Is overtrading when scalping a problem on its own or only because of fees?

[howdoyouturnthison]

I sure do! I actually like MadAzMoney better. Don’t know the other guys you mentioned, but the two above use level2 and tape reading a lot. Ross is more of a momentum trader and MadAz more of mean reversion. Both try to capture as much as possible quickly but the stocks they trade can turn so quickly that they end up with $.20 to $.50 over thousands of shares. They do not intend on taking small profits, just get out at any sign of trouble.
If you are going to trade like that, you do need very fast platform. The two use different ones, so you have a choice.

I never joined any or actually be in a chatroom on a live trade but these are making me a little nervous. I don’t know how much of it is actual strategy and how much a group pump via the chatroom participants. Hard to gauge how much buying power beginners actually have. I won’t know where I am at until I at least paper trade alone for a while whichever strategy I end up with at the end. Because it is a zero-sum game, it is hard to contemplate that dumb money would never run or why would big players not place a trap for them.

Ross got eSignal with Lightspeed and I checked one video of this other guy you mentioned and I saw he has DAS Trader and uses TOS for charts but not sure if that is also his broker.

I have an account with IBKR and their TWS software, but I am not happy with TWS and I also dislike that I have to pay for market data from account funds instead of credit card while I paper trade. When I finally paper trade, I want it to be in the same platform and with same tools that I’ll use live. Right now it seems that is going to be eSignal and Das Trader and running all that for paper trading is not cheap. The shitty reviews eSignal has been getting lately makes it all more uncomfortable to get in plus I get charged VAT on top of it all. Also looking into some other platforms that provide both charting, market data and broker integration.

I also don’t get why is Ross using trade-ideas as stock scanner? Shouldn’t scanners be part of any platform that already utilizes market data feed or you just paid for same data twice?

 

[qlai]

You are overthinking it. Use TOS for charts and paper trading - all free. If you make money with TOS, you most likely make money with faster platform. MadAz uses limit orders only while Ross mostly market orders, so advantage MasAz, IMO. Spending the time in their chat rooms would be worth your time and effort. Good luck.

 

[howdoyouturnthison]

You are overthinking it. Use TOS for charts and paper trading - all free. If you make money with TOS, you most likely make money with faster platform. MadAz uses limit orders only while Ross mostly market orders, so advantage MasAz, IMO. Spending the time in their chat rooms would be worth your time and effort. Good luck.

I guess I am overthinking it. Except TOS is not an option because I can’t open an account with them (not from US), so that is 1 good free paper trading option less. Same with Webull.

 

[qlai]

K, IB is fine. Charts are secondary for both of these guys.

 

[speedo]

First of all, scalping is a difficult way to go, especially for a beginner. That said, if your strategy is well tested to show a positive expectancy and has clear signals and trade management rules then it's not overtrading if you have 10 or 50 signals. If on the other hand, your trades do not meet the above qualifiers, one trade is overtrading.

 

[bone]

My trading career started out scalping in the CBOT Bond Pit. There you had about a one-half second time advantage and you could make a go at it.

In the very late nineties into the early 2000's in Chicago there were about 15 to 20 proprietary futures trading firms where scalping on the screen was still feasible using external data sources as an edge. All of those firms went away by about 2005 or so, with the exception of a few that I am aware of that made the switch to automated trading systems. The reason they went away was the advent of ATS, algos, and bots.

It seems like everything we do in society is being challenged by computerized systems.

In trading you need an edge and you need to eliminate or minimize outside advantage over you. Personally, I do this by swing trading. The turbulence created by the bots and algos isn't really concerning for me.

But to start out directly competing against the Bots and Algos and the plethora of ATS armed with a mouse and routing your orders through a discount broker - good luck with that because you'll need it.

 

[bone]

So you're going to trade the US equity markets from Europe using a discount broker and you want to scalp? Probably the first thing you should do is make a list of advantages versus disadvantages to that scenario. Hint: the disadvantages are not minor.

Traded instrument: Stocks

Actually, there are just 2 guys and their followers. Just 2 because it is surprisingly hard to find a lot of big numbers traders that are loud enough to get noticed but don’t scare you right away (even though maybe they should?)

One is Ross and the other is one (u/Phihix aka Kyle Vu) that doesn’t sell any courses yet but has a history of posting on r/Daytrading that seem to convince the majority he was not fake. I am sure you know Ross and what entry/exit/stock type strategies he teaches and have strong opinions about him, that is just who was my entry into this world. Ross makes fewer trades while Kyle makes way more and I just don’t see how anyone could find so many patterns in a day. That is why I concluded that he must be taking trades that go for much smaller profit targets. I don’t know what strategy Kyle use, but it involves low float low price stocks with high relative volume, so probably a variation of what Ross does.

For a few weeks I have been consuming information but haven’t paper traded yet. I’ll post another separated question regarding proper paper trading environment setup after I learn more of the basic stuff and have an actual strategy with rules. Everyone keeps recommending me TD Ameritrade/TOS but they don’t accept people from this part of EU, IBKR’s TWS charts are dogshit and it may seem childish but if I am going to look at a software for long period of time, I want it to look good and provide smooth UI experience but also be feature-rich. While on this forum I found 2 candidates I’ll explore further: medvedtrader and motivewave but I am going off topic now.

 

[howdoyouturnthison]

So you're going to trade the US equity markets from Europe using a discount broker and you want to scalp? Probably the first thing you should do is make a list of advantages versus disadvantages to that scenario. Hint: the disadvantages are not minor.

Maybe I should have said momentum trading instead of scalping. Goal is to pick a chart pattern and/or some other technical indicator and then time the entry by matching a signal from the pattern/indicator with increase of buying on time and sales table. Setting a tight loss and 2:1 take profit goal. Yes, I will trade from EU with IBKR Pro. Round trip latency probably in 150-200ms range. Direct ECN access so don’t think that’s a discount broker. Obviously, there is more to it but that’s a start.

 

[Fonz]

This is for "the believers":

If our trading/scalping results are impacted by speed, we will lose. I live near Miami, to far from the exchange, I don't have the best software and hardware, I am slower than algos and HFT, etc. You got the point.

So, I see only few possibilities:
- Never enter with a market order, they are manipulated to say the least. The slippage will kill any hope of profits. Limit oders only should be the rule with only very few exceptions.
- A traditional close hard stop will be hit a lot of time.
- A hard stop should always be an emergency last resort kind of stop, and really not as close as people think in general.
- A stop order should be used only when the reason we entered is now wrong.
- A daily Profit Factor < 2 and we lose in the long run.
- A daily PF > 5 should be the norm.
- A daily and weekly max loss should be fixed per contract.
- 2 losing days in a row should be exceptional.
- To expect gaining 1 or 2 ticks a day is not (anymore) sustainable.
- Any news, fundamental, or classical AT and indicators, based strategies will not make us successful. These strategies are for swing trading and investments.
- Reducing the cost of doing business should be one of our priority.
- Thinking risks first and how-not-to lose is the priority.
- Any profitable scalping will probably not be scalable, at least not enough to trade OPM.

Last but not least, we should have no ego, right mindset and good attitude.

I am sure 99.9% of the believers as much as the non-believers will disagree with me, which is just fine

Hope to contribute to this interesting thread.
Good trades!

 

[bone]

It’s not a matter of being a “believer”, it’s a matter of risk versus reward.

I would make the case that if you are manually trading - you’re better off taking 3 highly selective trades per day instead of 50 “scalps” per day.

If you want to take 50 trades per day: that’s what automated trading system platforms are for.

This is for "the believers":

If our trading/scalping results are impacted by speed, we will lose. I live near Miami, to far from the exchange, I don't have the best software and hardware, I am slower than algos and HFT, etc. You got the point.

So, I see only few possibilities:
- Never enter with a market order, they are manipulated to say the least. The slippage will kill any hope of profits. Limit oders only should be the rule with only very few exceptions.
- A traditional close hard stop will be hit a lot of time.
- A hard stop should always be an emergency last resort kind of stop, and really not as close as people think in general.
- A stop order should be used only when the reason we entered is now wrong.
- A daily Profit Factor < 2 and we lose in the long run.
- A daily PF > 5 should be the norm.
- A daily and weekly max loss should be fixed per contract.
- 2 losing days in a row should be exceptional.
- To expect gaining 1 or 2 ticks a day is not (anymore) sustainable.
- Any news, fundamental, or classical AT and indicators, based strategies will not make us successful. These strategies are for swing trading and investments.
- Reducing the cost of doing business should be one of our priority.
- Thinking risks first and how-not-to lose is the priority.
- Any profitable scalping will probably not be scalable, at least not enough to trade OPM.

Last but not least, we should have no ego, right mindset and good attitude.

I am sure 99.9% of the believers as much as the non-believers will disagree with me, which is just fine

Hope to contribute to this interesting thread.
Good trades!