Creech said:
Scalping is basically trading for only several points a time, typically using 1 min intraday charts.
Not that I want to start anything, but I've found the following from Vad Graifer to be helpful:
In a nutshell, scalping is a trading style is based on assumption that it’s easier to get high amount of winning trades when profits are taken faster, minimizing the cases when relatively small profit evaporates and turns into loss. This is opposite to more conventional and commonly accepted approach where a trader lets his profits run risking to lose them on reversal or severe pullback and trying to make up for diminished win/lose ratio by bigger ratio of size of a winner vs. size of a loser.
SCALPING MYTHS
Before further discussion on "scalping", I want to dispell the widely believed misconceptions about this scalping. Let me set the record straight. Scalping is NOT about playing the spread, or trading for rebate. This is not what I do and it's not something I teach. If this is what you are looking for, you are in the wrong place. Scalping to me is about taking small profits and winning more consistently and frequently.
Myth #1: Scalping is a separate trading system with its own setups.
Truth: Scalping is not a trading system. Scalping is another way of risk management. It can be applied with any trading system, any setup, any technical indicator.
Myth #2: Scalping is the riskiest way to trade.
Truth: Scalping is the SAFEST way to trade. Scalper's exposure to the market is very small and risk control is as close to absolute as it gets.
Myth #3: Scalper is a trader that sits in front of his screen all day and does trade after trade, never stopping. Scalper is trading all the time.
Truth: Scalper is trading as frequently as market presents readable and safe opportunity. He spends in front of his computer as much time as he wants. He is free to turn off his monitor when he feels like it - simply because he is not tied to any positions to monitor.
Myth #4: Scalping requires certain market conditions.
Truth: Scalping can be applied in any market. In fact, it's much more universal trading approach because it can be used in markets where nothing else works.
Myth #5: To become a scalper a trader has to abandon his or her adopted trading approach.
Truth: Scalping can and should be adopted as supplementary trading style for a trader using any other approach. Scalping will complement greatly any other trading style. It will add safety and universality.
Myth #6: Scalping is addictive.
Truth: If making money consistently is addictive, then scalping is, too.
50/50 won't work for a scalper. 90-100 is a bit on high side as estimate, 65-80 is quite enough and, more importantly, easier to achieve when 1:1 is taken. There is no real need to amount huge commissions if trades are picked accordingly to one's setups (although naturally scalping WILL produce higher commissions, that's the nature of the beast)
Even more important point is, if you trade for a living with no other sources of income thus need to take money every month, what are you to do when there are no trends to ride? Or, another application for scalping, part time trader who doesn't want to leave positions unattended and prefers to take fast profits and leave. Or, while your longer term trades develop, you see clear opportunity in smaller time frame - why not? Where I am going with all this: scalping is universal. It's applicable to any market and to any trader - UNLESS hiw personal temperament tells him to stay away from this.
As for keeping an eye on 5000 stocks - this is completely backwards, sorry... One keeps an eye on signals for certain setups, thus stocks to trade get found from setups, not the other way around. . . . Like the piece I quoted says, scalping is not trading system - it's a way to manage the trade.
