Will this scalping strategy work?

Quote from kxvid:

Why don't you get a real job. You prop isn't going to like your trading style just going for the per share commission.
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What real job do you recommend? I deliver pizza at night so that I can do stuff like this during the day.

I'm not sure what you mean by per share commission. Do you mean the ecn rebate? What do they care as long as they're making money? Besides I think they're making a little money on the software and they have my deposit interest free (not that that is paying much now). Also in the contract it states that any losses are theres to keep, not mine. I lose $1. Another trader makes $1. They get to write off the $1 loss that I paid for and get the other $1 tax free.
 
Quote from options4me:

Instead of buying the 100 shares, buy the ATM or ITM option.
You can normally get about 3 options contracts for what you would be paying for when you buy the stock. Now you will be controlling 300 shares for the same cost. If you are daytrading this, you wont have to worry too much about the time decay either. I can easily make around $300 per day doing options
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I have traded options before. I don't like them for the following reasons.

1) Wide spreads and little ability to ever buy on the bid or sell the ask. You almost always have to wait until the market maker hits you.

2) No day trading rules with the prop firm.

3) Most of all the main reason goes back to the original point. With the options I have to pay commissions. With the prop firm I basically get paid to trade. The odds are in my favor.

I do think options are great if you want to buy a stock with a lot of leverage for swing trades. Also if I had 10 million dollars I'd probably just write covered calls every month. Thanks for the suggestions.
 
Quote from Aok:

You sound like an insurance company that has no hedge against a Hurricane.

And there will BE a hurricane.

Then all your gains will be smoked.
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Did you not read the part where every trade has a 10 cent hard stop? I got stopped out 12 times today. It's frustrating, but that's part of the game.

I hate to break it to you but you are only half correct in your analysis of indicators etc, etc.
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Please explain more, I'm not sure what you mean by being half correct. Please give me detailed backtested results that says moving averages, MACD, stochastics, rsi, etc work.


Because your "new" thought is not a new one. You think Goldman Sachs hasnt thought of what you have? The have the resources that dwarf you and guess what, there's no $ in that either. Not without mondo risk.

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I know GS can out do me any day. But aren't I trying to do exactly what the MM's do? Buy on the bid, sell on the ask, collect rebates. Do you think they know where prices are going? What happened to $170 oil? Now they changed their target to $50. Sounds like a good time to buy.


Discovery consists of seeing what everyone else has seen but thinking what no one else has thought.

Keep thinking.

http://www.gnpcb.org/esv/search/?q=Ecclesiastes 1:9
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Thanks Solomon. I'm not trying to do something anything nobody else has done before. Answer my question. Does doing what I'm doing now put the odds more or less in my favor? I'll repeat the simple strategy. XYZ is at $10. I put in a buy at $9.90 with a 3 cent profit target and 10 cent stop. But instead of paying commissions, I'm getting paid to trade via ecn rebates. Instead of making $3 on the winners and then paying commissions, I'm making $3 plus 40 cents in rebates. On losers I lose $10. Instead of adding commissions to that, I actually get back an ecn rebate.
 
Quote from rosy2:

many firms do this in some way or another. granted its all done by computers. i agree with the other poster in that you will burn out manually doing this for almost no money. I suggest you automate it and run it on 1000s of stocks.
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Yes I'm trying to automate it. I am not quick enough to do this manually. Unfortunately I don't know the first thing about automating on Sterling trader. I have started incorporating the DDE into Excel. I have programmed a little with Tradestation, but don't know the first thing about any other kinds. What I want to do is very simple. I imagine it won't take long to program once I figure it out. The great thing about trading with a prop firm is I can start off with auto trading just 100 shares. Let me get good at that and then I'll expand it.
 
Quote from Sandybestdog:

Did you not read the part where every trade has a 10 cent hard stop? I got stopped out 12 times today. It's frustrating, but that's part of the game.
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Wasn't the below your quote from your first post...????!!!

"Yesterday I took 6 stop outs in a row, today I have 12 wins in a row before taking one loss."
 
Quote from Sandybestdog:

HI I have been an active ET reader for awhile, but generally don't post much. I figured I'd start my first thread about
an idea I have, so please go easy on me. I recently signed up with a prop firm and basically get free commissions
now. I did this for a simple reason. I am sick of going to the casino to gamble, I want to be the casino. Let me explain.

Let's say you buy 100 shares at $10. You have a deep discount broker that charges you $1 per 100 shares. So after you buy you are now down $1
on the trade. When you sell, you are down another $1. The odds are immediately against you. You are the gambler. You are going to either loose or win. The guy on the other side will either lose or win. Both of you both pay commissions to "the Man." In the end, the odds are against both of you and you will both end up losing. If any of you are good and do win more, that just means that 2 people have to lose so that you can win. It's a cruel world, but that's how things go. I have been on the losing end for a long time and am slowly figuring out that doing the same losing thing over and over again and expecting different results is crazy.

Now take my current account at the prop firm. I buy a stock at $10 and add liquidity, I am now instantly ahead by 20 cents. When I sell and add liquidity,
I get another 20 cents. Whereas the other guy is now instantly down, I am instantly up. The odds are now in my favor. I am now the casino. I might win some and I might loose some, but the odds are in my favor. Forget about indicators and news and holy grails. They don't work, at least not intraday. I have tested this stuff and most of the traditional indicators not only don't make money, but they actually loose. It's funny how we are supposed to
follow all of these rules and indicators, but they have rarely ever been tested. Do the market makers try to predict where price is going? No, they play the odds. Buy on the bid, sell on the ask, and collect rebates.

My question to you is, does this make any sense whatsoever? I have been cautiously trying this for the past week and have mostly broken even so far.
Yesterday I took 6 stop outs in a row, today I have 12 wins in a row before taking one loss. I am waiting to go all in on this until I can automate it. I generally place buy and sell orders along the bollinger bands with a one minute chart. Sometimes they reach them and bounce back and sometimes it continues through and hits my stop. I generally use a 2-3 cent profit target and a 10 cent hard stop. I never chase the market. If I get stopped out and it reverses, I don't try to reenter. I will play the other side at that point.

The goal is to make as many trades as possible because now I'm actually getting paid to do so. This is not rebate trading per se, it's just using them to increase the odds. I'm also hoping that by going counter trend I will also be able to come out slightly ahead on the trades. If a stock is at $10, there is a 50% chance it will go to $9.90 and a 50% chance it will go to $10.10. So if it goes to $9.90, then that means selling pressure has pushed it down 10 cents. Sooner or later there will be not be enough selling pressure to keep it going lower. At that point the buyers take over. So I think by going counter trend and scalping for a few cents, the odds are a little more in my favor.

Has anybody else tried this approach? Does anybody have any thoughts as to where I should place the entry orders? I have backtested very simple scalping strategies with very good results. Although that assumes that you are filled on every trade, which obviously won't happen. So far my fills have been pretty good. I often catch the swing high or low. The goal in all of this is to pull $100-200 a day out of the market.
Let me know what you think.
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$100-200 per day?
You have only $1000, right? (100 shares at $10)
 
Have you accounted for the fact that a move from $10.00 to $10.03 for you to be in a profit isn't really a move from $10 to $10.03. It's a move from $9.99 (or whatever the bid is) to your price. At the point you pay $10, you're the lone one that is, the person behind you is only willing to pay $9.99.

At least that's how I see it.
 
IF you are doing a strategy and are consistently losing. Do exactly opposite of what you do. and you will come out a winner.

what does that tell you. It has nothing to do with your strategy. it has more to do with your risk-to-reward management.
 
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