The Art of Scalping

Quote from schizo:

I wish there was a crash course for scalping when I started out. How ironic that there ain't any even to this day. Interestingly, most of the day traders that I meet are better labeled as scalpers than otherwise. So I would like to start a brainstorm session in the hopes of catering to this ever burgeoning crowd.

This thread is devoted to all things scalping. Non-scalpers need not participate.

Let me kick it off by throwing out a couple basic questions for you to chew on:

1) Just what exactly is scalping for you? 1-tick, 2-ticks, or 10-ticks...or perhaps more?

2) Do you have a specific system you religiously follow, even if it were just 1-tick, or do you more or less trade by the seat of your pants?

3) What is considered as the optimal risk:reward ratio? If your goal is to capture, say, 5-ticks, should the stop be smaller than 5-ticks?
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Retail scalping, and i consider myself to be a retail scalper, is about using small bracket trades with a view to a larger time-frame.

For instance, i trade the eurusd with a 1:1, 5 pips. I trade round numbers from the hourly candles and i am in the market on average for about an hour and make about thirty trades within each sitting/set-up.

This what i do.
 
Quote from Dackster:

Retail scalping... is about using small bracket trades with a view to a larger time-frame... I trade round numbers from the hourly candles...
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Sorry to be thick, but I would be grateful if you could elaborate further on what you mean by the above.

Thanks.
 
Quote from abattia:

Sorry to be thick, but I would be grateful if you could elaborate further on what you mean by the above.

Thanks.
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No probs. I use the 50 and 00 price increments to trade off the hourly candle.
 
Now that we've defined and perhaps re-defined what scalping is, let's talk down and dirty about some specifics.

  • Do scalpers really care about trends?
  • In a trending market, just where do you get in: beginning, middle, or end?
    Considering that your aim is to scalp a few ticks, does it matter?
  • Say you got into the trade just above the ROUND number, where do you get out in case you are wrong? Is your stop based on $, %, or TA?
  • Nothing is worst for scalpers than a constant whipsaw, which is never short of supply. After a few acrobatic flips, you find yourself barely hanging by a tether that's about to wrap around your neck. When do you call it quits?
Feel free to add more questions to the list.
 
Quote from schizo:

Now that we've defined and perhaps re-defined what scalping is, let's talk down and dirty about some specifics.

  • Do scalpers really care about trends?
  • In a trending market, just where do you get in: beginning, middle, or end?
    Considering that your aim is to scalp a few ticks, does it matter?
  • Say you got into the trade just above the ROUND number, where do you get out in case you are wrong? Is your stop based on $, %, or TA?
  • Nothing is worst for scalpers than a constant whipsaw, which is never short of supply. After a few acrobatic flips, you find yourself barely hanging by a tether that's about to wrap around your neck. When do you call it quits?
Feel free to add more questions to the list.
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Some valid points here.

I said that i trade the round numbers, i do trade the round numbers, but that is not my entire view of the market.

For instance, i'm looking for price/candle action around these numbers.

Are the candles 'pinning', are buyers and sellers comming in and out?

Do the round numbers hold a relation to other historical prices like SR?

Daily volatility range?

Intra daily volatility range?

The round numbers are just an aspect that suits me, they may have absolutely no bearing on the market micro structure.
 
Do any of you try to collect rebates while scalping, although this is something I would like to do I just don't think about this when I am to caught up in jumping in/out of positions. About 50% of my trades are adding liquidity but this is something I am not even thinking about.

I have been away for trading for a while and just got back in recently and one thing I notice that I don't see any more, big block orders hitting the books. The obvious reason is the trades are broker down now in 100 share lots to keep things "under the radar" how do yo uas a scalp trader determine when these 100 blocks are going through is it a institution? just a regular prop trader? automated program?

Seems like a different ballgame these days although scalping is still profitable.
 
Quote from proptrader11:

Do any of you try to collect rebates while scalping, although this is something I would like to do I just don't think about this when I am to caught up in jumping in/out of positions. About 50% of my trades are adding liquidity but this is something I am not even thinking about.

I have been away for trading for a while and just got back in recently and one thing I notice that I don't see any more, big block orders hitting the books. The obvious reason is the trades are broker down now in 100 share lots to keep things "under the radar" how do yo uas a scalp trader determine when these 100 blocks are going through is it a institution? just a regular prop trader? automated program?

Seems like a different ballgame these days although scalping is still profitable.
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I don't bother with open interest and volume any more. The reason for this is because it's all displayed in the price action anyway, so that is my main focus point.
 
Quote from proptrader11:

I have been away for trading for a while and just got back in recently and one thing I notice that I don't see any more, big block orders hitting the books. The obvious reason is the trades are broker down now in 100 share lots to keep things "under the radar" how do yo uas a scalp trader determine when these 100 blocks are going through is it a institution? just a regular prop trader? automated program?

Seems like a different ballgame these days although scalping is still profitable.
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I exclusively trade futures and here's my take. Assuming that 1 futures contract is equivalent to 100 shares, I often see a flood of 1 lot crossing the tape within a matter of seconds. To me, this ain't the collective bargaining power of the herds but the work of God's Servants (you know who I'm referring to) who want to hide their footprints. What's more, I often see the other side melt away without hardly any resistance, which suggests that the same players were sitting on both sides of the fence.
 
Quote from schizo:

I exclusively trade futures and here's my take. Assuming that 1 futures contract is equivalent to 100 shares, I often see a flood of 1 lot crossing the tape within a matter of seconds. To me, this ain't the collective bargaining power of the herds but the work of God's Servants (you know who I'm referring to) who want to hide their footprints. What's more, I often see the other side melt away without hardly any resistance, which suggests that the same players were sitting on both sides of the fence.
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To try and view the market in the terms or context of big and small is somewhat self defeating, because the bigger players will size down and become more frequent. The market works in a collective or composite manner.
 
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