Scalping liquidity specs?

Discussion in 'Trading' started by TraderGreg, Aug 19, 2008.

  1. I've been scalping on a paper account for a while. I know that fills are far different (especially as accounts get bigger), and can begin to have plenty of slippage. Any scalpers here have numerical liquidity specifications?

    For a rough example, I figured my maximum lot size for a market order may be no more than the average volume per second on that particular instrument. Any ideas? Thanks for your help!

    -- Greg
  2. Scalping is about stealing liquidity from people. Paper trading scalping is useless except for getting used to the keys and getting your eyes familiar with watching a level II screen. After that you should trade with 100 shares... go around like a bandit, hunt for the shares that when taken will have a quick spread up or spread down and ALWAYS have an out. You'll have to get slipped several thousand times before you get the timing down enough to actually get the prices you expect... and even when you're really good, you still will get randomly FUCKED and have the book swiped on you unexpecectedly.

    Good hunting! It's a long journey but it CAN be done. If you trade 100 shares and keep your losses small you give yourself a chance to succeed by surviving the learning curve.

    As far as thin/thick stocks, you can scalp both, if you want to be diversified I would recommend at least at first trying to get to know how to trade any market... thin, thick, etc. Many will tell you to specialize and I am inclined to agree, specializing in scalping certain setups in certain kinds of markets is great, but first you should learn how to spot a scalp setup in any kind of stock and then as you progress as a trader find what seems to work best for you and hone in on that.