Will this scalping strategy work?

Quote from Sandybestdog:



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........... 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.
More...

How are you ahead 20 cents if you buy the stock at $10. That statement, and the thought process behind it is wrong.

As for your probabilities, I'd revisit that as your numbers are 100% wrong. You fail to include scratches, stocks that don't move, slippage and mistakes. Perhaps you should take a course on probability and statistics before you trade. You're not ready yet.

Jeff
 
Quote from millionaire7:

hi...How do you get free comm with prop firm.
I dont have any idea about prom firms. Thanks
More...

I pay 2 cents per 100 shares. I don't think there are actually any fees incurred by broker/dealers other than ecn and sec fees when a trade is placed. So any traditional broker simply charges a commission for what they offer. The prop firms are not technically brokerage houses. You trade their money and usually put up a deposit to insure your losses. You split the profits and usually take all of the losses. Depending on the deposit and payout ratio the "commissions" they charge will vary. I chose a firm with a lower payout to get the 2 cent commission. They aren't making any money on the trades, just the profits. There is a lot of info on ET about prop firms, so look around. Be sure to research the company because they do not carry the usual funds protection and customer service that brokers offer.
 
Quote from ML_QUANT:

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."
More...

The quote about me saying there is a 10 cent hard stop was in response to someone saying I was an insurance company with no hedge in case of a hurricane. In my first post I clearly stated that I put a stop on every order. I have gotten stopped out at swing highs and lows, that's the way it goes. I have learned the hard way not to hold on to losers, or at least to know when to get out. What I mean is I have to be willing to get stopped out multiple times and keep going. Because this is a counter trend strategy, it works best in a choppy market. Yesterday afternoon was trend straight up for 2 hours, so I got stopped out 6 times in a row for a $60 loss. But I then traded it back to break even by the close. So if I can break even in a trending market, I will make a lot in the choppy markets. Today after the fed announcement, I was getting 4-5 cent profits no problem in the choppiness. Then around 3 it started trending way up and then crashed down, so I gave some of it back.
 
Quote from crgarcia:

$100-200 per day?
You have only $1000, right? (100 shares at $10)
More...

No that's just an example. I get huge buying power but for now have never traded more than 200-300 shares of XLF. I'm trying to scalp a few cents on each trade and do that all day. The XLF and QQQQ bounce around all day and if you throw up an order anywhere near the current price, you usually get filled.
 
Quote from Susannah:

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.
More...

If I understand you correctly, you are saying that to buy at 10, it would have to trade through it and then the bid would be 9.99. Yes that is technically correct. However when something is trading 200 million shares a day, it is very easy to buy on the bid. Often many orders come after you in the que, so you won't be that last to get filled. I have gotten many fills on the exact swing highs and lows. There is one slight problem I'm trying to work out a solution to. For the life of me, I have not figured out why Sterling trader does not have a one-sends-other order feature. So instead I have to place a buy at 10 and then place a stop limit order with a stop price of 9.99 (to make sure I get filled) and a limit price of 10.03. It has cost me a few times when I got a good fill and didn't immediately sell because the stop limit wasn't triggered yet. This shouldn't be a problem when I try to automate this. Thanks for the response.
 
Quote from Sandybestdog:

...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.
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.
More...

I have some questions for you. How the heck do you get a $0.20 discount on the shares by adding liquidity? If I were you, my simple strategy would be to always put my limit on the bid until it's filled, and adjust the ask as it moves until it's filled. I'm pretty sure both would assure reasonable pricing if you're "given" 0.20 on the entry. Which firm are you with?
 
A stupid approach. Going for 2-3 cents with a 10 cent stop is for losers. 4:1 risk to reward? Good luck.

Do you really think you can win 4 times in a row and then lose once and wipe out everything you made over the long haul day in and day out? Good traders are at least half as right. You, with this approach are going to lose it all 4 times faster than you think.
 
Quote from MrktObserver4u:

A stupid approach. Going for 2-3 cents with a 10 cent stop is for losers. 4:1 risk to reward? Good luck.

Do you really think you can win 4 times in a row and then lose once and wipe out everything you made over the long haul day in and day out? Good traders are at least half as right. You, with this approach are going to lose it all 4 times faster than you think.
More...

Didn't he say he got $0.20 for adding liquidity? He can buy sell and lose even $0.10 with this, but I may have misunderstood him.
 
where's the strategy? you are merely stating your preference to add liquidity than to remove with quick profit target.....is that it? this is not a strategy............it's just a dull risk/reward mangement at best. you can't just add liquidity all the time......people hit bids/offers for a reason.
 
You must log in or register to reply here.
Back
Top