Lost 25K as a long in the past year ... Gained 4K scalping in the past 3 days!

[jonboy123]

I have tried to give you an example of how it is possible but you and all you give me is abuse which is hardly a good way to go about getting what you need.


Paul

you gave me an example, but only for market makers.
am i a market maker?
is the the OP a market maker? no.
so how do we do it?

if you dont you dont know. no need to waffle about and waste time.

dude. chill. Im not abusive. im just impatient. sorry i aplogise. thanks for commenting tho.

 

[arabianights]

No

Not at all

Please buy some books and start again

Now... as for buying the bid and selling the offer, most exchange traded securities (let's ignore US stocks here [in particular anyone who mentions NYSE specialists can go **** themselves] and talk about the general idea) work through electronic order matching. Focus on two types of order, limit and market. A limit order signifies to the exchange that you are willing to deal up to a certain price. A market order is an instruction to deal at *any* price. The bid and offer? Those are the market's best limit offers. So to buy the bid you need to submit a limit order and then wait for somone to sell to you at that price, whether through a market order or a lower limit sell order. Then repeat the process by putting in a limit order to sell at the ask.

That is what it means to buy at the bid and the offer.

You will find that with many markets only certain participants, known as market makers, are permitted to make these bids and offers, or alternatively they may receive preferences in order matching or all kinds of things. But that's the principle for you.

 

[Tenapenny]

jesus. Doesnt anybody answer questions here?
read the thread title...and my questions/comments man.

im trading stocks.
why? to make money.

:-0:innocent::!::!::!::!::!::!:

I give up! Goodnight!

 

[DaxDestroyer]

jesus. Doesnt anybody answer questions here?
read the thread title...and my questions/comments man.

im trading stocks.
why? to make money.

:-0:innocent::!::!::!::!::!::!:

You really should start to value, what others do for you!

 

[Bolimomo]

SCALPER BUYS THE BID, CORRECT????

SOMEONE PLEASE EXPLAIN HOW SCALPING IS DONE IN A REAL WORLD EXAMPLE USING A COMPUTER. aND EXPLAIN IT TO ME LIKE IM A THREEE YEAR OLD.

Okay. Three year old: here are some explanations.

The following is true for the USA. I don't live in UK and don't trade the UK market so I don't know if it is applicable to you.

To buy on the bid, sell on the ask, you probably need what we call "Direct Access Platform". Some brokers offer it. Very useful for active traders. If you want to scalp as an individual (not a firm, not a market maker), you almost definitely need it. Direct Access Platform (such as "RealTick") let you see what's called "Level 2" information. You know not only the inside bid/ask (the current market), you also know WHO are doing those bid/ask. Every market maker has a 4-letter (usually) symbol that represent their firm. e.g. GSCO - Goldman Sachs, MLCO - Merrill Lynch, etc..

Individuals don't necessarily need to buy from or sell to market makers. We can go through what's called ECN (Electronic Communication Network), such as ARCA, to route our orders. Using ECNs, we trade with other participants - who may or may not be market makers. You can try to buy on the bid and sell on the ask. If the price runs away (often the case nowadays, the bid/ask prices are rarely static), your orders will not get filled. If the market makers bid at the same price as the ECN, who has priority? That I don't know. But buying at the bid, selling at the ask, you are taking the bread out of the plate of market makers. But usually the inside bid/ask are not from the same market maker. So you compete with market maker A to bid for the stock, and turn around to compete with market maker B to offer the stock to others, and make your spread.

In general, however, the term "scalping" may not necessarily means buy on the bid and sell on the ask every time. It is almost impossible to do and be consistently profitable (at least for individuals). It does mean though the trader is taking razor-thin profit with each trade, but will take many of these trades before the price runs away. The trader gets ahead with a net gain at the end of the day after paying commissions and fees.

 

[pedro01]

Scalping can mean many things to many people. Generally speaking it is usually mentioned when discussing techniques that involve being in a trade for a short amount of time.

The term scalping does not relate to any specific methodology of when to get into a trade and when to get out of a trade. This is the piece you are missing.

You could say that this is a scalp - just a few points from the ES, although this is subjective and you will probably find as many people saying that this isn't scalping as those that say it is due to the amount of time the trade was open:

In the above case, the indicators and lines drawn on the chart as well as the price movements led the trader to believe that the ES was on its way down. There was divergence between the chart and the indicator and that indicated that it may be the end of the little uptrend it was in. That is an example of part of a methodology. There are many, many methodologies out there.

Now - your method seems to involve just trying to buy something cheap and sell it at a higher price with no attention to the price action or the fundamentals. If this were really possible, it would have been hammered to death by now & would therefore no longer be possible.

Think about it - if you could really click a button to buy something cheaper than everyone else & then sell it back to them at a higher price a few seconds later, don't you think someone else may have stumbled across it before ?

If you look at the 'potential setups' thread on this board, it will give you an idea of what it is may help you out and what kind of things other people had to learn. I don't think there's an easy way to go about pulling $$$ out of the markets. I fear though that as I haven't gone to the trouble to post the link to that thread in this post - you wont actually go & look for it.

You have much to learn & if you show that you have put in some effort to learn, you will find people here very helpful. If you try to use this board as an alternative to reading books, learning the concepts, watching the charts, you will not find many people willing to help.

 

[Bolimomo]

..... If the market makers bid at the same price as the ECN, who has priority? That I don't know.

I am answering my own question. More information about this. The following is my understanding. Correct me if I am wrong.

On Nasdaq, there are multiple market makers (usually) for a given stock. They all can buy/sell the given stock. Other participants can trade with the market makers (via SelectNet), or trade with other participants via different ECN's (ARCA, Instanet, etc.).

In theory, no one particular market maker controls the price of a given stock. Market makers compete with each others to trade that given stock and each tries to make profit for his/her firm. So the price (bid/ask) fluctuates. Market makers for a given stock are required by regulations to make a 2-way market. Which means during regular sessions, they must provide a bid and an ask for that stock.

The current best bid and best ask prices are known as the "inside market". e.g. CSCO bid 16.27, ask 16.33. There might be multiple market makers offering the same bid or the same ask. Typically though, market makers will mark-up the price more than the inside market spread. e.g. GSCO may bid CSCO at 16.27. But they won't sell CSCO at 16.33. They would sell CSCO at 16.40. MILO may bid CSCO at 16.20 and sell at 16.33. etc..

Now... limit price orders always get queued up on the ECNs at different price levels. e.g. there may be 200 shares bidding at 16.27, 500 shares bidding at 16.26, 300 shares bidding at 16.25, etc.. And there might be 400 shares asking at 16.33, 300 shares asking at 16.34, 100 shares asking at 16.35, etc.. These orders are in the queue to be executed in a First-In-First-Out fashion. If traderA bids 200 shares of CSCO at 16.27, and traderB bids 500 shares of CSCO also at 16.27, traderA's 200 shares at that price will get filled first, then the rest of the shares for traderB - provided that the market price has not run away. At each inside bid/ask level, only the limit orders on the ECN at that price will become executable. e.g. if the best current bid price for CSCO from a market maker is at 16.27, then the limit orders at 16.27 on the ECNs will become executable. Stocks can be sold from one ECN participant to another at 16.27.

If someone wants to sell 100 shares of CSCO at 16.27, who will get his stock? The market maker or the ECN participant who is bidding at 16.27? Well... that depends on how such an order is routed. If that order to sell is routed through SelectNet to target a particular market maker, then the stock will go to the market maker. If that order is routed to an ECN, then the ECN participant will get that order. Using a Direct Access Platform, you can control if you want your order to go to SelectNet or an ECN.

If you place a market order to sell your 100 shares of CSCO, then it will depend on the routing logic used by that trading platform in what sequence to route your order to and how long it will wait before going to the second choice. If you use an Internet browser base kind of platform, your broker will sell your order flow to the market maker who pays them kick-backs to fill your order. (And they will eat you because you just wrote them a blank check.)

 

[new_trader]

Want of money

jesus. Doesnt anybody answer questions here?
read the thread title...and my questions/comments man.

im trading stocks.
why? to make money.

:-0:innocent::!::!::!::!::!::!:

"Wahhh Wahhh...what do I do? Wahh Wahhh....how do I do it? Wahh...Wahhh...questions...questions...questions...brain picking...rudeness...disrespect...etc

This is what you get when people are motivated by the money

And people give them what they demand! :-0

 

[pedro01]

"Wahhh Wahhh...what do I do? Wahh Wahhh....how do I do it? Wahh...Wahhh...questions...questions...questions...brain picking...rudeness...disrespect...etc

This is what you get when people are motivated by the money

And people give them what they demand! :-0

Why the hostility ????

Just tell the poor guy how to make some money.... :smart:

 

[Tenapenny]

"Just tell the poor guy how to make some money.... "

Get a job! :whistling

 

[Bolimomo]

I have seen young people, new traders typically, come into these on-line trading forums - this one and others - with horrible attitudes: They are ignorant + arrogant. For one thing, they don't care to do their homeworks. Google is all they know how to do. If the answer cannot be found from the "top" sites listed in Google, they will come to these online forum and post some one line question: Tell me everything I need to know about trading stocks.

Yeah. Spoon-feed me! (No "please")

2 hours passed and no respond to my question? Pound on the table!

 

[Tenapenny]

Unfortunately there are people who have grown up spoon-fed. Some have the attitude of wanting it all and right now because they have always had things just handed to them for no effort on their part. A sad society really!

 

[jonboy123]

Okay. Three year old: here are some explanations.

The following is true for the USA. I don't live in UK and don't trade the UK market so I don't know if it is applicable to you.

To buy on the bid, sell on the ask, you probably need what we call "Direct Access Platform". Some brokers offer it. Very useful for active traders. If you want to scalp as an individual (not a firm, not a market maker), you almost definitely need it. Direct Access Platform (such as "RealTick") let you see what's called "Level 2" information. You know not only the inside bid/ask (the current market), you also know WHO are doing those bid/ask. Every market maker has a 4-letter (usually) symbol that represent their firm. e.g. GSCO - Goldman Sachs, MLCO - Merrill Lynch, etc..

Individuals don't necessarily need to buy from or sell to market makers. We can go through what's called ECN (Electronic Communication Network), such as ARCA, to route our orders. Using ECNs, we trade with other participants - who may or may not be market makers. You can try to buy on the bid and sell on the ask. If the price runs away (often the case nowadays, the bid/ask prices are rarely static), your orders will not get filled. If the market makers bid at the same price as the ECN, who has priority? That I don't know. But buying at the bid, selling at the ask, you are taking the bread out of the plate of market makers. But usually the inside bid/ask are not from the same market maker. So you compete with market maker A to bid for the stock, and turn around to compete with market maker B to offer the stock to others, and make your spread.

In general, however, the term "scalping" may not necessarily means buy on the bid and sell on the ask every time. It is almost impossible to do and be consistently profitable (at least for individuals). It does mean though the trader is taking razor-thin profit with each trade, but will take many of these trades before the price runs away. The trader gets ahead with a net gain at the end of the day after paying commissions and fees.

right...thankyou.

So how do you buy on the BID? Need to put a LIMIT order in?

So do we want small or large spreads?
Someone on another thread says we want SMALL spreads.

but....

" you want a small spread. You want a small spread, I want a small spread, scalpers, swing traders, investors, everyone wants a small spread! For example, if a share price is 100p, because of the spread it could be 102p to buy it and 98p to sell it. So if you buy and sell straight away you lose 4p. You would prefer it if the spread were 99p-101p. Therefore if you buy and sell straight away you only lose 2p.... Scalpers want a smaller spread than anyone because they are buying and selling many times a day for lots of small profits"


(from a book)
$28.50 bid and $28.55 ask. This quote indicates
that if you wanted to buy, you would have to pay $28.55, but if you
wanted to sell, you would get only $28.50 for your XYZ stock. The
difference between these two prices is known as the spread. Traders
who trade liquidity risk often are referred to as scalpers or market
makers. They make their money off the spread."

so..... the bigger the spread.... the better... maybe im not undertading how they make money off the spread....(thats another topic about scalping then)

"Scalpers
are looking to make the difference between the bid and the ask,
which is known as the spread. If gold is $550 bid and $551 ask, a
scalper will be looking to buy at $550 and sell at $551. "

....But you cant simply BUY for less, and SELL for more straight away with shares.

Thankyou.

 

[Aspire]

Jonboy,

Scalpers are not looking to simply buy on the bid and sell on the offer. If it were that easy everyone would be doing it.

If you put in an order on the bid you join the queue of other people waiting to get filled on the bid too. Of course you join at the back of the queue because you were the last to join.

So you wait for all the bids ahead of you to get filled and then you get filled yourself. Then you put your order in at the back of the queue on the offer and wait until all the offers ahead of you get filled and then youu get your small profit.

The problem is that it although you will make a little bit when it works, very often the market will move against you while you are waiting for your order to exit to be filled and you will lose much more than you have made.


My advice to you would be to move on from this ridiculous idea of easy money buying on the bid and selling on the offer and focus your energy elsewhere.

 

[jonboy123]

Jonboy,

Scalpers are not looking to simply buy on the bid and sell on the offer. If it were that easy everyone would be doing it.

If you put in an order on the bid you join the queue of other people waiting to get filled on the bid too. Of course you join at the back of the queue because you were the last to join.

So you wait for all the bids ahead of you to get filled and then you get filled yourself. Then you put your order in at the back of the queue on the offer and wait until all the offers ahead of you get filled and then youu get your small profit.

The problem is that it although you will make a little bit when it works, very often the market will move against you while you are waiting for your order to exit to be filled and you will lose much more than you have made.


My advice to you would be to move on from this ridiculous idea of easy money buying on the bid and selling on the offer and focus your energy elsewhere.

but the thread starter said himself.....buying Bid and selling Ask is working for him...
the book says this is what scalpers do.....way of the turtle....

sorry to be a pain, i do belive you and other people saying the same thing on another thread....but im also reading the things opposed to this.....

so it is possible...but not as easy as it seems and not worth it.....

 

[Aspire]

You can make a lot of money consistently scalping (ie. making lot's of very short term trades every day) but there is a lot more to it than simply buying the bid and selling the ask.

You can make money buying on the bid and trying to sell immediately on the ask but if you try to do it repeatedly you will lose a lot more than you make for the reasons I explained before.

Scalping is definately worth it. You can make a lot of money consistently, it is good fun and you can relax when away from your screens.. but it takes a long time to learn.

There are no good books on scalping so you have to work it out yourself. Forget what your book told you about scalping, you will soon realise there is a lot of rubbish written in a lot of trading books.

 

[jonboy123]

You can make a lot of money consistently scalping (ie. making lot's of very short term trades every day) but there is a lot more to it than simply buying the bid and selling the ask.

You can make money buying on the bid and trying to sell immediately on the ask but if you try to do it repeatedly you will lose a lot more than you make for the reasons I explained before.

Scalping is definately worth it. You can make a lot of money consistently, it is good fun and you can relax when away from your screens.. but it takes a long time to learn.

There are no good books on scalping so you have to work it out yourself. Forget what your book told you about scalping, you will soon realise there is a lot of rubbish written in a lot of trading books.

lol
so theres various tactics and methods for scalping right?
people are in disagreement here...few posters have said its impossible to buy bid and sell ask....

cheers.
scalping is just making small profits off trades quickly,right? wheter long or short.... or whether exploiting bid and ask spread.... short term thinking....quick trades.... scalping is a day trading technique......

 

[Aspire]

Looks like you've got it.

As far as who can do what with regards to bids and asks etc there are different rules depending on what you are trading and on what exchanges but a scalper won't restrict himself to just using limit orders or just trading at market. He will do whatever is most appropriate at the time.

 

[jonboy123]

hello everyone.
I apologise for coming across as annoying and childish.
I have calmed down since. I have re-read this thread. And i understand it a little better now.

So you put a limit order and wait in line i see, if it gets filled, you do it in reverse to sell at ASK.

So if it doesnt get filled when buying, you just close and move on.

But say if you are filled to BUY at limit, the BID.... and then you cant sell at the ASK, so then you can lose out??

Are there any decent scalping books?