Beautiful Scalper

[BeautifulStranger]

The term scalping seems to mean different things to different traders. I will break down different aspects of intraday trading as I see it, in order of typical intraday trading frequency:

1. Making the Spread
For retail traders, there appear to be opportunities in higher priced stocks that are not too active or too inactive. The key is a reasonably wide spread in the stock. Reading order flow and constantly sending test limit orders to find hidden orders and to guage how aggressive the other trader are part of the basics required with this trading method.

2. Reading Order Flow
On the idea that people who pay the spread are either retail traders or other particularly motivated traders, one may be able to guage short term extremes in sentiment and which side of the market is "Stronger" than the other. Applying the context of whether is it a trend day, etc., may create entry opportunities that may either fade strong interest or entry opportunities that may be created during quiet times such as after a correction in a trend day. The threshold and timing of trades based on order flow varies and is subjective according to context. Anticipation of order flow is possible at certain price levels. Surprises on expected volume at a "Important" level may be a useful signal.

3. Technical Analysis
Gauging by the spikes in volume and price action at round numbers, previous highs and lows, etc., skilled technical analysis has value in most traders arsenals.. The decision to buy at support or sell at resistance as in a perceived trading range day, or at some deviation off of a intraday high or low in a perceived trending day, are usually supported by other factors such as risk sentiment and correlated assets in context.

All told, knowledge of each trading style can only help one's trading performance even those who swing trade.. By avoiding seeking execution of a longer term trade at times when a knowlegeable trader of the short times frames might find ridiculous, one will only save money long term.

The above summaries of major intraday trading styles are from the eyes of a neophyte trader.

Hopefully I have helped stimulate ideas for some or maybe even many and a more nuanced discussion of these trading styles will ensue.

 

[farmerjohn1324]

I respect your opinions and am intrigued by your idea of starting out live. Any specific reasons why you feel that way that you would like to share?

I have used sim accounts for various things (Forex, futures, options, etc.) and have lost lots of paper money and thought nothing of it. I didn't feel it as real.

I'm now in the position of feeling it for real in live markets beginning in about 4.5 hours. It's hard for sim to feel real.

 

[birdman]

I have an inspiration to learn scalping

To sim or not to sim? With the advent of zero comission, I'm surprised the question is ever raised anymore. If you want to learn intraday trading, the only advice that i feel confidfent about giving is ... fund yourself an Ameritrade account greater than $25k to avoid the daytrading rule and then set your market order at 1 share and trade til your hearts content. It will be a lot more fun than sim.

If you do 20 round trips per day and lose on half of them (with a .10 stop - which is too large for many share prices) you will have only lost $1 on your losers.

Go over your trades at the end of the day to see where you could have done better. If you are positive after 2 weeks, try 10 shares for a couple of weeks.

When you work up to 100 share size, stay there a few months longer than you think you need to.

 

[schizo]

“Amateurs practice until they get it right; professionals practice until they can’t get it wrong.”

— Unknown

Whether you're scalping or investing (long-term), the concept is the same: you need a profitable strategy. For me, that is price pattern. For others, it could be something else. Find your niche and work on it until you're so good, you can't get it wrong.

 

[Atikon]

If you go for demo, go for IB. They give you a realistic BID/ASK on Options. TOS are unrealistic spreads in paper trading

 

[Atikon]

1. Making the Spread
For retail traders, there appear to be opportunities in higher priced stocks that are not too active or too inactive. The key is a reasonably wide spread in the stock. Reading order flow and constantly sending test limit orders to find hidden orders and to guage how aggressive the other trader are part of the basics required with this trading method.

test limit orders to find hidden orders

what do you mean by that? If you have LVL2 you will see all the bids and asks, what hidden orders are you talking about? Stop losses?

 

[.sigma]

I started in 1978, long term, this started as a hobby and most of life been retail cept last twelve years ramped up.

Wow, you've seen many different market environments! I'm not a scalper, but any suggestions for a 30 year old who's been trading since he was 20? Where were you around 30 in terms of your trading journey?

 

[.sigma]

@BeautifulStranger are you scalping option premium that you sold? Just curious?

 

[BeautifulStranger]

test limit orders to find hidden orders

what do you mean by that? If you have LVL2 you will see all the bids and asks, what hidden orders are you talking about? Stop losses?

Let's say at the time you happen to be looking at TSLA, it is $425.00 bid, $425.35 ask. The last trade was at $425.00, with recent prior trades in the range of $425.00 to $425.17. size is currently 50x50. You could enter a limit order to sell at $425.34, to see if your offer is immediately joined by another seller. You could then continue to reduce your offer until you get to $425.18, or until the seller stops joining your offer. Let's say the seller joins you to $425.18, but you get filled (short) at $425.17, after you enter a limit sell order at that price. Now you could put an order to buy at $425.01. If no other buyer joins you there, you can leave it there to see if more aggressive selling later comes in. If a buyer did join you at $425.17, then you have a decision to make, probably using additional inputs. If buyers later come in instead, first by joining your bid, then bettering it, you can make a decision to either increase your bid or see if the previous seller is willing to accept $425.18, for a small loss if you believe the stock has turned. It would be an especially bad sign if prices now started to exceed $425.18. If prices started to trade at $425.35 or higher, your seller definately bolted, at least for the time being. From here, I let you draw your own conclusions have to manage a trade like this for various scenarios.

Feel free to critique my take on this process, as I claim no special knowledge or expertise in this kind of trading.

 

[BeautifulStranger]

@BeautifulStranger are you scalping option premium that you sold? Just curious?

No. I wish to develop scalping skills in the underlying, in support of partially hedging delta or relatedly hitting a desired delta to theta ratio. I believe extra alpha can be generated while the underlying moves against the options position. Basically, I want to profit from shorter term stat-arb opportunities that may occur within the longer time frame intended for my options position.