'sup, Turok.. thanks for the feedback. A: You say you scalp "illiquid" stocks. From this I will assume that you won't be moving much size (not a critisism, I trade small size as well). Are you able to scalp even a 500 share lot in these "illiquid" stocks? i usually open my trades with 200 share lots. if i'm in, and the stock moves against me say 50 cents or even a dollar below my original entry point, i don't sweat it. i just play the penny game with the ECN computers to try to get the stock back up to my entry price. alotta times i'm able to do it without buying a single share. if i do happen to get the fill, and end up doubling, or tripling down (to a max of around 500 or 600 shares), 50 or 60 cents below my entry, my cost basis'll be low enough for me to turn the trade around. that's pretty much how i'm able to stay 90% green. i used to trade 1,000 and 2,000 share lots, but the stops were killing me. also, when those pennies would tick away, the anxiety would start building up in my gut around the $70-$80 point.. then when i'd kick in commissions, i was out $100 dollars. after having a few bad trades in a row, and being down $350, $400 bucks, i'd start thinking of what i coulda, and shoulda done with that money instead of just blowing it. i was profitable, but the guilt from the bad days just worked me over. that's why i started trading small. B: You are looking for ~5 cents per trade. when i enter a stock with a wide spread of say 10 cents or so, i'll immediately hop on island, and hide my offer a penny below the inside offer. if the inside offerer cancels his offer, i'll cancel mine, and penny it up to a penny less than the next inside offer. if he comes down a penny, i'll cancel and come down a penny. he usually doesn't 'cuz he doesn't know i'm there. as long as i'm hit with the first market buy, i'm happy. if the inside offers start collapsing, or if the stock runs up without hitting me, i'll just cancel my offer and double-click the bid.. provided it's at least 5 cents. C: You have ~18 winners per day Around that.. but alway around 90%. D: Your losses per losing trade are ~12.5 cents (5 x 2.5 - from your statement that 2 losers wipe out 5 winners) naa, my losers are bigger than that. i shoulda said my winners are a minimum of 5 cents. i also have 20 cent runs. my losers come at the end of the day when i don't wanna hold something overnight. E: we are now down to 65 cents (13x5 ) daily profit times your share size. If you can scalp 500 shares in this illiquid stocks that puts you at $325 per day. Now, I'm in no way talking that money down as that is more than probably 95% of ET members make, but as a guy who has scratched like that for those kinds of dollars before I can tell you that there are a lot easier ways to make $350 a day than staring down a LVL II. I'm glad it's working for you. While you have that nice steady income from your porfolio, you might want to think about working on some additional methods that will scale and require much less maintenance. Nice work on those scalps btw. Beginners thing it will be easy -- it's not and most will lose, lose, lose at that game. JB yea, i feel what you're saying on that. it is alotta work, and i even made it sound alot easier than it really is. but i'm up about $400 to $600 a day, net commissions. the market used to savagely rape me when i'd try to daytrade any other way. i had a prospective prop trader sitting with me in the office yesterday during my CECO and OSTK trades from yesterday (below). he thought i was crazy the way i tried to move the stocks back up to my purchase price artificially by having the computerized ECN system automatically matching my bogus, micro-second inside bids, and didn't feel it was worth the effort either.. but i ended up salvaging and netting money on both trades after AWFUL original entries. (I was long several other stocks at the time, so that's why i only did 100 share lots.) i also short and cover fairly large lots of naked QQQ calls and puts during daily breakouts and dips, and buy and hold liquid, momentum stocks.. but scalping for me has always been my most consistent way of netting daily profits.
it's funny.. every month i tell myself it's time to learn both technical and fundamental analysis, but end up just brushing it off. i was weened on and spoiled by late 90's volatility and fractions, and only needed to know a rudimentary amount of level II knowledge. although i know it'll be beneficial as far as learning better entry and exit points, as long as i can scratch out a nice living spread scalping, i'm avoiding it like the plague.
Nice work Sammy and thanks for the explanation. I sooooo remember working that LVL II and Island book similar to your description though you are definitely having to show more creativity these days than I was back then. Best wishes. JB
SammySOESa, Good work. A respectable day's pay. Don't let ppl tell you othewise. Keep doing what works for you.
thanks for all the replies,and i want to further explain myself as below: i wanna trade a lot and take the profit fast, say,2 or 3 cents per trade if i only watch the Level II , times and sales windows, will it works?
As a trader who used to scalp and loved it I would strongly discourage you from going down that path in these market conditions. It used to be hard and now it is even harder. If I were you I would ask SammySoesa specifically what he thinks about your proposal as he is still making money with the scalping method. How about it Sammy, do you recommend this to a new trader? JB
joema, don't do it. i do it out of default because i never bothered to learn TA. in the late 90's when i started daytrading, i didn't have to know technical analysis. then, when we converted to decimals, i lost 2 grand a day for 4 straight days, and i quit. most of the scalpers i knew at Tradescape back then had to learn TA if they wanted to continue, whereas i just took a regular job. one day it just occured to me that scalping still might work on thinly traded stocks. i started trading again, and lost another 30 grand trying to hammer out a plausible system that would work. for a new trader, it would be near impossible. check it out.. there's so many things you have to know like.. a) SIZE might, or might not be the axe. he's only showing 100 shares on the bid, but he might be buying 1,000, 2,000, any amount. do you hop infront of him with a hidden isld bid, and wait for a market seller to hit you or not.. or do you hop infront of arca at 35.29 instead.. or 35.26? b) if there are no prints at all, but you just go to another stock, or do you hover over the inside ask, waiting for an ECN to flinch? alotta times a seller you pop up and offer 100 shares at 35.32 on an ECN to try to lure the other sellers and computers to match his offer, only so he can retract it and hit them to buy at the same 35.32 nano-second offer he just faked. sometimes what i do is hover and wait for that fake offer, and double-click it before he can pull it. hopefully, the other offerers don't join him, 'cuz i'll be in the stock at 35.32, and will be able to put a new offer on isld, hidden, at 35.39. c) are the futures and major averages trending up while overstock is lagging? d) what time of day do the ARCA black boxes start pennying? e) if you're only looking for 2 to 3 cents, what are you gonna do when the thinly traded stock craters 40 cents in 10 seconds? do you double down or take the loss? i could go on for hours, but i wanna start trading. i'll add some more a little later. joema, learn TA.. level 2 scalping is not for beginners. it's ALOT to learn.
here's a little more, joema.. sorry the print screens are so big. it was as small as i could make it while still being able to make out what's going on. you see how the futures and major averages are screaming, yet OSTK is dropping? i put in that hidden ISLD bid at $34.99 in an attempt to exploit the 10 cent spread. i had to penny it up a couple times, but you can see over in the blue print on the left that i got my fill at $35.02. in the circle on the right are my open positions for the day. i'm trying to finish some homework for class this afternoon, and i'm babysitting my JNPR buy from yesterday's close, so i haven't done much trading. as i suspected, OSTK snapped back. you can see i put my hidden ISLD sell order in at $35.15. i coulda just double-clicked ARCA at $35.09, and taken the 7 cents, but i wanted to maximize my profit. OSTK ran like i thought it would, and my $35.15 offer was hit, netting me 13 cents in the 2 minutes. normally, i woulda done 200 shares, and netted $26 dollars, but i wasn't really concentrating on the trade while trying to capture and upload these printscreens. immediately after i sold, OSTK crumbled back to the $34.90's, making it the perfect level 2 scalp. if you're interested, i'll add more later.