I am reading about scalping and trying to get a better understanding of the strategy. I ran into 2 groups of people. Those that advocate for being picky about their trades and looking for 20, 30, 40 cents profit goals per trade, and another group that trades way more often and goes for 10, 15 cents. Big scalp group emphasizes the importance of direct market access with fast order execution. They try to sell on ask but they often bail out on bid and they enter on ask as well. But I have also encountered the small scalpers that use brokers that provide them with “no fee” trade execution (except regulatory fees). It seems to be that they care less about absolute speed because they also try to sell on the ask but they differ from the first group by trying to enter at bid. I see successful (I assume they don’t all lie) traders with brokers that offer no commission trading but sell order flow to someone else. They don’t seem to be impacted by it but I don’t know what type of orders are they actually sending in. Here is where I get confused about it: Could this be achieved by using special order types like “buy stop-limit order” and “sell stop-limit order”? If I create such orders and send them in, does that increase the probability of me getting a fill when the market moves because my order is already there? Where is “there”? Is there a separate internal que that the exchange keeps for these types of orders or are the orders not actually yet at the exchange and are at the market maker that received my order and did not yet send it to the exchange? Or could they actually still be at my broker, whish is even worse and will make execution slower? Example: Stock ABC trades at $9 and I want to buy it after it breaks $10.05. I send in a “buy stop-limit order” that triggers at $10.05 a buy limit order of $10.10. Should this enable me to get in fast without the need of direct market access? I guess this depends on where is my “buy stop-limit order” actually located after I create it. Is it at my broker, is it at the market maker or was it already sent to the exchange and is there but invisible? I think the location of the order is critical to predict how fast it will execute. After I am done with paper trading, I plan to try real trading with $2-10 priced shares with order size of 50. I think I should go with the no-fee trading at first because of how thin my profit margins will be. Thanks for the help with figuring this out!
Suggest considering... "Scalping is too difficult". Yeah, some will chime in and claim, "I scalp and I'm profitable". My questions would be, "HOW profitable... enough to make it worth your time... better than you'd make flipping burgers"?... and "what percentage of scalpers are successful"? Without offending the "pridefully successful"... my view is that scalping is borderline impossible. The only legit "scalping success" I've heard was about a guy who averaged 400 trades* per day. That's waaaay manic... and few would be able to do it, IMV. *That's ~ 1 minute/ trade. How could you keep that pace up, let alone do it with enough success to make it worthwhile?
%% And if 95% of the money made/scalped is stocks over $9.50/$10. WHY try to pretend a new trader is going to make money with stocks under $10?????,?? Easy to sell a long or long ETF on the ask/just wait until its uptrending/LOL/true......................................................................................Did that early today. BUT with so many ways to make money in an uptrend, anything is possible.
Create a spreadsheet that takes into account number of trades. The strategy should have an expectation, so you need tactics that will match. After you do that, figure out the probability of each type of target (profit/loss). Combine the two and find the sweet spot. That will be your starting point. Then work on actually executing the trades.
I don’t think it’s the size of the scalp target, but the type of “scalping” they do. The term is no longer well defined. Explain what the difference between the two groups wrt entries and exits. Also specify which instrument(s).
I was trading, Earn2Trade to qualify for an account, I was only slightly negative on my trades, under estimated comm's, in 2 trades went from in over all profit, to blowing the -$550 daily draw down rule, clocked up $500 in Comm's thought $300 Slowed it down, trade of 20Lwma direction , less trades longer holds bigger profits but similar loss size, doing better. Scalping is just PAIN!! Aim for 10 - 30min holds!!
Traded instrument: Stocks Actually, there are just 2 guys and their followers. Just 2 because it is surprisingly hard to find a lot of big numbers traders that are loud enough to get noticed but don’t scare you right away (even though maybe they should?) One is Ross and the other is one (u/Phihix aka Kyle Vu) that doesn’t sell any courses yet but has a history of posting on r/Daytrading that seem to convince the majority he was not fake. I am sure you know Ross and what entry/exit/stock type strategies he teaches and have strong opinions about him, that is just who was my entry into this world. Ross makes fewer trades while Kyle makes way more and I just don’t see how anyone could find so many patterns in a day. That is why I concluded that he must be taking trades that go for much smaller profit targets. I don’t know what strategy Kyle use, but it involves low float low price stocks with high relative volume, so probably a variation of what Ross does. For a few weeks I have been consuming information but haven’t paper traded yet. I’ll post another separated question regarding proper paper trading environment setup after I learn more of the basic stuff and have an actual strategy with rules. Everyone keeps recommending me TD Ameritrade/TOS but they don’t accept people from this part of EU, IBKR’s TWS charts are dogshit and it may seem childish but if I am going to look at a software for long period of time, I want it to look good and provide smooth UI experience but also be feature-rich. While on this forum I found 2 candidates I’ll explore further: medvedtrader and motivewave but I am going off topic now.
If you’re manually scalping a modern electronic market with a mouse in your hand staring at an order book - Godspeed.
I sure do! I actually like MadAzMoney better. Don’t know the other guys you mentioned, but the two above use level2 and tape reading a lot. Ross is more of a momentum trader and MadAz more of mean reversion. Both try to capture as much as possible quickly but the stocks they trade can turn so quickly that they end up with $.20 to $.50 over thousands of shares. They do not intend on taking small profits, just get out at any sign of trouble. If you are going to trade like that, you do need very fast platform. The two use different ones, so you have a choice.
Classic scalping is much harder due to HFT liquidity making it a pita compared to long ago. For daytrading I like going for .30 - .80 on stocks and ETFs priced under $30 for roundtrips of 5 to 30 minutes.