Learning to trade by scalping?

Originally posted by AAAintheBeltway
Biomech,

OK, I see where you're coming from. You see the smaller time frames as building blocks for larger, so a logical way to learn is start with the most basic element,ie the very short term.
More...

Yes this is it exactly.

Originally posted by AAAintheBeltway
Biomech,

I would say most experienced traders approach it from the other direction. They work backwards from the longer timeframe, say weekly or daily, to the 60 minute then to the 5 minute. On the daily, it is all about identifying the overall trend and picking an entry point using chart analysis, retracement levels, tech analysis or what have you. Pretty much the same approach using the 60 minute. Whne you get down to the 5 minute however, it becomes more about getting in and out, execution skills as another poster said. Very intense game of trying to get your position on at a favorable price, then looking for the opportunity to hand it off to someone else at a profit.
More...

From my reading, I would agree with you that most people start at the longer time frame and then work their way down to shorter time frames. This seems counter-intuitive to me as it seems there are many more skills involved the longer you stretch out the time frame. The shorter you keep the time frame, the less you have to worry about the overall trend and other TA stuff. It seems you should always want to have mastery of good execution technique.
 
In the current environment Scalping will be very
challenging. The key reasons for this include:

- Decimalization - the spreads are now at 1 or 2 cents
instead of 1/16 or 1/8. Making a living between the
bid & ask is more difficult. It is interesting to note that
professional firms such as NITE have stated that their
reduced profits are due to the advent of decimal trading.
- Volume - the reduced volume being traded makes getting
fills more difficult in some cases. Less people are pressing
to take your posted order at the bid or ask.

Many folks who scalped have not converted to what I call
momentum scalping. They do not try to make a profit between
the bid & ask, but try to find small runs of 15 to 25 cents in
a trending direction. They often look at signals like to 5/15
period cross-overs on the 1 or 3 minute chart to find small trends
and then try to ride them briefly. Most hold their trades only for
30 seconds to 3 minutes.

Some folks have provided good advice on this thread.... one thing
that they did not cover in detail is the psychological make-up of
a scalper. I have found that most profitable scalpers are people
that can play video games for hours on-end & always hit the high
score, have very fast reflexes, and a mind that can instantly
correlate data on a screen (and repeat it all back verbally after it
is gone). Most of the folks that I have found to be good scalpers
are young (in their 20s) and played video games like mad for all
of their teenage years.

Some of your info you posted on the thread that shows you
expect a 6 month learning curve shows that your mind is in
the right place. Scalping is one skill where trading simulators
are of not much use (CyberTrader, etc.)... it is better to go
try with small lots with a direct access broker with low per
share fees....

- Greg
 
Originally posted by gwb-trading
... They do not try to make a profit between
the bid & ask, but try to find small runs of 15 to 25 cents in
a trending direction. They often look at signals like to 5/15
period cross-overs on the 1 or 3 minute chart to find small trends
and then try to ride them briefly. Most hold their trades only for
30 seconds to 3 minutes.

...I have found that most profitable scalpers are people
that can play video games for hours on-end & always hit the high
score, have very fast reflexes, and a mind that can instantly
correlate data on a screen (and repeat it all back verbally after it
is gone). Most of the folks that I have found to be good scalpers
are young (in their 20s) and played video games like mad for all
of their teenage years...

- Greg
More...

Man, you hit it right on the head!

Scalping still gives you the closest thing to guaranteed profits per trade in this business, but I still think there's way too much risk unless you are using other strategies at the same time over a longer timeframe, and are just looking to stay sharp or to use a variety of strategies. The hardest thing about scalping is the amount of focus and energy it requires. I really doubt that most remote traders make any money scalping. Why not just play video games instead?

PS - I'd recommend using IB and doing 100 shares at a time. This way, when you get sick of scalping, you'll still have some money around for trying other strategies.

-dude
 
Greg (gwb-trading) gave you one piece of the puzzle. Here are a couple more: learn to read the noodles, and learn one stock like the back of your hand, say BRCM. Watch it daily for four months, start on paper, move to 100 shares and progress from there. Make sure you trade with a direct access broker and no I don't recommend IB. You can't run with the big dogs and p*** like a pup. Others have put it this way, don't bring a knife to a gunfight and expect to win. BTW, current market conditions are very difficult for scalping. You better know your stock, or you will get your a** handed to you. Hey I'm beginning to sound like some of the senior traders here!

Good luck and good trading.

--arky
 
BIOMECH..

You mentioned that part of the reason is that you want to work on your execution...

If you have not traded, those here will confirm the fact that the execution in real trading is much tougher than the execution in paper trading. So if you have the money to lose on the learning curve, you should have fun.

I do not trade stocks, I prefer futures, but execution in the real world is alot more emotional.

The best to you in your learnign curve...

PS: Babak:D
 
Originally posted by macal425


Would that be the fisherman who puts on a trade before he goes out to sea and takes it off when he returns?
More...

LOL I think that just about sums it up! :D
 
biomech -

FWIW, I don't see that there's a "progression" from scalping to longer term tradng strategies. Any more than there's a progression from defensive tackle to downhill skier.

The two involve different skill sets. You could "transition" from one to the other just as you could transition from programmer to accountant with new training, but it will involve a reasonable amount of relearning not merely a progression.

Better to pick what you want to do and focus on learning to do it as well as possible rather than have a going in expectation of "progressing" from scalping to longer term trading.

Whether scalping is the "low risk" approach is highly debatable. Too many new traders started with that misconception and eventually busted out on thin/no profits over the long haul and huge commissions to conclude that it's either low risk or the best way to make trading profits.

One more note - intraday swing trading (or other types of daytrading other than scalping) don't incur the risk of overnight holds. So don't ignore non-scalping daytrading as a potential path.
 
I use a scalping technique with MT chatroom and find it to be very lucrative. I'm in on the move and out when it stalls. Sweet 'n to the point--profit.
 
I have been scalping for about 5 years now. It is a very tough environment for a scalper, but, not impossible. I am still profitable, but, only because I have been trading for so long and have learned to be very disciplined in my approach. I think it would be just about impossible to be profitable scalping if you are just starting out in todays market. I am trying to learn how to "swing trade" or daytrade with a longer term horizon holding for minutes or hours, rather than seconds. I know it will take time. Luckily I am a prop trader and I get paid a percentage of my "gross" rather than having to pay commissions. In other words, I can do 500,000 shares a day and only take out 2 grand and still make 25% or $500 for the day. I think in the long run only traders who get paid a % of there gross will be able to be profitable if they are scalpers.
 
I have been scalping for about 5 years now. It is a very tough environment for a scalper, but, not impossible. I am still profitable, but, only because I have been trading for so long and have learned to be very disciplined in my approach. I think it would be just about impossible to be profitable scalping if you are just starting out in todays market. I am trying to learn how to "swing trade" or daytrade with a longer term horizon holding for minutes or hours, rather than seconds. I know it will take time. Luckily I am a prop trader and I get paid a percentage of my "gross" rather than having to pay commissions. In other words, I can do 500,000 shares a day and only take out 2 grand and still make 25% or $500 for the day. I think in the long run only traders who get paid a % of there gross will be able to be profitable if they are scalpers.
More...

Sweatyb,

25% on a $2000 profit? Do you work for Schoenfeld?

nitro
 
You must log in or register to reply here.
Back
Top