Discussion in 'Professional Trading' started by Engine99, Dec 9, 2007.

  1. Can anyone explain how scalping works (or if it does even work for non professional traders)?

    I understand the concept in theory but I don't understand how you can sell the ask and buy the bid through any trading platform (e.g. tdameritrade, interactivebrokers, tradestation ...)

    Can anyone point me into the right direction?
  2. this is what the market makers do all yes it does work.
  3. Scalping doesn't mean you are selling the ask and buying the bid. It just means that your style of trading is based on taking small movements out of the market. For example, one day trader may buy a double bottom and hold it until that trend ends, assuming one gets underway. A scalper isn't interested in riding the trend but, instead, takes 1 or 2 points (sometimes just ticks) off a change in price. Scalpers still buy the ask and sell the bid like any other trader (non-professional) but they are looking for smaller changes in price to generate profits.

  4. VTI0990


    I believe buying the bid and selling the ask is something that can only be done consistently if you are in a trading pit. Otherwise scalping is just taking very quick profits.
  5. John47


    Look scalping isn't 'buying the bid selling the offer' thats not consistently possible w/ the algorithms orders are filled, ect.

    Scalping, now more than ever, is really taking out a price level, or more often even, a specific order, that is mispriced.

    Example: ES is 1485.0 bid ... 1485.50 offer....85.25's trading back and forth. 5.25 bid, 5.25 offer ....they're trading.

    Now you see the Russel and NQ go bid HARD. Tick and trin and freeze for a second then uptick. In the other index futs people suddenly stop showing fake size on the offer and you know that the only cars being offered are the real orders waiting to be filled.

    ES like i said is an 85.25 trade...half tick wide then somebody offers 50 at 85.25 and the market looks like:

    85.0 bid on 1000, 50 at 85.25.

    You know the 85 bid is real paper cause you saw it get hit with a few sizeable orders and not get know its real and is staying till its filled.

    You lift then offer w/ a 10 lot and instantly, ES and everything else up ticks and its 85.25 bid on 1000, 500 at 85.5, 85.5's trading hard...go bid...and your at 85.75 for the half tick scalp.

    Scenerios like that happen all day long and if your trading ES looking to risk 1 point to make 3 you probably don't even pay much attention...but there are guys trading that way scalping size in ES and plently of other instruments. They're looking for a small surge one way and they're taking out the price or order that they know SHOULD BE bid but is offered or should be offered but is bid.
  6. ggoyal


    yep, infact scalping is better than longer term trading. But if you have figured something else out, better. Until then, the best thing to do is trade for short movements with the direction of the trend. To make it worth your while, you need to have some volume. then with the comes checking volume because if it's not trading heavy, your order could affect price in an unpleasant way.

    just trade high volume stock. look at average volume and daily volume. mostly daily volume. but with this kind of trading, you can't make the big millions.
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  8. Can't you do that with limit orders? (I'm a novice, so please educate me.)
  9. VTI0990


    I won't act like I am much better than a novice but...Say the market (crude oil) is 88.01 bid 88.02 ask. Sure you could put an order in to buy at 88.01. However, the market would need to be asking 88.01 for you to buy. That would mean you would have to sell the bid (88.00) so you are at a loss immediately. The reason that this was easy to pull of in the pits is because those guys actually made the market. If you are just a trader (I know nothing of electronic market-making, if such a thing exists) I don't think scalping in the aforementioned manner works.
  10. Scalping is a dying style. With automated trading and the limited spread on stocks, means no money in scalping. Best bet is to stick with intra-day or swing trading.

    Happy Trading!
    #10     Dec 10, 2007