Scalping is just shaving off pennies in stocks (20 cents in JPM, 10 cents BAC, etc.) or a point in the futures. I scalped sometimes at a prop desk, so I'll just tell you how it worked. Admittedly, this strategy was not successful or a failure for me, but I saw the head trader make $3,000-$5,000 on a daily basis using this method. We listened to the squawk (Trade the News) in the S&P 500 pit. We tried to gauge momentum of the futures and positioned bets whether the market would continue upward, downward or would reverse. I guess you can call us the scalpers of the index arbitrageurs. So listening to every tick on the S&P futures contracts, we scanned for stocks that traded with the market and eventually outperformed the mkt that day. These stocks were always the most most liquid (highest volume) issues and ideally the spread wasn't larger than 1 cent. One strategy I liked was buying a stock that was near its high, when the S&P 500 contracts were approaching yesterdays lows. In regard to time, some of the trades lasted less than a minutes and some were held for 15 minutes or so. BTW, we generally didn't trade from 11:30am-1:30pm, 2:00pm. In response to your noise comment... considering that we trade the most liquid stocks (JPM, MS, BAC, C, etc.) it is difficult for a stock of JPM to go up 20, 30 cents on noise alone, especially during higher volume hours 9:30-10:30am and 3:00-4:00pm. The biggest challenge with scalping is the commission fees (in addition to discipline). The high frequency of trades/volume makes the barrier costly so you must have a great commission structure in order to have a chance of surviving. You get good rates when you trade +100,000 shares on a daily basis (I'm not talking about IB accounts). I doubt many here on ET have that capability and have accounts that are over a $1,000,000. Anyways, you buy/sell 1,000 to 5,000 shares of JPM at a time and you try to scale out of the position whether it goes in or against your favor...In a 5,000, you take of 500 shares for 10 cents, 500 shares for 13, 500 shares for 15, etc. We try to make baby profits with minimal risk. Our "edge" is that we may have a better feel for the S&P momentum because we can hear the emotion in the pit and the last tick comes out on the squawk a second faster than it does on the computer screen. But more of it has to do with the guy's voice that is announcing the numbers. Hopefully that was a good explanation of the scalping I used to sometimes do. Although I was 50/50 with this strategy, I saw my boss make money 90% of the time doing this.... so I know it works. The advantage for him is that his commission was practically free because he is a partner at Lightspeed and that he has been doing this for over 15 years... He was the CEO of Broadway Trading in the 1990s lol.
Two questions for futures scalpers: How many contracts do you trade per day? How low are your commissions per contract?
IMHO scalping does not have risk. Let me explain. Between 2000-2004ish, in a pre-SUPERDOT world, the DOT trading platform at the time was like walking down a gorgeous pasture just full of endless pennies. In a nutshell, you could trade SPY, DIA, QQQQ on the DOT trading box, you could see dozens of entities sitting on both sides making a market at any point in time. The spread was very tight. But here is where the scalping happens. And this could be done fairly consistently. Usually 500 - 1000 share lots 6-7 times per hour. You would put in a bid 2 pennies below the current best bid of which there was a wall of bidders. Because of the massive volume on these ETF's you would get hit on your lower bid; meanwhile the wall of bidders 2 pennies higher than you is still standing there. So you would immediately sell your shares to the bidders. We are talking here a matter of a seconds to pull this off consistently. I doubt this works in a SUPERDOT world now, as I am sure times have changed. Someone else posted about going direct and just getting ECN rebates. Can you still do this and make a living?? I thought they restructured it now so you can no longer just buy on the ask, sell on the bid and still make out with the rebates. Since if you hit the ask, you are taking away liquidity and hence there is a charge. Anyone still doing this?? This has allot of appeal for me.
wow forex? I was going to write a detailed post about how you have no fucking idea what you are talking about and obviously don't know how markets are made and who provides liquidity to them but then you said you trade forex so im not even going to waste my time. Dont worry you'll be a real trader soon enough.......just keep slinging those micro lots around in eur/usd
usually a couple hundred contracts a day......I trade lower liquidity/volume contracts so naturally don't trade as many lots as some guys. My commisions are CBOT member rates.
Instead of exhibiting publicly your good command of English language why don't you explain to us how to buy the bid and sell the offer consistently without risk and through a broker. If you don't do that, you are simply a troll who is so frustrated with his own misconceptions about things he has never tried, or you are just trying to impress people about non-existent nonsense, a condition of schizophrenia "Schizophrenia (pronounced /ˌskɪtsəˈfrɛniə/ or pronounced /ˌskɪtsəˈfriːniə/), from the Greek roots skhizein (σχίζειν, "to split") and phrēn, phren- (φρήν, φρεν-, "mind") is a psychiatric diagnosis that describes a mental disorder characterized by abnormalities in the perception or expression of reality." http://en.wikipedia.org/wiki/Schizophrenia
why don't you fucking read some of youngtrader's 1000+ posts. he and i have been here for quite a bit longer than you, and i've seen him post some information you're asking about. he has posted some good stuff in the past. basically, fuck off and quit asking others to prove you wrong without proving yourself right.
Gladly Say a market is 300 bid and offered at 302 and the market is priced in halfs (like 300.5,301,301.5 etc) so back to our example. The market is 300 bid for 30 at 302 for 10 with paper being a buyer all day. I would probably bid 300.5 and try to get filled and if filled turn around and try to offer it back at 301 or 301.5 Another example would be if its still 300 bid for 30 and 302 offered for 10 and all of a sudden there is a stale 3 lot order at 300.5 I would buy that 300.5 and try to turn around and dump it for a half tick or better. This is a very very very generic example and there is so much more that I am thinking about when making trade decisions but it gives you an idea of how scalping works. Thats what scalping is.....buying bids and selling offers.......MAKING A MARKET AND PROVIDING LIQUIDITY SO MARKET PARTICIPANTS CAN DO BUSINESS WITHOUT MAJOR SLIPPAGE!!!!! If you still don't get it by this point in time there is absolutely no hope for you.
So your volume is about the same as mine. Just never thought of my style as scalping. You're not trading YM ZB ZN ZW or ZC? And you're only paying $0.11 to $0.16 per contract? http://www.interactivebrokers.com/en/accounts/fees/CBOT.php?ib_entity=llc
50-150 RTs per day for me, 0.45 $ commissions per side, full exchange fees since I would pay a lot more taxes in my country if I set up a firm to get an ECM.