FastandFurious, thanks for your input and your view may well be the predominate one, i've heard good arguments for all kinds of scenarios with the most common variant on your version being the use of market exits to limit loss when the price moves aganist you then there were a few guys who market in and limit out (on their winners) and market in and market out on their losers ... this crowd identifies a move and fears not getting a entry before most of the move has taken place my hats off to anyone who can do a 150 round trips a day, I'm way too slow for that
the most looked after moves in scalping are market shorts, or market limit shorts in which if one uses a market order, the order gets filled after the move is completed. For example, you spot in the openbook an institutional size aggressively stepping down and you are very eager to short it, DO NOT USE MARKET SHORT as you will get filled after the short move is completed in which it is not a bearish situation anymore and thus you are on the wrong side.
nice thread. I agree with much of what has been said. The typical time frame for a scalp is less than a minute, unless it goes your way then you can let it ride longer. Lossers are usually cut at 0 or -0.01, and most winners only go for a few cents, 0.01 or 0.02 are your bread and butter... basically you get in when you feel a move is staring, if it doesnt start right away you bail out. You´re probably going to make several hundreth trades a day, 200 trades per day is a good average to start, once you got experience you could aim above 500 trades per day... so your commision structure is very important, most scalpers work for institutions, since retail commisions will eat you alive... When you start scalping you need to learn how to lose money. Why? you need to learn how to know when your move isn´t going to happen, or is already over, really fast... there´s very little margin for error, its gotta be a second nature, and you gotta start playing small, 100 shares. Once you learn how to lose your money responsably you´ll be able to look after your profits as you increase block size.
Is a lot easier to get liquidity in 8 different prices per dollar than in 100 different prices. As the markets eveolve and become more efficient, and liquid they are able to agree on price at a much more precise level. Having a decimalized sistem allows you to absorb way more liquidity than a fractional one, but you need to have a very liquid market to begin with. The london exchange for instance, trades many stocks not in pounds but in pences... so when you see a stock at 332.25 its price is actually 3.3225 pounds... It´s quite common for a stock to move 200 or 400 million shares a day down there... Smaller spreads need more liquid markets.