Is scalping the problem?

AMT4SWA · Oct 13, 2003

After thinking about the demise of yet another prop trading firm, I think that a good part (not all) of the problem is the failure to scalp profitably. I have never worked with a prop firm so this is only speculation on my part, and this thread is intended for all to think about the viability of certain trading strategies. Maybe scalping is a method of trading that can no longer support the mainstream of prop traders and the firm for which they trade. I would think that a good portion of prop traders use scalping listed stocks as their primary daily objective (am I wrong?), and this method does not seem to be effective at this time. If this is the case, then prop traders as a group should be in a period of strategy evaluation. Maybe there should be more of an effort to seek out more profitable forms of trading. What do you think?

Chris

T-REX · Oct 14, 2003

Quote from AMT4SWA:

After thinking about the demise of yet another prop trading firm, I think that a good part (not all) of the problem is the failure to scalp profitably. I have never worked with a prop firm so this is only speculation on my part, and this thread is intended for all to think about the viability of certain trading strategies. Maybe scalping is a method of trading that can no longer support the mainstream of prop traders and the firm for which they trade. I would think that a good portion of prop traders use scalping listed stocks as their primary daily objective (am I wrong?), and this method does not seem to be effective at this time. If this is the case, then prop traders as a group should be in a period of strategy evaluation. Maybe there should be more of an effort to seek out more profitable forms of trading. What do you think?

Chris

Hey Dude. Good to have ya back. I could not agree with you more.

This should be grounds for a great discussion.

p.s. Be sure to attend my live demonstration of the "2 Bar Charlie" day trade system later today. I'd love to have ya there dude.

Cutten · Oct 14, 2003

Agree. Scalping stocks has suffered from increased competition as a result of previous high returns and easier/cheaper market access attracting new players; at the same time it has been hit by reduced opportunities due to falling intraday volatility, decimalisation, withdrawal from the market by the public etc.

IMO the big money is currently in swing & position trading, and going for longer timeframes intraday.

Some day scalping will return, probably when the current bunch of tick traders has been washed out and finally given up on it.

T-REX · Oct 14, 2003

Quote from Cutten:

Agree. Scalping stocks has suffered from increased competition as a result of previous high returns and easier/cheaper market access attracting new players; at the same time it has been hit by reduced opportunities due to falling intraday volatility, decimalisation, withdrawal from the market by the public etc.

IMO the big money is currently in swing & position trading, and going for longer timeframes intraday.

Some day scalping will return, probably when the current bunch of tick traders has been washed out and finally given up on it.

PREACH IT BROTHA PREACH IT!!!!

taodr · Oct 14, 2003

Maybe their traders have been guided more towards shorting. This might have caused massive and consistant losses. One can read it on this board as well as others....most are adamant the market should go down but it is slowly bouncing higher.

T-REX · Oct 14, 2003

Quote from taodr:

Maybe their traders have been guided more towards shorting. This might have caused massive and consistant losses. One can read it on this board as well as others....most are adamant the market should go down but it is slowly bouncing higher.

It is a fact! This market is going to correct within the next 3-5 days! PulseScan Swing Vix is overbought and "RIPE" for a correction which could gain downside momentum and lead to a kaotic massive decline. We wont know the magnetude of the selloff until it actually happens. This correction will either prove or disprove of the economic recovery talked about in the media and hyped by fund managers as an attempt to hold onto thier clients and not experience a major withdrawl of funds from thier funds.

PUN intended!

spyderman · Oct 14, 2003

If 40% of volume is program trading....what % is natural buying and selling, or REAL professionals positioning blocks which results in the same shares traded over and over again till they flatten out? What % is the public? I mean...who is everyone scalping with? eachother? Rather incestuous don't you think?

paulsta · Oct 14, 2003

At our company, we are recommended into scalping, however, part of the problem we have found (since this is a relativly new venture) is the lack of clear methods for scalping thats are available to us. Infact, many of us look for a longerterm intraday trade. Scalping seems to be very tricky for us newer traders since we aer both slower and less informed about the market in many cases

Mecro · Oct 14, 2003

Quote from AMT4SWA:

After thinking about the demise of yet another prop trading firm, I think that a good part (not all) of the problem is the failure to scalp profitably. I have never worked with a prop firm so this is only speculation on my part, and this thread is intended for all to think about the viability of certain trading strategies. Maybe scalping is a method of trading that can no longer support the mainstream of prop traders and the firm for which they trade. I would think that a good portion of prop traders use scalping listed stocks as their primary daily objective (am I wrong?), and this method does not seem to be effective at this time. If this is the case, then prop traders as a group should be in a period of strategy evaluation. Maybe there should be more of an effort to seek out more profitable forms of trading. What do you think?

Chris

Pretty much,

Thats the style we're taught and it worked when we started, it even worked back in August.
Then September came round, a whole load of new scalpers came in and institutional volume never picked up. It quickly became a dead style. Just a way to churn for the firm.

It's really the overwhelming flood of day traders that make it so impossible to break over commissions. And the listed stock institutional volume is really dropping off.

I'm just trying to learn smth new. The scalping rules only lose money.

silk · Oct 14, 2003

And no sectors in play day after day. Thats the problem. You can't trade this little volatility.