What is scalping, and how does it work?

K

kaihui

Very new in trading. Need someone to shed some lights on many things?

Accordingto webster, Scalping: to resell at greatly increased prices <scalp theater tickets.

OK, how does it work then? Assuming you can make 0.1% gain by each scalping, that means if you trade with $100K, you can make $100.

Then the problem is that not many stocks have enough volume or market cap so you can trade $100K easily. For those big caps, they tend not to move at all.

Kai
 
Q: What’s your definition of scalping? Or, what is scalping that you describe?

A: By scalping I mean taking profits equal or slightly higher than the initial risk – size of a stop you define for particular trade. Ideally, profit is taken in a single “leg” – price movement in your favor without pullback. This isn’t always possible but overall, scalping is not about enduring heavy pullbacks.
http://www.nasdaqscalper.com/faq.html


In a nutshell, scalping is a trading style is based on assumption that it’s easier to get high amount of winning trades when profits are taken faster, minimizing the cases when relatively small profit evaporates and turns into loss. This is opposite to more conventional and commonly accepted approach where a trader lets his profits run risking to lose them on reversal or severe pullback and trying to make up for diminished win/lose ratio by bigger ratio of size of a winner vs. size of a loser.

Scalpers engage in a trade for very brief period of time and controls his risk so tightly that probability of being hit hard is extremely low.
http://www.nasdaqscalper.com/scalping.html
 
All one is attempting to do in scalping is to take advantage of price fluctuations rather than a price action swing.

Generally, scalpers are in the said market for minutes or seconds, and they approach the market with a different mindset unlike the day-trader or position trader.

Either method demands a considerable amount of focus.

Example :

I bought ES U5 at 1200.00 and it rallies to an area which I consider resistance at 1202.75 ... and I close out.

That's a 2.75 profit that equals $175.00 ... and I bought 5 contracts.


So,


$175 x 5 = $875 profit (minus commissions and fees, of coarse)
 
keywords to serach in this forum: scalping, scalp, tape read, tape reading. there are many articles about it in this forum.
 
Quote from kaihui:

Very new in trading. Need someone to shed some lights on many things?

Accordingto webster, Scalping: to resell at greatly increased prices <scalp theater tickets.

OK, how does it work then? Assuming you can make 0.1% gain by each scalping, that means if you trade with $100K, you can make $100.

Then the problem is that not many stocks have enough volume or market cap so you can trade $100K easily. For those big caps, they tend not to move at all.

Kai
More...
When I think of scalping I think of Soes Bandits.

In currencies, that I trade in, and as mentioned previously, a trade is opened then closed almost at once, net resulting in a small amount of pips/money.

To do it successfully you have to have a good overall trading structure to support your rapid in-and-out scalps and know how to get flat without losing your profits should the trade go against you while your scalp position is open.

I have a system that can scalp 1000-pips in every 8 to 12 hours of trading round the clock in EUR/USD and end flat, when that pair typically moves 75 to 100 points in the same time period.

The system is for sale for $75,000,000.

Any takers? :D

sKaLpZ
 
One of the best people to talk with about this style of trading is Vadym Graifer, who is on this board under the nick threei... I suggest you do a search of him here and you strongly consider his scalping course, available from www.realitytrader.com
 
Quote from candletrader:

One of the best people to talk with about this style of trading is Vadym Graifer, who is on this board under the nick threei... I suggest you do a search of him here and you strongly consider his scalping course, available from www.realitytrader.com
More...

Just received Vadym Graifer's latest video course on scalping. An excellent well thought out course with live examples.
 
Quote from EchoTrader:

All one is attempting to do in scalping is to take advantage of price fluctuations rather than a price action swing.

Generally, scalpers are in the said market for minutes or seconds, and they approach the market with a different mindset unlike the day-trader or position trader.

Either method demands a considerable amount of focus.

Example :

I bought ES U5 at 1200.00 and it rallies to an area which I consider resistance at 1202.75 ... and I close out.

That's a 2.75 profit that equals $175.00 ... and I bought 5 contracts.


So,


$175 x 5 = $875 profit (minus commissions and fees, of coarse)
More...

i'm new to trading. can you explain to me why that would be scalping? it seems like going up 2 and 3/4 handles is a lot. isn't scalping "going in and out" very quickly? when i scalp i try to take 2 ticks and i'm good. to each his own i guess but going up 2.75 would take quite a while. what is your stop loss and your risk?

volitility has been shitty for the past few days and i got burned this week. live and learn
 
Quote from sKaLpZ:

In currencies, that I trade in, and as mentioned previously, a trade is opened then closed almost at once, net resulting in a small amount of pips/money.
More...

never scalped currencies

which trading plaform do you use & which broker etc?
 
FuturesTrader71 has also made considerable contributions regarding scalping, trading, money management and so forth. his primary focus was the DAX, but not sure if that's still the case. either way, i believe he was making 200+ trades per day. in a couple of his threads / posts he even offers a pdf version of a line-out sheet he uses.

anyway, he has always been helpful and very generous with time, knowledge, and experience.

sKaLpZ also started an informative thread:
http://www.elitetrader.com/vb/showthread.php?s=&threadid=48539

i'm sure there are others like FT71 and sKaLpZ ...

hth

take care -

omni
 
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