I seem to have a problem trying to scalp. That is the trades are often successful But i get spooked & bail to quickly. Such as fri cisco was in an ascending triangle and about 1:35 broke to the upside I had a limit to fill at 14.40 (looking for a min of .10)but got spooked & missed the fill then cancelled replaced the order At 14.45 and was filled the stock went to the.50 then retraced to the 40 where i bailed should i have waited for more penetration of support? After that test of .40 it climbed to .56. I can see the tape move and can see buying or selling (.03-.04)but i cant pin down how much of a move so like fri it seemed like it was going to break down when it tested 40 and thats why i bailed. Is this normal for me to be quick to pull the trigger( being a beginner & all) & what can i do to change this with out Holding a loser till im bankrupt. Any comment would be appreciated
Trades based on chart patterns should have larger targets and wider stops; the better setups for scalping are fading expansion bars after an extended move or anticipating "failed" technical breakouts.
Cornholetrading...well said. Billyg67.....too much technical analysis will kill a good scalper. Of course we look at charting....resistence and support levels, SMA, extended moves...etc. But scalping is all about reading, anticipating, and reacting to what the market (futures) and the stock (specialist) is doing. daytrader NYSE.....that is a good example. The experience come in when you can anticipate what the specialist is doing. If you have his book....is it the same 50k shares he is walking down .30 and protecting it from the NXs' by keeping it a penny away? It works when you can think like the specialist. Is he short or long on his book. take the offer for a ride....when he shows the offer flip it 2x and take the snapper for the bigger ride of the two. Specialist is long on his book and will take the shorts for big loser.
BILLYG: You had the right idea, but you shouldn't have chased the market to 45 unless the futures upticked with some order flow behind it. When scalping, TRADE ORDER FLOW. I believe you stock types call it tape-reading. This is reinforced by careful concentration and gradual accumulation of experience; you won't get this in a book. Study the order flow... Are buyers lifting offers? Are more buyers coming in? Are offers drying up? Is the book thinning out on the upside? Are big offers getting pulled? Now for the hard part... you will get gamed out of your position. Market-makers will try desperately to spook you out of your trade. They will offer them down to 40 so they can buy more. They will pump up a bid and cross it. They will offer a bunch. Have conviction, and a reasonable stop-loss based upon market range for the last two bars. Finally, I don't think that you can scalp effectively from a retail perspective unless you have the the ability to submit and cancel orders on a speed and execution basis similar to market-makers.
BillyG...there is a reason why it is more advantageous to have a "per share" commish structure. If you are long 2000 shares of something, many times you are going to close that position in increments - not all at once. So if you buy 1000 shares twice, and then sell them 4 times at 500 shares each, that's 6 trades. If you were paying "per trade", you would have to pay the commish 6 times. When its all said and done, you will proabably pay less with per share structure. As far as setups are concerned, from what I have read here so far, we have (besides the 2 I mentioned): 1) Trade thick stocks with the futures (such as IBM, GE) That's it? Also, I have thought about scalping the ETF's like SPY, QQQ and DIA. I just think this couldbe ideal because you dont need bullets to trade these. But how can you gauge the direction for next few ticks? It has to be purely chart reading. I know a guy who tried doing this using various stochastics but was not too successful. Anyone have any ideas on how to scalp the ETF's? Tape reading will not work with these.
scalping can be done successfully, but i want to add that you should limit your activity to the first two hours of trading. ipersonally consider this a time period where the market liquidity is such that any stock with a daily volume > 500 k can provide 1-3 good r/t scalps. Six figure income is easily achievable but if you need more than $1000 daily i think you may be disappointed. I would love for someone to tell me that last sentence is wrong because they are actually achieving it.
I think it would be a good idea to point out that scalping is not what most people on this site do. I often see people post that they scalped 2 pts etc. The definition of scalping is trading for minimum ticks ie the bid/ask spread. This is what market makers, locals and automated programs do--it is not trading for more than that and it is certainly not what folks on this site do as a general rule. When you are trading for more that the minimum ticks, you are just day trading, not scalping.