come true. We hope that many thousands of people will experience the unbridled freedom and excitement of becoming a profitable short-term trader who gets to live a lifestyle that most people will only dream of. 

Imagine if you can consistently make $50 a day or $200 a day or $500 a day from trading? How much would that change your life and the lives of everyone around you for the better? 

If you want to start implementing your own successful scalp trading strategy with zero fees, sign up for an account now and start living the trader’s dream.

Latest News

5 Key Principles to Trade Futures Successfully 1

5 Key Principles to Trade Futures Successfully

Trading
• Digitex
August 5, 2020

Digitex Futures opened to the public on July 31, 2020, with a launch day event filled with experienced traders and influencers in the crypto space. The main pull of Digitex is obvious: zero fees. Yet, beyond a platform that allows traders to enter and exit trades without punishing commissions, Digitex offers a whole lot more besides. Find out why trading futures on a one-click ladder is so important, how it changed this one person’s life–and how you can easily learn to trade as well, following these key points.

1. Anyone Can Learn to Scalp on Any Markets

Adam and Mika quickly hit it off as Mika shared how he had first come to scalping after reading an article that Adam had written around 15 years ago in Racing Traders. The article describes how Adam had started making a living scalping profits from trading horse racing bets on Betfair, using an initial stake he had loaned from his father.

As Mika says:

“I took your strategy, that you had implemented on Betfair, and I started scalping. It was amazing! I started to be profitable. With this small article, you changed my life.”

Mika had no other input than this one piece of writing from Adam, and yet he quickly managed to start turning a profit using a few simple rules. This is how he ended up finding out about the DFE. Mika goes on to describe how he managed a 60-day run of profitability on the Digitex testnet at launch.

So don’t be put off – if you’ve been thinking about experimenting with scalping, there is no better time to start.

2. You Don’t Need Charts or Indicators

Charts and technical indicators have their place, and many traders use them and find they give reliable results. However, Mika explains that he managed to accrue a balance of 100,000 DGTX from an initial stake of just 50,000 DGTX, without ever using a chart or an indicator. He simply scrapes in his one or two tick profit as soon as it’s available and moves onto the next trade.

3. You Don’t Need to Know the Markets

Mika openly admits that he knows nothing about virtual assets. In fact, DGTX was his first-ever purchase, and he bought in solely for the opportunity of zero-fee trading via the ladder interface. Long-time supporters will know that Adam developed a trading ladder application for Betfair, called BetTrader, and along with Adam’s strategy, Mika was also a keen user of BetTrader.

The overall lesson is, as Adam has always said, you don’t need to know what you’re buying or selling. You just need to read the markets. During the talk, they both agreed they were never fans of blockchain or horse racing for their own sake, as much as the market for buying or selling the product itself. Successful trading is the ultimate freedom.

4. Be Disciplined

Mika outlines a few simple rules that he always follows.

“The most important rule is to always follow the rules. Never try and predict the market. Take the profit when its there – two or three, or even one tick. And I hate losses. A two-tick loss is the maximum I will tolerate.”

Adam concurs, stating:

“You have to be strict with those losses. That’s where people get it wrong. I found a direct correlation between the longer I held positions and the more successful I was. The shorter I held a position, the more I was able to avoid the losses.”

5. Virtual Assets Are the Best Medium for Scalping

While it’s true that you can scalp any markets, Adam and Mika agree that virtual assets lend themselves well to scalping. The horse racing markets demand that you’re online while the race takes place. A football game is only 90 minutes long.

Furthermore, most sports have been ravaged by incidents such as strikes or the current pandemic.

Crypto is a digital medium, and the trading is 24/7 – it never stops. Therefore, there’s always an opportunity to scalp a profit, no matter where you are in the world.

That said, Mika also asked Adam when he could expect multiple ladders, which were available in Adam’s BetTrader app. Once we launch more markets on the DFE, including ETH, gold, oil, and the S&P, we will have multiple markets on multiple ladders on the same screen.

Two scalp traders with the same strategy and the same visions chatting live and unscripted – the enthusiasm was palpable. If you missed the live event, then we’d urge you to watch this chat in particular, as it encapsulates everything that Adam and Digitex have been working towards delivering, in under 30 minutes.

Are you ready to try your hand? Sign up here to start trading Bitcoin futures with zero fees today.

August 5, 2020
Trading

5 Key Principles to Trade Futures Successfully

Digitex
5 Key Principles to Trade Futures Successfully 2

Digitex Futures opened to the public on July 31, 2020, with a launch day event filled with experienced traders and influencers in the crypto space. The main pull of Digitex is obvious: zero fees. Yet, beyond a platform that allows traders to enter and exit trades without punishing commissions, Digitex offers a whole lot more besides. Find out why trading futures on a one-click ladder is so important, how it changed this one person’s life–and how you can easily learn to trade as well, following these key points.

1. Anyone Can Learn to Scalp on Any Markets

Adam and Mika quickly hit it off as Mika shared how he had first come to scalping after reading an article that Adam had written around 15 years ago in Racing Traders. The article describes how Adam had started making a living scalping profits from trading horse racing bets on Betfair, using an initial stake he had loaned from his father.

As Mika says:

“I took your strategy, that you had implemented on Betfair, and I started scalping. It was amazing! I started to be profitable. With this small article, you changed my life.”

Mika had no other input than this one piece of writing from Adam, and yet he quickly managed to start turning a profit using a few simple rules. This is how he ended up finding out about the DFE. Mika goes on to describe how he managed a 60-day run of profitability on the Digitex testnet at launch.

So don’t be put off – if you’ve been thinking about experimenting with scalping, there is no better time to start.

2. You Don’t Need Charts or Indicators

Charts and technical indicators have their place, and many traders use them and find they give reliable results. However, Mika explains that he managed to accrue a balance of 100,000 DGTX from an initial stake of just 50,000 DGTX, without ever using a chart or an indicator. He simply scrapes in his one or two tick profit as soon as it’s available and moves onto the next trade.

3. You Don’t Need to Know the Markets

Mika openly admits that he knows nothing about virtual assets. In fact, DGTX was his first-ever purchase, and he bought in solely for the opportunity of zero-fee trading via the ladder interface. Long-time supporters will know that Adam developed a trading ladder application for Betfair, called BetTrader, and along with Adam’s strategy, Mika was also a keen user of BetTrader.

The overall lesson is, as Adam has always said, you don’t need to know what you’re buying or selling. You just need to read the markets. During the talk, they both agreed they were never fans of blockchain or horse racing for their own sake, as much as the market for buying or selling the product itself. Successful trading is the ultimate freedom.

4. Be Disciplined

Mika outlines a few simple rules that he always follows.

“The most important rule is to always follow the rules. Never try and predict the market. Take the profit when its there – two or three, or even one tick. And I hate losses. A two-tick loss is the maximum I will tolerate.”

Adam concurs, stating:

“You have to be strict with those losses. That’s where people get it wrong. I found a direct correlation between the longer I held positions and the more successful I was. The shorter I held a position, the more I was able to avoid the losses.”

5. Virtual Assets Are the Best Medium for Scalping

While it’s true that you can scalp any markets, Adam and Mika agree that virtual assets lend themselves well to scalping. The horse racing markets demand that you’re online while the race takes place. A football game is only 90 minutes long.

Furthermore, most sports have been ravaged by incidents such as strikes or the current pandemic.

Crypto is a digital medium, and the trading is 24/7 – it never stops. Therefore, there’s always an opportunity to scalp a profit, no matter where you are in the world.

That said, Mika also asked Adam when he could expect multiple ladders, which were available in Adam’s BetTrader app. Once we launch more markets on the DFE, including ETH, gold, oil, and the S&P, we will have multiple markets on multiple ladders on the same screen.

Two scalp traders with the same strategy and the same visions chatting live and unscripted – the enthusiasm was palpable. If you missed the live event, then we’d urge you to watch this chat in particular, as it encapsulates everything that Adam and Digitex have been working towards delivering, in under 30 minutes.

Are you ready to try your hand? Sign up here to start trading Bitcoin futures with zero fees today.

Latest News