SCALPERS: Criteria for cutting losses / profit-taking

people like wcomtrader are taking advantage of an abberation in the market. they are adding liquidity in large blocks and taking advantage something that will not exist much longer.

for the inexperienced, by adding liquidity (i.e your bid getting hit, or your offer being taken), some companies will provide a rebate to your commissions. so for instance, if at the end of a month, a wcom trader provided 5million shares of liquidity, they may get a rebate of around $15k. i don't do this kind of "trading", so those numbers are just guesses.

the problem with this technique is that i highly doubt if will last very long.

these types of traders have their own definition of scalping. my definition is trading 100k-200k shares/ day in 1k-2k share increments, trying to scalp out 10-20 cents per trade.
 
Originally posted by WCOMtrader
First of all,

true scalping is trading at least over 10,000 shares.

so, a penny loss on that is 100 bucks.

If you trade for larger swings: you're trading momentum.
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"True scalping" has no size requirement. The principle is the same for 100 shares or 10,000 shares. Scalping is ALL based on momentum. The goal is to buy into strength when you see a move develop and sell when the move dissipates. Whether the move lasts for a few cents or a few quarters is not relevant. Being on the right side of the trade IS. You can still find .90 cent scalps if you look for volatile stocks that gap down in the morning.

Trading large size for one or two cents in a stock that trades a trillion shares a day is NOT scalping. It's called liquidity trading.
 
Originally posted by goldenarm



Trading large size for one or two cents in a stock that trades a trillion shares a day is NOT scalping. It's called liquidity trading.
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This is not neccessarily true amigo.....you still need to provide liquidity (or else no rebate).......peace
 
funny, I thought 'scalper' was clearly admitted as : "an individual that makes dozens or hundreds of trades per day, “scalping” a small profit from each trade by exploiting the bid-ask spread".

I'd agree liquidity trading is something else, although I think it is a variation of scalping. but OK, we can agree to disagree on that.

where I'd disagree is when I read scalping is based on momentum.
I don't think so. Momentum trading is something else, and that's not scalping. Often I think people refer to scalping when they mean momentum trading.
"Momentum traders look to find stocks that are moving significantly in one direction on high volume, and try to “jump on board” and ride the momentum train to a desired profit".

I can scalp (I consider myself a scalper) when trading as a specialist surrogate. I am often against the momentum, still I scalp the profit.

I'd say pure scalping almost disappeared. It's now a combination scalp/momentum. Because spreads are much smaller than they used to.
but by definition to trade momentum, there must be a momemtum (dah!). So that's why I don't call scalping against momentum, momentum trading.. maybe we should create a new kind of traders : anti momentum traders !

just kidding, definitions aside, it's legitimate to make a difference between the different styles. because the loss level, profit target (or lack of), win ratio etc.. are different depending on the style.
a way to do that is to consider the % of the price you target for profit (0.02% or 0.2% that's an order of magnitude and more. that would be 1 cent or 10 cents for a 50$ stock.. the target can be 50 cents or more obviously. but that ain't scalping, it's momentum for sure.

tntneo
 
You're correct, tntneo. There are momentum scalpers and "specialist" scalpers who look to make the spread and don't require momentum. Range traders would also fall into the latter category.
 
i scalp $50 stocks with 10,000 shares sometimes 20,000 shares - i get out the SECOND the trade is not in my favor - i know that my timing is good enough that if i don't immediately have a mark - it's a loser - i then look for .05 or .10 or even .25 or more depending on the spoos move - if i catch a good move .50 to $1 is not out of the question
 
Originally posted by TSaimoto
I thought the definition of scalping is a trader profits from trading the spread of bid/ask.
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That is the true definition of scalping. But with the advent of decimization the definition of scalping has different interpretations.
 
what I've been doing the past couple of weeks is a prime example of scalping...(as well as shaving).

if I see that there is a large bid on Redi/Arca, I will just shave the level penny

example: instead of 2.05, I bid 2.0501. on the way out, if there is a small Redi on 2.06, I ask with em. if there's a big one...i put 2.0599. if i see that the stock might tank,i try to just hide on Island below the best price.

on shorts,i try not to shave on my covers, cuz it takes a while for a shaved penny to get hit. i try to go with the Redi or maybe hide on Island, or if i see that there's an eliminated penny/level, i put out a Trac...which more often than not gets hit.

you can forget about inca,especially on the stock i've been trading.it just turns into a bidding game/war.Inca gets hit but mostly on the level penny.there's no point in trying to outbid with .001's.
 
Major Cahones...where do you catch $1 moves.i'd like to know lol.

I'm extatic when/if I catch .05 on 2000 shares (which is what my max buying power is right now,i started a month ago)
 
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