Learning to trade by scalping?
- Thread starter Biomech
- Start date
I just wanted to add my two cents to this thread. I think that some people just don't make good scalpers because of their psychology. Take me for example, I suck as scalper, I am getting better though. I day/swing trade. I perfer to wait for the setup that is "perfect". In other words my reflexes are too slow to scalp. If you grew up playing Nintendo maybe you could pull it off just fine. Like others have pointed out, you will need to learn to take your profits quickly, while you still have them! However, if you anything like me you may find that scalping is too stressful.
Good luck
Good luck
On topic....scalping is part and parcel to all trading...you must enter and exit to make money. When referring to "scalping" many traders think of buying on the bid and selling on the offer (making money on the spread)...this is of course a thing of the past (or left to a few MM firms).
We try very hard to get past the "analyzing" aspect (regarding the "type" of trading you're doing), and simply focus on good entry/exit points. Whether they be 10 seconds or 10 days. If traders can get this concept, the rest is a lot easier.
We try very hard to get past the "analyzing" aspect (regarding the "type" of trading you're doing), and simply focus on good entry/exit points. Whether they be 10 seconds or 10 days. If traders can get this concept, the rest is a lot easier.
well, then what you are saying is any trading is scalping. I don't want to split hair, but obviously that can't be, since the majority don't see the 2 words as equal.
anyway, as long as you consider trading as a biz, it's fine with me. there are all kind of ways to make money. I get your point that it does not matter how you call it, fundamentally. that's OK.
anyway, as long as you consider trading as a biz, it's fine with me. there are all kind of ways to make money. I get your point that it does not matter how you call it, fundamentally. that's OK.
I realise I'm a bit late on this thread, but I just wanted to throw in my .02 (for anyone reading) -
I'm not sure what you mean by 'scalping is part and parcel to all trading'. A long term investor also has an entry and exit point but I don't really see how he has "scalped" anything.
You clarify your POV in the next paragraph and I agree with what you say in regards to getting past the "analyzing" aspect as far trying to attach a label on the type of trading you are doing. (Although this has its uses if trying to describe your style to another trader.)
I think its a mistake, though, to neglect selecting a trading methodology/timeframe to suit your own personality. I mean, there is quite a difference in holding for 10 seconds compared to 10 days wouldn't you think? And if you're suggesting that traders jump from time frame to another, on the assumption that they've found a "good entry point", well....let me know, and I'll start taking the other side of their trades!
(And on a lighter note, are you suggesting you advocate your traders take 10 day positions? Man, can't be good for commissions!
)Someone mentioned earlier that we don't really have an established definition for "scalping", and I'm not going offer one because I don't we'll ever get people agreeing, but I think we're all in the ball park if we assume that it's a method that trades between 20-50+ times a day, for typical gains of less than 20c (there you go - I _AM_ offering a definition!), with holding times of less than 5-10 minutes.
Also, I've read/heard of people, when discussing scalpers, that they "know some traders who trade for small profits per trade, but make two hundred trades a day". Does anyone know of people who trade like this? Are there traders making _THAT_ many trades a day? This works out to a trade every few minutes - INTENSE!
And another question, if my idea of scalping (as described above) is close to what people think, what sort of size can be done holding for a minute or two trying to get a dime? Does anyone big size traders trading like this?
Daniel
Daniel,
Yes, there are plenty of traders like that and it's considered quite normal and not intense even. Many of the traders at these prop trading firms including the one I was at are basically hardcore scalpers. They trade anywhere from 60,000 shares to 1million shares/day. And their share size is anywhere from 500-2000shares lot. so you do the math. That's more than 200trades a day. And I think this is "normal" for prop firms since they want to people to burn & churn commissions.
trader99
"Also, I've read/heard of people, when discussing scalpers, that they "know some traders who trade for small profits per trade, but make two hundred trades a day". Does anyone know of people who trade like this? Are there traders making _THAT_ many trades a day? This works out to a trade every few minutes - INTENSE!
And another question, if my idea of scalping (as described above) is close to what people think, what sort of size can be done holding for a minute or two trying to get a dime? Does anyone big size traders trading like this?"
i do.i know guys who do 75-100 trades a day.i know one guy who did 200k in commish last year.i dont know how much money he makes but been trading that way for years so must do all right.
the mo for their style is like this:take huge size 10-20k in stocks like sunw or jdsu or csco.or any stock with float bloat and offer out at the same time and play for pennies and nickles.
as far as this thread goes learn by scalping.has any one mentioned how hard it is to try to go long term if you once go the scalping route.scalping kind of ruins your ability to stay in a trade.
And another question, if my idea of scalping (as described above) is close to what people think, what sort of size can be done holding for a minute or two trying to get a dime? Does anyone big size traders trading like this?"
i do.i know guys who do 75-100 trades a day.i know one guy who did 200k in commish last year.i dont know how much money he makes but been trading that way for years so must do all right.
the mo for their style is like this:take huge size 10-20k in stocks like sunw or jdsu or csco.or any stock with float bloat and offer out at the same time and play for pennies and nickles.
as far as this thread goes learn by scalping.has any one mentioned how hard it is to try to go long term if you once go the scalping route.scalping kind of ruins your ability to stay in a trade.
OK. The problem with scalping is the liquidity isn't there for most stocks. It's very difficult that you can buy 10-20K of a stock at the same price and then offer out at 5-10cents higher for the entire chunk. Maybe for something extremely liquid maybe csco, msft, etc. I've seen it done before on stocks in play.
And the other thing is once you are a scalper then it would take some serious change of view to unscalp. Especially if you have done it for years on end. You can't see the forest from the trees.
And any slight movement you get chicken out.
so, it's best to learn and style and stick with it. But to be a good net positive scalper seem very hard..
trader99
I don't know how people can scalp things like sunw and csco because they are just so cheap that they don't move. Sure you can get big size and roll it for a penny, but you have to be in a certain situation to do this. THis type of scalper has to be in an office that offers no commissions and very low payout(like Schonfeld for example) Their are several firms like this, where you can do 3 million shares a day, only take 5 grand out of the market and take home 2 grand. (they do make you cover SEC fees I believe.) This is churn and burn in my opinion but lots of traders do it because they can make an allright living. some of these guys will do a million shares and only take a grand out of the market and still make 200 bucks. Anything that is a positive trade, even 1 cent is just locked in because as long as you stay positive and beat your sec's, you will make 20% of the gross PnL. I have seen guys leave these shops and never be able to make money when they have a commission to cover because those shops ruin you as a trader.
I trade with guys that will do similar volume(I personally can't control that type of volume), take out 8-9 grand and take home 4-5 grand net for the day after covering commissions. This is a more impressive type of scalping to me since it takes talent to take that type of money out of the market with that size volume in todays conditions. They don't trade cheap crap like sunw, they could never make the money there. They trade fast movers like qcom and amat that actually will rip 15 cents over and over all day and they take 5-8 thousand share positions when it moves. This is the type of scalping I want to learn, I just get to a certain share size and then my profits go down. Currently I can make decent money up until about 200,000 shares and then when I go over I seem to churn more. I need to take larger positions on my good trades to get my volume up instead of just making more smaller position trades.
Scalping is hard right now, and if I was starting right now, I probably wouldn't pick it as my style simply because the environment is very hard right now to make money at it. There are only a small group still making money scalping consistently if they have to cover commissions. The churn and burners are still making money but when the market picks up, they will still only get 20% of gross when the rest of us will get 100%.
I trade with guys that will do similar volume(I personally can't control that type of volume), take out 8-9 grand and take home 4-5 grand net for the day after covering commissions. This is a more impressive type of scalping to me since it takes talent to take that type of money out of the market with that size volume in todays conditions. They don't trade cheap crap like sunw, they could never make the money there. They trade fast movers like qcom and amat that actually will rip 15 cents over and over all day and they take 5-8 thousand share positions when it moves. This is the type of scalping I want to learn, I just get to a certain share size and then my profits go down. Currently I can make decent money up until about 200,000 shares and then when I go over I seem to churn more. I need to take larger positions on my good trades to get my volume up instead of just making more smaller position trades.
Scalping is hard right now, and if I was starting right now, I probably wouldn't pick it as my style simply because the environment is very hard right now to make money at it. There are only a small group still making money scalping consistently if they have to cover commissions. The churn and burners are still making money but when the market picks up, they will still only get 20% of gross when the rest of us will get 100%.
I totally agree. I'm actually a VERY light trader. I have yet to trade anything even remotely close to 100,000 shares a day or even 50,000 shares. I aim to take 10-20cents out of each trade and I've taken 50-$1. I think my record was $1.40 on one really good move.
Because otherwise, you aren't really making any money for yourself except burn and churn for the firm. So, it's easy to be skeptical about firms that try to teach a high churn scalping strategy.
good luck to all,
trader99