A question to any Nasdaq short term scalpers out there: When trading liquid stocks like MSFT, what (if any) indicator do you use to determine the very short term direction. When I say "very short term" I mean the next 4 to 6 cent move. Could Level II quotes indicate this type of move ahead of the prints? If so, are there specific ECNs that have more weight when looking for a short term direction? Or is Level II just considered noise, and wouldn't show any short term directional indications? Also, do the futures have any lead on these type of moves? Thanks for your help, samtrader
The Nasdaq futures lead the way. I started Nasdaq scalping about three months ago. I am a newbie, and I am flat after commissions. I have been watching a few of these stocks all day, every day, and it still scares the hell out of me. The futures turn on a dime and you better be able to get out fast, so make sure you have the right tools and since you are asking this question, I suggest you find some sort of support and training before you go "big game hunting." I am using a chatroom as a training and support mechanism. It is keeping me from getting creamed, because the futures are not real easy to read and gauge, but it can be done. This method is extremely difficult to learn and implement. I have already studied these methods for 14 mos, simulator traded for two mos, and am now live with Realtick. I am making progress, but there is indeed a nasty learning curve. I do believe the rewards are sufficient to justify the process, but it is definitely more difficult than I ever imagined. So now you have the answer, but you need to find a way to incorporate it as part of an overall plan, that is the hard part. Good luck and do be careful, this market has been treacherous lately! Today for example, I just watched in awe as these damn stocks are driven up and immediately sold off just as some poor sucker is buying in at he top. Think DANGER WILL ROBINSON at all times, I know I do! Good luck and good trading! --arky
A few years ago you could make money catching the difference the the spread and whatnot, thems was the days! I was never one of those who could, it never fit my personality, but I do know a few people who did it. That time though has, IMHO, passed. Anyone trying to scalp the spreads in the Nasdaq is fighting a lost cause. There are plenty of valid methods, techniques etc out there, probably about as many as there are traders making money because everyone's way will be slightly different..but I don't think that the Level2 type, scalping the spreads sort of trading is making anyone money, save for some brokers. Brandon
let's try this for starters: http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=13871087 It was written in July of 2000, some things sure have changed since then in both, market and my approach, but basics are the same. In addition, I have to say: - I wouldn't be trying to scalp stocks like MSFT, INTC and the likes - I wouldn't be trying to trade for 4-6 cents unless you got some miracle deal with direct access broker for $5 per ticket - Level 2 is rather thermometer but not the directional tool Best regards, Vadym
Scalping for dimes (nickles?) is a hard way to make an easy living. I've done it, and the 'trick' is in waiting patiently , as boring and frustrating as it is, for the strong setups. Easier said than done for most. Also, I find that staring at the same stock(s) all day has a numbing effect , that can throw off timing when the real setup appears. Example, stock I watch all the time had a strong bid all day, size buyers. Made for a poor short trade even when the market sold off some. By the time the Greenspan tank hit, I was gun shy to take the trade, and of course it sold off nicely with the rest. Buyers aren't stupid. Long week, tired, good an excuse as any.
I could not agree more with Brandonf and Threei. As a matter of fact Threei has one of the two best chatrooms available, IMHO. Scalping for 5 or 6 cents is a joke, again IMO, and if that was all I could make on a trade I would not continue in this business. I scalp for .25 to .50, which is profitable. This requires the proper setups and timing, but I know people who do it several times daily. I only do it once or twice a day, and sometimes I screw up, usually I get wiggled out because I don't know the stock well enough. That is why I think it is a good idea to get to know your stocks. One or two good Nasdaq stocks can earn you a living, IF you know the stock and its personality. You will never be 100% accurate, but you will achieve an accuracy rate of 70%. I am not there yet, but I will be because I am determined, focused and disciplined. I do not overtrade or impulse trade. No setup, no trade. That means my stock and the futures must be in the proper alignment, and then I pull the trigger. I still sweat bullets on every trade and have my own anxiety to overcome. Now I have been doing this for awhile, I can finally see why many say the mental aspect of this game is the most challenging. There is some great material at the link Threei has provided, I personally have found it extremely beneficial. Good luck! --arky
Scalping Nasdaq stocks are you joking. The only ones who would recommend scalping Nasdaq stocks are chop shop owners who try to take advantage of kids out college. Who cares if Goldman Sachs is on the bid or offer--what a bunch of BS. I don't even consider that trading anyway. Scalping and making money off the spreads is gone with the fractions and go-go days of the late 90's when you had housewives and truck drivers daytrading.
making money off spreads, I was never fan of that idea even during fractions time, let alone now. But scalping is different animal, it's just old and mistaken stereotype, IMO, to liken it to spread trading. Scalping is as alive as ever and does have its advantages. Disadvtantages, too, of course... It's just one of many ponds traders swim in, no one of those ponds is better or worse than others. And yes, scalping by watching who is on bid is not great idea either, agree with you Vadym
What's your main objective? I scalp a few times a day, because I am looking for the trend. i need just one to make my day. I only use three stocks, and may "scalp" them bacause the trend has not begun yet. But I coninuously enter when my set up is right because I don't want to miss that "big move" (1 point plus for me.) It's all objectives and styles. I know a guy who still scalps Naz and he makes near half a mil a year for the past five years. he has adapted, but still does it. I won't use his method because it is uncomortable to me, but that is for me. If you are the Starbuck's customer of the year and were yelled at everyday in school because you couldn't sit still, perhaps a scalping style is for you. Just because another doesn't like it (me, for example) doesn't mean it can't work for you.