How much $$ is required to be Scalp Day Trader ?

Discussion in 'Trading' started by hayman, Aug 21, 2003.

  1. TGregg


    Time fer some math.

    One year of trading at +15% per day = 1.15^240 = 36,938,706,618,205,300%

    Not too bad. So if one started with 25k, after one year one would have about 9,234,676,654,551,316 thousand dollars.

    Dang. I'm gonna drop this daytrading crap and start scalping!

    EDIT: I just gotta quote brokerj's profile that says he has been an "Institution oriented stock, bond, commodity broker for thirty years also a registered options principal"
    #11     Aug 21, 2003
  2. I was asking hayman the guy who started the post thanks.
    #12     Aug 21, 2003
  3. TGregg


    And I wasn't replying to you. Note that I quoted somebody else. That's kind of a hint.

    EDIT: I'll take some of this back, because you posted the interesting August summary over at that other thread. However, I suggest that you observe the etiquette of message boards in general (and EliteTrader in particular) before you wade in to accuse somebody of a lack of decorum.
    #13     Aug 21, 2003
  4. sorry TGREGG I definitely wasn't trying to start a tit-for-tat and interepreted the post as here do I have to repeat the figures again thing. (and I also failed to note the sarcasm initially in your post as well lol)
    #14     Aug 22, 2003
  5. Mecro



    I work for prop and I have 150k in buying power. Only like once or twice have I needed all of it.

    I trade mostly 500 and 1000 share blocks. Sometimes I'll do 2000-5000 if something is really moving but rarely in this market. You do not have to trade size to make money scalping. Just get into the right trades. There is a guy in a different office within our company that used to only trade 500 share lots, only on the longside and bring in 1000 bucks net everyday.

    Don't listen to idiots that say scalping is no good now. They are the jerk offs messing up the trades, getting out too early and bouncing the shorts just to sell their shares and watch the stock plummet more. They are also trading high volume NYSE like AOL. Have you seen his intraday chart? It's a seesaw.

    The overall market is nowhere as good as it used to be.
    #15     Aug 22, 2003
  6. brokerj


    Hey folks, I stand fully behind my previous post: First, the only time frame I read was 'about a year' and indeed if in fact the results of trading were as indicated, a poor performance was achieved.

    It seems that some of the responses ignore that I said very plainly that results that could be expected were on INVESTED CAPITAL, which the original post fails to mention in any way.

    Yes I do trade on this earth, and quite well, thank you.

    Sorry you feel insulted, my most humble apology is extended.
    #16     Aug 23, 2003
  7. hayman



    Interesting post, thanks ! Since I trade thinner liquidity stocks, I am finding that the fills overall seem to be better with block sizes of 1000 shares or less. It appears that I get passed up on (via "penny price improvement") more frequently, when my traded block size is 2,000 and higher. Maybe your friend has got the right method down.


    Don't worry about it. I aws just teasing, not insulted at all. Everyone has an opinion, and you are certainly entitled to yours. I scalp trade, because it is a strategy I feel comfortable with, and I am quite fortunate that I make money and support my family. I wish I made more, but I am not comfortable assuming more risk, or changing to a strategy that I'm not comfortable with.

    By the way, the #'s I gave don't make mention of how much I made and in what timeframe. I just mentioned how much I started with, and how much is in my account today. The profit and profit percentage are personal.
    #17     Aug 23, 2003
  8. LOL! :p

    This is the biggest joke I've heard for a while, seriously
    brokerj, could you give us a live demo of your superior performance?

    The answer to the guy who openend the thread: $25K is enough to start with I'd say. Build from there, don't put in anymore. Remember, you can use a leveraged account.

    $1,000 a day on a $25K account is possible if you're good. But please remember that smaller traders have a lot of money velocity. This actually makes the world of finance quite fair - It's the law of diminishing returns. A good trader can turn $25K into $1m in 5 years, but an equally good trader can NOT turn $1m into $40m in 5 years (which is, again, 4,000%)!

    Particularly in stocks, you soon lose the benefit of money velocity. Try doing a quick scalp on 50,000 shares. Doesn't work, folks, not even with INTC or MSFT. I know, I've tried less than that.

    While I've been scalping index futures for quite a while now (ES, NQ, some YM), I actually thought I'd have another look at stocks the other day - Just for fun. I have full stock datafeed on my subscription, so I thought why not.

    Well, I was absolutely amazed. I could not believe how easy it is to scalp stocks now. I've got to admit, when I started trading with Naz stocks, I didn't feel that way. But now that I'm turning around, having traded index futures, trading stocks just seems like kindergarten scalping. The spread is tiny (1c), the commissions are tiny, the competition is weak (compared to i.e. on the ES, anyway), the speed is slooow...

    After scalping futures, scalping a Nasdaq stock just seems like slow-motion trading, honestly. And it lags behind the main indexes! I can literally track the ES and NQ, have a sip of coffee, and then punch a limit order to fade the crowd, which always seems to be stupid on the stocks (I use hotkeys - lolol my dad, who drops into my house every few weeks has never touched my keyboard again since I showed him that I can automatically buy 1,000 shares by pressing "B", sell 1,000 pressing "S" and close out pos by hitting "space" - Shaky striking puts in repetitive orders of course, make sure you don't take too much caffeine).

    Anyway, this may sound arrogant, buy honestly : If you've traded the indexes, the enemies you face on the stocks are just weak! They don't even see it coming! Let me say, I've traded high-correlation stocks, i.e. semi's that almost identically track the indexes, though.

    The many opportunities that abound in trading stocks just don't appear on the mini's. The mini's are soooo full of sharks, that all you do is hold on to your balls all the time. You take your scalps off immediately, because next second it goes the other way. ca-ching - BANG! You have no leading indicators, and sentiment shifts so quickly. You're glued to market depth cumulative and index correlation so much, it's not funny. In the stocks, you can watch the index depth, see depth shift to heavy ask, stock depth still heavy bid. whang in buy order limit at bid , should hit immediately, otherwise forget it. The crowd will hit your bid no worries, they're still in their old mode. Then ask will build and the MM's will drive the market up (into direction of volume, contrary to direction of price, as most people mistakenly think, which is why 99% lose - this is a major secret). Watch your thing rocket up 10 or even 20c, whatever, then hit the ask again before fakeouts get you by the balls. Bingo, ca-ching. Another way to scalp is to trade fakeouts directly, that is fade the spikes contrary to volume. This is where MM's pick up "discounts", remember, they want to offset their risk and get the highest R:R price. So, to simplify that, you look at an ultra-short-term downtrend, and sell the little "returns" of price contrary to that downtrend. Basically, it's retracement trading in it's tiniest form. Retracements, no matter what timeframe, will always be there - So that you and other professionals can pick up discounts + scare out impatient / inexperienced traders. This is crucial. Be on the right side. Just make sure they don't shave your iceberg orders etc, that can be nasty as I've come to see a few times lately. Apparently, the MM's can hide their ECN orders to shave you so you can't see them, which is very nasty indeed.

    Scalping the stocks, you can just look at the chart (15s, 1m), compare correlation to the indexes, watch their cumulative depth as well as the stock's depth of course and then constantly fade the crowd or go with it in the case of a little breakout. But, generally scalpers don't wait for breakouts. They're in and out all the time. I did 57 trades yesterday, and that wasn't a record. Generally, I'll go for 1-10 cents on a stock like brcm or mxim, if you're scalping, shooting for i.e. more than 5c on mxim, can easily get you slaughtered. You need to learn that greed doesn't pay if you're scalping. Be a mouse, take a tiny piece of cheese and then run. The issue swings all the time, and fakes you into believing it's now gonna continue into one direction by going there 10-20c. Next thing, the whole thing collapses 30c and you realize you've been faked out. Know that you want to be on the right side of the fake-out or you'll be on the other.

    Remember, 5c a trade can be a lot if you're doing 50+ trades a day. Yesterday, I only averaged 3.2c on 57 trades (losers offset the winners immensely), so if you'd traded the named $25K account, that would be... ~570 shares/trade = $18.24 / trade. $18.24 doesn't sound like a lot, and that's why most people say it isn't worth it, trading $25K of shares for a gross of $18.24, but at 57 trades you'd be up $1,039.68, just trading a $25K account. If you're trading IB, you'd have a net of $12.54 / trade, for a total of $714.78 net. Yes, you can make more trading futures if you're using high margin - But it's a lot riskier and 10X more difficult. Considering the low risk and the high consistency of this kind of trading, I consider it more effective than any other form of trading.

    Obviously, it's the most difficult form of trading, too. You need 100% concentration at all times, 6 hours straight. Not everybody is made for that. I remember I used to be 'hyperactive', but as soon as I'd be in front of a video game, I'd not deviate my attention even for a second. I'd be right in there, and play the hardest passages to the end. Sometimes 1-2 days nonstop. I'm sure some here can share this kind of experience. Remember when When "Wing Commander I" and then "Wing Commander III - Heart of the Tiger" came out? I played that for about 6 months straight. Legend of zelda? Donkey Kong Country? Final Fantasy? How about playing Space Invaders, pac Man, Pitfall and the like on Atari until you'd see everything with a green overshadow for a few days? Unless you can bring up that kind of perseverance and concentration, scalping isn't for you. Scalping is the closest you can get to a really awesome difficult video game. You never really play through it, either. Don't get trapped by it! Imagine you're playing in battlenet, with some of your opponents being paid thousands of dollars a day just to outperform you! Logically, they try everything to do so. This isn't an idea, this is reality.

    What is the moral of this whole story? Well, maybe those who want to scalp, should refrain from futures for now. I am considering even going into stocks again more actively. It seems like all the crack players have jumped onto the index-train, leaving the stocks with inferior MM's! The best players all play the futs - So why play the futs if you can be a flying axe amongst inferior sheep? Some people say it's the lack up uptick rule. On the other hand, you could use that to your advantage. Some people say it's taxes i.e. 60% is taxed as long-term gains, 40% as short-term, while for equities, 100% is short-term gains-taxed etc - I know all that. But why worry about taxes if you can make money more easily? Some people say it's leverage - However, if you go to i.e. GreenTree Trading, you can get professional leverage without being a qualified professional, that is 10X, i.e. $50K for $5K initial! You wouldn't want to leverage more on the futures, either - Trust me. So yeah. Everybody says "Stocks are out". This alone should be reason enough to go there. Remember: The more people on the train, the harder it is to get a place.

    And by the way - I'm a miserable stock trader. I understand little about routing etc. If I did, I could probably double what I'm doing. Anybody out there who understands scalping stocks well - Feel free to PM me - I'd really greatly appreciate your help. Many Thanks in Advance.

    All the Best and Compliments,
    ~The Scientist :cool:
    #18     Aug 23, 2003
  9. hayman



    What an awesome post ! Thank you very much for your insight. It was inspirational !
    #19     Aug 23, 2003
  10. wow we have come full circle. when i started on these boards everyone was trading stocks. then it was your an idiot if our not trading eminis. now we are getting back to stocks because eminis are too hard and stocks are so easy.
    it is interesting to watch people go from one thing to the next searching for the holy grail. they jump from Stochastics to Fibonacci to Gann to Elliott waves to Bradley Model to vix to pivot points to this indicator to that indicator. it seems a constant search for something thing that will make you rich.
    #20     Aug 23, 2003