Momentum Scalping and HFT's, is it a dead game?


Junior member
24 3
Hey guys, I've been paper trading now for three months and after trying day trading, and more momentum scalping, I've identified what Im good at and what I am not.

Day trading to me is defined as being flat at the end of the day, and making trades for 15 mins or longer using charts to find support/resistance levels and then using the order book at times to confirm those important levels.

Momentum Scalping to me is a little bit more long term than pure scalping. Its trying to find the stock that shoots up or down .20-.30 cents in a short time span using the order book mostly to find those moments when everyone is pilling in or dumping in succession, following the herd mentality creating even acceleration into the move, then eventually hits a brick wall at the top or bottom meeting a strong buyer or seller.

I made money 4/5 days using momentum scalping in my demo account, and at times hitting out of stocks that go one or two pennies against me. But then I can catch a 20 cent up move and what I do is enter with a 100 shares, then it goes up 5 cents enter another 50 shares and if it goes up another 3 cents in the next second I add another hundred.

The second I see a held offer and I'm up, I get out. This has been working for me much better than longer term intra day trading.

With day trading I usually get on the wrong side of the market, set my stops too low and take my profits too quickly creating a negative expectancy. For example I see a large gap up in a stock in the morning, and I see it then drop to its opening price, I assume that it will retrace the upmove and so I buy at the opening price. But the bell opens and it drops right through my stop.

But thirty minutes later the stock is back up and way past the original upmove and it turns out I was right after all but by that time I've already taken a rip on the open.

But if I had kept my eye on the level 2, and waited for the open, I would see the stock going down quickly, and short and keep shorting until it stops moving. Id cover quickly too.

My question is that the prop firm that I work for tells me that they want their traders to focus more on longer term day trading, but I'm not finding as much success with that as I am with momentum scalping.

We dont employ HFT's purely discretionary style trading. My question is that have HFT"s killed the momentum type of plays that I am making money on in the demo.

I realize that in real trading that getting hit or taken is not so simple as it is in the demo.

Would you guys say that because of HFT"s its not worth investing my time into momentum scaling and try to perfect longer term intra day trading instead, which is what my firm thinks is an edge still.

Of course I'm going to try and get better at intra term day trading because my firm emphasizes that and I want to do what they suggest but does that mean that momentum style trading is something I should abandon?
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