Is Scalping possible?

Quote from FuturesTrader71:

Jeeeez... now I'm a loser too. :D

Can you help us understand what scalping is from your perspective?
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About FT being a loser: I dunno.

Scalping?
Some make the distinction between scalping in the traditional sense and I dunno what other sense.
Me? As I already said: I dunno.
As I clearly left no doubt about this point, I can't help you any further.

Perhaps best classify it with trend, chop and money-management babble.

hph
nono
:cool:
 
Quote from nononsense:

[...]
Perhaps best classify it with trend, chop and money-management babble.

hph
nono
:cool:
More...
Blanket statements always get my attention. Scalping is not for everyone.
 
Scalping defined.


Last traded price = the most recent assesment of a price where trade will take place. ( the market's function after all!)

Selling on the offer= a miniscule edge on this value price

Buying on the bid= a miniscule edge on this value price.



Expanding beyond the tic scale, the control price on yesterday's value bellcurve= the most valued price

Selling 2sd above this price= an edge on value if the current distribution holds and a low risk exit if it doesn't


Buying 2sd below this price= an edge if the current distrribution holds etc....


This type of scalping must always be undertaken with a mind to the current trend in daily value......Obviously!!



I'm just trying to outline basics here...If you want the meat, then go and do your homework. These are the basic rules, exceptions must be learnt, as in any language.

The bigger the timeframe you can handle, the more stable will be the market's output and assesment of value. In other words, the longer your time frame, the less bullshit, volatility, noise, bollocks, etc.... you will have to contend with in your decision making.


The truth is out there.:cool:



1in 10
 
Clearly there's a wide ranging dispute over the definition of the word scalp.

As a former local, a "scalper" if you will, I'll offer my take.

A scalp must be a defined edge. A "scalp" is a quasi arbitrage trade.
I'll re-post something I wrote a while back:

"Trades on the futures floor are not time prioritized. That means large customer orders, no matter when they are entered, stand no better chance of being filled, than the local who decides at the last moment that he too would like to buy at that price. That's what scalping is essentially, trading in front of resting orders. Or in the case of spread scalping it may be possible to buy September contracts at let's say 17 cents over where I can sell December, but simultaneously a spread order is willing to do the spread 18 cents over. By and large, spread brokers will not assume the risk of "legging" spreads, so the risk/reward for spread scalping locals is pronounced."

As we all know, in the electronic marketplace orders ARE time prioritized, so unless you enter your order early in the queue you have no opportunity to receive a "transaction" edge. In turn, by virtue of being "early" you have no idea whether anyone at all is going to join your order afterwards. Thus you're merely guessing whether a fill at that price will be a true "edge". So I'd say in electronic trading there is no TRUE transactional/ execution edge and that type of scalp is nonexistent.

Now I'll go so far to say that a skilled electronic trader with uncanny ability to spot imbalances in the basis between futures and the underlying "cash" market can create an edge. What I mean is: If you're a ZN trader and you have multiple cash screens and you know that if cash is x bid and that buying futures at a price of x- basis is the equivalent of buying cash with an edge then by all means you've gotten a trade that you can "scalp." Surely another participant will be willing to make the same trade that you did as long as the cash market bid remains at that level. When that happens you then have an opportunity to "lean" on that player and voila' you have a scalpable edge.

What are NOT scalps are the following. "The markets been chopping around between 3 and 6 so I'm just going to try and buy 4's and sell 5's." Or, "I have a great short term technical system that has a high hit rate but produces small steady gains." Those strats may work for you, although as others have mentioned, with retail commissions you'd better be right VERY often. Those are speculative strategies however and not scalps. Scalping is method. It's not just any short duration trade, and just because a trade only provides a small profit, most certainly, does not make it a scalp.
 
Quote from FuturesTrader71:

Jeeeez... now I'm a loser too. :D

Can you help us understand what scalping is from your perspective?
More...

wow FT .. stupid and a loser - all in one day :D

i know you don't sweat generic perspectives, so i won't fret too much that these jabs at your particular niche will damage your trading psyche :)

take care and keep it up

omni

BTW: the DAX has been rather interesting over the last three sessions, no?
 
Pertinent and astute comments.


However if you place trades at resting levels in the tails of a bell curve, the chances are that you will always have others behind you as the market approches.

This gives you 2 options.

A)With an early fill the chance of an old fashioned 1 or 2 tic scalp if the market sticks around the level and seems to accept it.


B)A good position if the market rejects these prices quickly.



That's a two out of three winning scenario....What more could you want?



1in 10
 
Quote from FuturesTrader71:

Hmmm.... I'm in the "stupid" business then. I had to find out some day, I guess.

Facts:

1. Scalping is not for retail traders. The cost structure will not let you be profitable. It is very hard to compete against pros out there who are paying exchange/clearing fees plus $0.05 per turn commish. This means that the YM would cost around $0.30 per turn for a pro and around $4 or $5 to you.

2. Scalping is not buying the bid/selling the offer. There is more to it than that.

3. Learning to scalp without guidance or a mentor is a good way to just give away your money.

4. Scalping requires excellent connectivity and network structure. It is not something you want to do over the internet if you will be active.

5. It is not for the faint of heart. Complacency in scalping is fatal to your account and so are psychological barriers with accepting losses.

You will most likely do better trading intraday swings with no overnight exposure. You can work up to the point where you can add size and diminish the effect of higher commissions.
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I have reviewed your posting history. While it does appear that you have a firm grasp on these issues, I can't help but think that you must be advertising for your trading firm. Is this correct sir?
 
Quote from Oneinten:

Pertinent and astute comments.


However if you place trades at resting levels in the tails of a bell curve, the chances are that you will always have others behind you as the market approches.

This gives you 2 options.

A)With an early fill the chance of an old fashioned 1 or 2 tic scalp if the market sticks around the level and seems to accept it.


B)A good position if the market rejects these prices quickly.



That's a two out of three winning scenario....What more could you want?



1in 10
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You're right, but I'll tell you, that book get's loaded up early. I've heard of guys putting in so many bids and offers that they're busier canceling orders than trading.:)
 
Price and value are two different things.(except to a cynic...ref:Oscar Wilde) A scalp is simply a trade which attempts to exploit this.

Time frame could be 1 tic...or the mean price of the whole of the trading activity for the last ten years.

The principle is the same.You profit in a market if you can distinguish between value and price and you have TIME on your side.

i.e. You know how to spot a bargain and you have time to sell it on to the next guy at a fair!!!! price.


It's not rocket science.



1in10
 
Quote from Pabst:

Clearly there's a wide ranging dispute over the definition of the word scalp.
...
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Hi Pabst,

You certainly can say that!
At least, you can tell us about a personal experience that probably used to be described as "scalping" in the local's jargon. As I have never traded on the floor, I found your description quite interesting.

Having to wring some money out of trading my own personal way, I must say that "finding an edge" is a very difficult exercise. In fact it is practically made impossible if you fail to spot in time the fog surrounding things like trend, chop and scalping. The only thing that works for me is doing it my own way and not trying to explain today's trend, chop and scalping to mystified people. You can of course tell all kind of stories about these as long as you don't have to demonstrate that you can indeed make money with these. I can't, so I like to shut up.

Be good,
nononsense
 
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