best stocks to scalp

[jonp]

Quote from shortie:

how many round trips per day are doable with Q using 1000 shares/trade

when scalping worked, probably 40 rt's if you are very focused all day long, placing orders on every level, reposting on every fill. look at the 1 day chart of qwest between 12-2 and see how mostly every order takes place mid-penny on low volume, those hours are impossible to make money.
qwest is a bad example, citi is the all time favorite of any scalper. for over a year citi has been in a tight daily range with huge volume. people would be doing 100 000 shares at a time, making the same penny all day long. now citi is dead. either it's just a summer slowdown and mega volume will come back or it's just one more trading strategy which has stopped working because of the mass amounts of people/businesses that have gotten into it.

 

[MarkRyan]

For scalping the market should be very liquid

 

[rodwhitedc]

Quote from jonp:

real scalping is holding a position for 2 minutes or less on average. you are using a stock which is low priced, has a 1 cent spread between bid/ask. you have the level 2 quotes of the stock your watching as well as the time and sales right in front of you flashing every sale price and quantity. you put an order for 100 shares on the bid, 100 on the ask. you wait for your fills and you make $1 each way.

That's not it at all??? If your only making a dollar each way on your fills, then your not even covering the cost of the trades and your losing money big time. Even with a deep discount broker, your in the hole.

This is how real scalping used to work. Scalping became less effective when decimal trading started buy can still be used effectively today. When there was fractional trading, the strategy used to be called "scalping a teenie." A teenie was 1/16 of a dollar, the smallest the spread used to get or $0.0625 spread. The market maker made his money in the spread. Here is how a real scalp works...

First you find a non-volatile stock with hardly any price movement and enough liquidity to get in and out of the stock easily. You buy 2000 shares on the bid and as soon as your filled, you jump to the ask side and sell 1/16th higher. If price movement is steady, you scalp $0.0625 on the trade or $125.00 round trip (scalping the stock or better yet scalping the market maker). You should scalp a stock and then move on. If the market maker catches on to what you are doing, he can move the price of the stock against you and you lose money so it was always best to scalp a stock for the day and then move to another stock. If the market maker gets wise to what your doing, he will sell shares from his account and move the stock lower and make you lose money. BE CAREFUL OF THIS!

With decimal trading, the spread is usually a penny so it's much more difficult to scalp. If you buy 10,000 shares on the bid, jump to the ask and sell a penny higher, you can still make $100 bucks round trip. You just need a whole lot more capital to make the trade happen which puts more capital at risk.