Is there a difference btwn scapling and momentum trading?

Discussion in 'Trading' started by breezy1, Oct 15, 2002.

  1. breezy1


    Am I missing something or are scalping and momentum trading the same? They both seem to involve very fast trades with small gains, and profit coming from lots of trades. Is there some significant difference between scalping and momentum trading? Or is a rose a rose by any other name?Thanks:confused:
  2. It seems that momentum plays a part in many scalping strategies, althought momentum strategies are not limited to the scalping time frames.
  3. A scalper, by definition, is someone who's looking to take 5 to 15 cents out of a trade.

    A momentum player is looking to ride out the move as much as possible.

    The timeframes at times are the same, cause the momentum move's are sometimes fast and furious.
  4. The terms are interchangeable. Broadway used to like to use "momentum trading." The word "momentum" is very vague.
  5. The terms refer to different things - the first term refers more to a trade duration time horizon and the second refers to one potential entry/exit criteria.

    Scalping is a trading style contrasted with other styles like intraday swing trading, multiday swing trading, or position trading.

    Momentum trading is an entry/exit criteria which can be used by different trading styles.

    Scalping isn't momentum trading but scalpers may take trades based on momentum (but not all do because different scalpers have different entry/exit methods).

    Similarly, momentum trades can be entered by intraday swing or longer term traders.
  6. Momentum trading is an entry/exit criteria which can be used by different trading styles.

    That's pretty vague. Could you be mo pacific?

    Maybe I need to read this book:

    On today¿s Nasdaq, volatility and 100 point intraday swings are the norm. Trading on Momentum explains how to take advantage of these new market dynamics by trading stocks based on market momentum rather than traditional valuation methods. The resulting model shows traders how to recognize when the market is changing, determine what is changing and why, then instantly adapt their methods accordingly. Detailed charts and graphs illustrate day trading strategies for quickly identifying market changes, then getting in and out with a quick profit. Traders of all types can turn to Trading on Momentum for pointers on how to: * Determine market dynamics by tracking movement and watching the day¿s behavior * Confidently identify short-term market tops and bottoms * Master momentum techniques including gainers, dumpers, and gap plays

    **100 point nasdaq swings as the norm**:D

    So anyone playing gainers, dumpers, or gaps is a momentum trader?
  7. That's the most vague post I've ever read here on ET, aside from FPC's strategy plays on NVDA (of which he is the supreme poser).

    All those books are shite. They seem to get worse every year...especially considering momentum trading is DEAD.

    I thought that momentum traders follow the spoos almost exclusively with stocks in a strong overall trend, whereas scalpers will use a wider variety of tools (being better overall traders than the momentum crowd) like scalping momentum, scalping pivots, leaning on size, fading the spoos, market making, etc.
  8. breezy1


    I appreciate the help. I am still a bit confused but think what is being said is that scalping involves a shorter time frame. They seem to share some similarities. Could be that momentum traders trade a bit less frequently? Both close positions at the end of the day I assume.
  9. Could you briefly say a few words about each of those types of scalping. It seems they could be placed on a continuum of how much/little they make use of support and resistance in trading. In particular, I'm interested in how a scalper operates in a trending market (momentum scalping?). Often I see them taking the opposite side in a rising market, going for a .25 ES point at resting points in an upward trend. That trade seems to have a backwards risk/reward ratio, yet they do it.
  10. Momentum trading is using the general market "movement" (directional) to "ride with the wave" of momentum. This comes from reading the tape properly, see premium in the spoos, bid/ask differential, etc.

    Scalpers tend to envelope prices, with bids and offers (either in place, or in mind at certain prices), similar to "making markets"....most daytraders are scalpers, simply because they like to get out within a given time frame, but many daytraders are not momentum players.

    We try to combine the basic techniques, always using momentum as a key to good entries.....why would anyone want to sell an up stock on the rise, with a rising overal market??

    Hope this helps...

    #10     Oct 16, 2002