Scalping stocks using L2 data

rdo2014

Newbie
3 0
I am fairly new to trading, so apologies if this is a dumb question. Has anyone tried scalping the stocks by buying at bid and immediately selling at ask price? Basically you are working as a market maker. It seems like a reliable way to profit 1-2 cents a trade on a low-volatility stocks. What are your thoughts?
 

Davidee

Member
80 2
The big financial institutions pay highly skilled mathematicians to write programs to do this, these guys have another huge advantage over the little guys in that they pay a much lower spread. As a percentage of ones profits the spread is huge when it comes to scalping and retail traders who scalp are rarely successful.
 

rdo2014

Newbie
3 0
The big financial institutions pay highly skilled mathematicians to write programs to do this, these guys have another huge advantage over the little guys in that they pay a much lower spread. As a percentage of ones profits the spread is huge when it comes to scalping and retail traders who scalp are rarely successful.

Sure they do, but same can be said about any trading technique - big players will always have more resources and will be on the other end of your trades.
 

rdo2014

Newbie
3 0
I'd say an algo does it way quicker and better, and so your profit potential is extremely limited. I'd also love to know what commish you pay.

My estimate for commissions is $20-25/trade, it definitely takes a chunk of profits. The speed with which your trades fill is probably the same whether they are placed by a computer or a person, it still takes 30 seconds to a few minutes to fill (at least in a simulated trading I tried). Computer will be able to do this for 100 stocks simultaneously, but you need a lot of capital for that.

I am just curious if anyone actually tried this in a live setting and what the results were.
 

Mr. Charts

Legendary member
7,368 1,185
I've been trading for a living for many years and occasionally trade wider spread stocks buying on the bid and selling on the offer, but only in momentum stocks and not immediately after entry.
Commission is peanuts, roughly $10 per RT for a 1000 shares, using direct access.
 
 
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