what the hell is scalping

intradaybill · Apr 8, 2009

Quote from youngtrader:

Gladly

Say a market is 300 bid and offered at 302 and the market is priced in halfs (like 300.5,301,301.5 etc) so back to our example.

The market is 300 bid for 30 at 302 for 10 with paper being a buyer all day. I would probably bid 300.5 and try to get filled and if filled turn around and try to offer it back at 301 or 301.5

Another example would be if its still 300 bid for 30 and 302 offered for 10 and all of a sudden there is a stale 3 lot order at 300.5 I would buy that 300.5 and try to turn around and dump it for a half tick or better.

This is a very very very generic example and there is so much more that I am thinking about when making trade decisions but it gives you an idea of how scalping works.

Thats what scalping is.....buying bids and selling offers.......MAKING A MARKET AND PROVIDING LIQUIDITY SO MARKET PARTICIPANTS CAN DO BUSINESS WITHOUT MAJOR SLIPPAGE!!!!!

If you still don't get it by this point in time there is absolutely no hope for you.

oh...I'm sorry...I didn't think you are so naive...I still hoped you had something better to say.

This is not buying the bid and selling the offer

This is buying the bid and making an offer to sell

If you do not understand the difference of what I am talking about you will keep losing money and then coming to ET and pretend to are a know something.

I repeat, what you just described is not buying the bid and selling the offer. It is buying the bid and making an offer to sell.

When you get accross strong hand and they pull their bids as fast as you get filled at your bid, they will take your money before you know and while you think you are buying at the bid and selling at the offer they laugh because they know you can maybe buy at the bid but you must find someone to buy your offer.

You people are for laughs...I wonder how far stupidity can go...

It seems it has no limits..."the universe may have limits but stupidity has none"

Evidence about that here at ET.

saliva · Apr 8, 2009

The best way to learn anything is by an actual demonstration. Next time, don't quibble over words. Show us what you're made of. By that I mean show me the damn money.

POST THOSE TRADES IN REAL TIME (or otherwise, as they often say, "please shut the fuck up!")

kiwi_trader · Apr 8, 2009

I like to think of myself as a microtrend trader but some would suggest scalping (my trades last 3 or 4 times as long on a slow index like spi or stw but on hsi this is todays representative sample.

This is not proof of trading so dollars are left off ... just an ideas of how scalping can work.

Code:

Strat    Action     Start    Entry    End    Exit    Duration    P/L    MFE    MAE
HSI    Sell        12:56:33    14386    12:57:58    14336    01:25    50    50    -19
HSI    Sell        13:37:41    14273    13:39:42    14298    02:01    -25    30    -25
HSI    Buy        13:57:57    14278    14:00:35    14321    02:38    43    43    -3
HSI    Sell        14:12:41    14320    14:13:53    14270    01:12    50    50    -11
HSI    Buy        16:58:02    14283    17:01:26    14328    03:24    45    45    -2
HSI    Buy        17:34:04    14356    17:39:28    14387    05:24    31    31    -13

TraDaToR · Apr 8, 2009

Quote from intradaybill:

I repeat, what you just described is not buying the bid and selling the offer. It is buying the bid and making an offer to sell.

I see an improvement from this previous sentence:

"You are a troll. The only way you can buy the bid is if your broker improves your price. Otherwise you can only get filled at the offer when you buy and at the bid when you sell."

Now, you have acknowledged half of the process. Just make an effort for the other side.

Everybody has to learn somehow at a time, don't be ashamed to be educated by a 18 years old.

intradaybill · Apr 8, 2009

Quote from TraDaToR:

I see an improvement from this previous sentence:

"You are a troll. The only way you can buy the bid is if your broker improves your price. Otherwise you can only get filled at the offer when you buy and at the bid when you sell."

Now, you have acknowledged half of the process. Just make an effort for the other side.

Everybody has to learn somehow at a time, don't be ashamed to be educated by a 18 years old.

In an efficient and liquid screen trading based market with a deep order book where there is no spread dictated by a market maker or specialist, when your higher bid is hit and you indeed get filled the spread instantly contracts and then opens or closes to the next best bid and offer.

Now, if buyers desire to concede to higher sell offers, you can attempt to make an "inside" offer and contract the spread to your advantage. In this case you make the spread.

If suddenly after you bought at your bid, sellers decide for some reason to concede to lower buy offers, then market reverses and you must look for a way out. And vice versa.

In the long term, this will happen 50% of the time but the important thing to understand is that unless you have zero commisions and fees, you will end up losing money. Some people lose a lot of money because they end up getting out at a much lower price than their initial fill. I would say 95% of them

Thus, you and your geek trader friends take this post and read it everyday like a Bible. I am not surprised you post this nonsense during busy market hours for most sane scalpers. It is an indication you do not trade because otherwise you would be busy making money, or tons of money as you claim.

That is not to say scalping cannot be profitable. The method you described is not profitable at all, actually it is called "noise trading" and noise cannot make you money. Noise is not an edge.

Now, during the day, repeat to yourself, as many times as you can

"noise is not an edge"

Write it down as many times as possible on a piece of paper. Your misconceptions and addictions may be cured, or may be not...doomed you will be...

youngtrader · Apr 8, 2009

Im not going to try to fight it anymore. For those on ET that actually know me personally (pabst, rtrader2525, etc) they could honestly tell you that I am not a joke.

Other than that I have nothing left to say.....if you guys are not willing to believe me thats fine because personally i really dont give a shit.

PS just for kicks bring up an orderbook of something like orange juice, feeder cattle, milk futures etc and then come back to me and tell me making a market is not a possible trading strategy.

Cutten · Apr 8, 2009

Quote from intradaybill:

The only way you can buy the bid is if your broker improves your price. Otherwise you can only get filled at the offer when you buy and at the bid when you sell.

If you use limit orders you can easily buy at the bid and sell at the offer - I do it multiple times in the typical trading day. By the way I have used IB for scalping and it's perfectly possible, albeit not ideal since their software is not that good.

Cutten · Apr 8, 2009

Quote from intradaybill:

.

This is not buying the bid and selling the offer

This is buying the bid and making an offer to sell

Yeah and if he then gets filled, he has sold on the offer and thus completed a successful scalp.

Obviously you cannot instantly sell on the offer, by definition - if you could, it would be the *bid*, not the offer.

I'm not sure what is so confusing for you here. "Buying the bid and selling the offer" is normal terminology that all traders should be familiar with.

Cutten · Apr 8, 2009

Quote from intradaybill:

In an efficient and liquid

That is why in an earlier post I said you need an inefficient and/or illiquid market to scalp in this method (working the spread).

There are numerous inefficient or illiquid markets available to trade, which have the wide bid/offer spreads needed for this strategy. Hence, scalping the spread can be done profitably in these markets.

intradaybill · Apr 8, 2009

Quote from Cutten:

That is why in an earlier post I said you need an inefficient and/or illiquid market to scalp in this method (working the spread).

There are numerous inefficient or illiquid markets available to trade, which have the wide bid/offer spreads needed for this strategy. Hence, scalping the spread can be done profitably in these markets.

I agree. I also said that I do not argue scalping is impossible in general. I just argued against your specifc method. I have been scalping T-Bond futures in the past for a while making good profits.

Now, in most illiquid markets there are strong hands. Stronger than my hand anyway. If you can play strong hand and actually that is what some market wizards were doing in the past and maybe still do, then I agree you may do your buying at the bid sell at the offer type of scalping, which I call buying at the bid, making an offer, which is a more appropriate description.

Hey, if you know a market we can play this game without raising eyebrows from "upstairs" let me know and I am in...