What is a scalp?

S

sulong

Hi,
I'm looking for help on defining exactly what a scalp trade is.
Dose each trader define it there own way?
How do YOU define a scalp trade?
If I wanted to devolope a scalping system what are the componits?
Thank you

sulong

P.S. if this is a wore out topic,please send directions to proper threads.
 
no, it's not worn out. The thing you need when you scalp is a high hitrate. Makes sense when you figure your profits are small, so therefore you don't have much to work with on the loss side.

And commissions are the great enemy.

Usually a scalper figures how many times he can scratch and breakeven on one winning scalp. So, at IB that means you can only scratch twice if you scalp for a tick on es.

According to my precise calculations, you need to be able to hit one and scratch eleven times and breakeven. So on es, that means you need 1.25 profit.
 
Quote from inandlong:

There are many excellent threads on the subject of scalping. Use the SEARCH function to find some of them.

Good luck.
More...

maybe I wasnt clear, I was not looking for any ol chat about scalping,but rather how to define scalping.
The way a trader can define a trend.
sulong
 
From a beginning trader perspective (myself included in that generalization) I understand a scalp to be a special kind of day trade. In a scalp, you buy (or short) a stock, and sell (or cover) it very quickly, taking a very small profit. Doing this over and over again yields larger profits.

A scalp could last anywhere from a few seconds, to several minutes, but this point is debatable. I would argue, if your scalp lasts more than 10 minutes or so, it's not a scalp at all, but more of a day trade.

Commissions and speed of execution are key to scalping. I can't scalp effectively on Ameritrade because the $22 round trip, along with the 10-30 second executions. By the time I try to enter a scalp move, the stock has already moved 2-10 cents past my entry, and there's no point in 'chasing the dog'.

For this, I've opened up an account at Interactive Brokers (low commissions, and FAST executions), but I'm not transferring any money over there until I surpass the 25k mark, and can successfully be a 'pattern' day trader without any annoying margin calls. I'm at about 18k right now, and I'll short term and day trade until I cross 25 - that could be another 2-6 weeks.

I've only been doing this fulltime for about 4 months, so I'm pretty much just starting out as well. If you wanna chat about it, look me up on AIM or Yahoo Messenger. I've love to have some other newbies to chat with.
 
A true scalp is performed in the pits. A pit trader will buy at the bid and sell at the offer or vice versa(earning the spread).
 
Quote from profitseer:

no, it's not worn out. The thing you need when you scalp is a high hitrate. Makes sense when you figure your profits are small, so therefore you don't have much to work with on the loss side.

And commissions are the great enemy.

Usually a scalper figures how many times he can scratch and breakeven on one winning scalp. So, at IB that means you can only scratch twice if you scalp for a tick on es.
More...
Goes without saying that these scalpers are not bailing out of many positions with a quarter point loss. In order to do that they at least must be EITHER snagging a bid on entry OR offering out on exit. They can't be both retailing in and out of a position.

Also I have read there are some fairly strict mechanical rules that a scalper will use to tell him when to scratch. Do you have an example of how that might work?

How exactly does a scalper enter a positon? Do they retail in and offer out? If they snag a bid on entry, that can sometimes be a problem because the best way to have your bid filled is to be on the wrong side of a market. Whever I join the bid and I notice I get filled right away, I immediately start looking for an exit. If you have a strong need to get your bid filled, you will discover an amazing ability to determine the trend of the market and the get on the wrong side of it. How do scalpers work the spread without getting in on the wrong side of a move?
 
Quote from profitseer:

no, it's not worn out. The thing you need when you scalp is a high hitrate. Makes sense when you figure your profits are small, so therefore you don't have much to work with on the loss side.

And commissions are the great enemy.

Usually a scalper figures how many times he can scratch and breakeven on one winning scalp. So, at IB that means you can only scratch twice if you scalp for a tick on es.

According to my precise calculations, you need to be able to hit one and scratch eleven times and breakeven. So on es, that means you need 1.25 profit.
More...


So dose this mean that a scalp is where the price goes in one direction,with out hitting the oppsite order for a predetermined distance?

for instance you enter on a bid and all the following transactions also need to be hit on the bid side to keep the price moving in the same direction?
 
a scalper is someone who goes for a small profit on a trade, the exact size of that small profit varies with each trader. And, a scalper usually stays in a trade for a short amount of time. Once again, the time that it usaully takes to complete a trade varies with each trader.
 
Quote from chipware:

For this, I've opened up an account at Interactive Brokers (low commissions, and FAST executions), but I'm not transferring any money over there until I surpass the 25k mark, and can successfully be a 'pattern' day trader without any annoying margin calls. I'm at about 18k right now, and I'll short term and day trade until I cross 25 - that could be another 2-6 weeks.

I've only been doing this fulltime for about 4 months, so I'm pretty much just starting out as well. If you wanna chat about it, look me up on AIM or Yahoo Messenger. I've love to have some other newbies to chat with.
More...

and WHY are you waiting to switch to IB ???? :confused:
 
You must log in or register to reply here.
Back
Top