Scalping

[Interceptor]

I have seen repeated, many times, the accepted wisdom that SB Co's "don't like" scalping.
Is there a specific reason for this, ie inconvenience value, or is it because it actually works?

 

[DC STOXX]

You cant scalp to its true definition through a spread betting company anyway

 

[grantx]

X75,

Scalping for a tick or two on a 4-5 tick spread is impossible.

Grant.

 

[DC STOXX]

X75,

Scalping for a tick or two on a 4-5 tick spread is impossible.

Grant.

THANK YOU

at least somebody here understands

 

[mp6140]

I have seen repeated, many times, the accepted wisdom that SB Co's "don't like" scalping.
Is there a specific reason for this, ie inconvenience value, or is it because it actually works?

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may have been your language first, but you sure use words the wrong way --- scalping, by the definition of entering and exiting BETWEEN the spread is no longer possible the way it was in the days of the SOES bandits when stock prices were measured in 1/16ths.

then you could easily slip between the bid/ask by buying at the bid and selling BELOW the ask (because the spread was wider)

these days, you would be lucky indeed if you could do that, and if at all possible, it would be only through a direct connection facilitator like EFX, MB or IB

of course, the SB might make a nice mistake and allow you to do it once, but dont look for a second time.

they dont like it for one simple reason --- youre eating their lunch because they make their money through the spread, and you better not mess with how they make money !

mp

 

[Interceptor]

Thanks, all, for that.
So, am I right thinking that anyone seeking 2 or 3 points a trade on something with a relatively narrow spread, such as the FTSE, would not incur the wrath of the SB's?

 

[DC STOXX]

Thanks, all, for that.
So, am I right thinking that anyone seeking 2 or 3 points a trade on something with a relatively narrow spread, such as the FTSE, would not incur the wrath of the SB's?

Well you could, but if you wanted to take 2-3 points per trade, and the SB was charging you a 2 point spread. It would eat into a LARGE % of your winning trades. Also scratching a trade is not an option....

Basically you are putting yourself at a huge disadvantage and putting the odds against you EVEN MORE...

 

[Interceptor]

So, if scalping per se is nowadays impossible, why do posts often refer to SB's "not liking it"? Are they in fact talking about something completely different, which isn't really scalping?

 

[DC STOXX]

So, if scalping per se is nowadays impossible, why do posts often refer to SB's "not liking it"? Are they in fact talking about something completely different, which isn't really scalping?

I think when people refer to scalping these days, we mean for just a few ticks depends on what you trade though, a STIR as opposed to natural gas scalp would be quite different.

 

[mp6140]

So, if scalping per se is nowadays impossible, why do posts often refer to SB's "not liking it"? Are they in fact talking about something completely different, which isn't really scalping?

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theyre simply hanging onto the word and using it to define a "short timeframe, small pip trade", which by definition is simply "flipping"

not that any of it matters, as people call things by all sorts of names --- i was just throwing in the "dictionary correct" version of the word for some fun late at nite !

LOL

mp

 

[Interceptor]

So, to re-jig my original question, why do SB Co's dislike "short timeframe, small pip/point trades"?

 

[mp6140]

So, to re-jig my original question, why do SB Co's dislike "short timeframe, small pip/point trades"?

==================================
because they do not get sufficient time to recoup their loss that you just took !

over a longer period of time, if you notice the reaches resistance, retraces as everyone takes profit and shorts the downside, picking up MORE shares at a cheaper price, when then readies the sb's for more upside, as they now have tons more shares to seel into the rally ! (sorry, but i explained all of this in another post and im not gonna do it again !)

so in the longer term, they easily make back anything they lost, but in the very short term, you are still (even if we dont call it scalping) eating at least a PART of their lunch, and like a mouse, they dont want you doing that or even being around !

mp

 

[Aspire]

==================================
because they do not get sufficient time to recoup their loss that you just took !

over a longer period of time, if you notice the reaches resistance, retraces as everyone takes profit and shorts the downside, picking up MORE shares at a cheaper price, when then readies the sb's for more upside, as they now have tons more shares to seel into the rally ! (sorry, but i explained all of this in another post and im not gonna do it again !)

so in the longer term, they easily make back anything they lost, but in the very short term, you are still (even if we dont call it scalping) eating at least a PART of their lunch, and like a mouse, they dont want you doing that or even being around !

mp

From how I understand this post it seems you believe that rather than just using the real markets to hedge exposure the Spread Bet companies are recouping losses by trading the markets outright but only when the client has a position on...??... This seems a little strange to me or am I misunderstanding you?


Oh, and by the way your definition of flipping is wrong. Flipping is when someone (Famously, Paul Rotter) Puts a whole load of fake bids in to the market to make it look like people want to buy. People buy in front of the bids but it is him selling to them. Then when he has a nice short position he flips the fake bids to the offer making it look like people want to sell and so people sell/stop out as he buys back to cover his position for a profit.... It is a very short term trade going for a tick or two but not all short term small trades are flipping.. Most people would call these trades scalping.

 

[mp6140]

From how I understand this post it seems you believe that rather than just using the real markets to hedge exposure the Spread Bet companies are recouping losses by trading the markets outright but only when the client has a position on...??... This seems a little strange to me or am I misunderstanding you?

i would say that the sb companies are doing their own trading also, just like any "bookie" might place a personal bet on an event -- at least in the USA, our equivelant of the sb (broker)does so constantly !


Oh, and by the way your definition of flipping is wrong. Flipping is when someone (Famously, Paul Rotter) Puts a whole load of fake bids in to the market to make it look like people want to buy. People buy in front of the bids but it is him selling to them. Then when he has a nice short position he flips the fake bids to the offer making it look like people want to sell and so people sell/stop out as he buys back to cover his position for a profit.... It is a very short term trade going for a tick or two but not all short term small trades are flipping.. Most people would call these trades scalping.

YOU IMPUDENT PUP --- listen to your elders and be silent !!! (LOL)

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understand please that im in the USA, and some of our words are not quite the same --- here anyway, the ability to scalp was destroyed when the markets went over to the decimal system and by doing so, closed the spread up to the point where no one could get between the bid and ask to "scalp" --- one note, back in the good days i was a SOES BANDIT, so have a slight amount of experience with the matter. the SEC closed the loopholes that we used, and in a twinkling, we were out of business.

now to the word "flipping" --- in the USA, it simply means holding for a short period of time and selling for a profit. The housing bubble recently is a prime example, as people bought houses, did nothing to them, but sold the following month on an inflating market.

we even have a tv show called "flip this house", meaning how to buy cheap and sell higher, which unfortunately, is not possible any longer !

in the financial markets IN THE USA, the terms are used exactly as above, as scalping is now literally impossible !

WHAT THEY SAY IN THE UK is something else indeed, and while it may well have been your language first, you sure do some funny things with it ! (LOL)

what you refer to flipping by paul rotter is EXACTLY what every mm, specialist and broker in the financial markets is doing --- you can even time it to the second on most days.,

the brokers (and we include mms and nyse specialists here from now on) will begin selling the shares they hold into a rally (remember, they got these shares cheaply "someplace" and "some time" ago) As the price progresses up, the brokers are running out of shares and if youre REALLY GOOD, you will see a number code on the level 2 market depth platform that tells all the other brokers that THIS broker needs shares --- NOW, since they all work together even though they are competing (its like spies --- there are RULES they work under with each other, even if they kill each other -- they do it by the RULES !) THE PRICE suddenly reverses --- scaring most retail traders into selling ---- meanwhile the brokers had gone short at that "number code" and are now driving the price DOWN, forcing the weak hands (dumb money) to sell at a loss.

after the brokers have covered their shorts by "headfaking" the "dumb money" into selling, UP GOES THE PRICE AGAIN, from a lower base point (read CHEAPER SHARES) and now we hit a new high, or at least the same one as before, forming a dbl top, bringing forth the now famous "number code", and while the rally is still continuing, the brokers are selling (shorting) their shares at the top of the run, and NOW THE PRICE DROPS AGAIN, scaring the dumb money, who sells in a panic --- all the way down to support where the brokers COVER AGAIN !

above is the explanation of why you see the prices moveing up and down in what APPEARS to be a random pattern, but is simply the brokers going long and short to make more profit !

there are ways to measure where theyve been and where theyre going, but since were actually just defining words here, that would be a tad overkill

enjoy and trade well

mp

 

[trader_dante]

So, to re-jig my original question, why do SB Co's dislike "short timeframe, small pip/point trades"?

Let me try and illustrate the reason I think they don't like it with an analogy.

Imagine you paid me good money for a signal service. In return I promise to give you profitable signals via text. You can then log into your broker and place the same orders.

Lets say at 11am the first text comes through telling you to buy the S&P at £10 per point and then just as you are reading it and taking note of the entry price and stop level, the next one comes through saying "sell to close S&P at £10 per point".

As you are puzzling over this for a second a third text comes through saying - "An easy £100 - told you this service was good value for money!"

How would you feel?

 

[fifty2aces]

======================================================================
what you refer to flipping by paul rotter is EXACTLY what every mm, specialist and broker in the financial markets is doing --- you can even time it to the second on most days.,

the brokers (and we include mms and nyse specialists here from now on) will begin selling the shares they hold into a rally (remember, they got these shares cheaply "someplace" and "some time" ago) As the price progresses up, the brokers are running out of shares and if youre REALLY GOOD, you will see a number code on the level 2 market depth platform that tells all the other brokers that THIS broker needs shares --- NOW, since they all work together even though they are competing (its like spies --- there are RULES they work under with each other, even if they kill each other -- they do it by the RULES !) THE PRICE suddenly reverses --- scaring most retail traders into selling ---- meanwhile the brokers had gone short at that "number code" and are now driving the price DOWN, forcing the weak hands (dumb money) to sell at a loss.

after the brokers have covered their shorts by "headfaking" the "dumb money" into selling, UP GOES THE PRICE AGAIN, from a lower base point (read CHEAPER SHARES) and now we hit a new high, or at least the same one as before, forming a dbl top, bringing forth the now famous "number code", and while the rally is still continuing, the brokers are selling (shorting) their shares at the top of the run, and NOW THE PRICE DROPS AGAIN, scaring the dumb money, who sells in a panic --- all the way down to support where the brokers COVER AGAIN !

above is the explanation of why you see the prices moveing up and down in what APPEARS to be a random pattern, but is simply the brokers going long and short to make more profit !

there are ways to measure where theyve been and where theyre going, but since were actually just defining words here, that would be a tad overkill

enjoy and trade well

mp

Ah, of course - the global conspiracy that all institutional traders co-operate to take money from the "little guy", trading his 4 figure account.

 

[mp6140]

Let me try and illustrate the reason I think they don't like it with an analogy.

Imagine you paid me good money for a signal service. In return I promise to give you profitable signals via text. You can then log into your broker and place the same orders.

Lets say at 11am the first text comes through telling you to buy the S&P at £10 per point and then just as you are reading it and taking note of the entry price and stop level, the next one comes through saying "sell to close S&P at £10 per point".

As you are puzzling over this for a second a third text comes through saying - "An easy £100 - told you this service was good value for money!"

How would you feel?

=================================================================

TD -- i LOVE it, but i dont understand it !

dont explain, as it loses all if one has to explain -- i shall simply skulk out of here, forever knowing how stupid i am !

mp

 

[Aspire]

WHAT THEY SAY IN THE UK is something else indeed, and while it may well have been your language first, you sure do some funny things with it ! (LOL)


Seems a case of lost in translation... Re-reading my post it seems a little agressive so appologies for that...... but it's you lot that are doing funny things with our language!


what you refer to flipping by paul rotter is EXACTLY what every mm, specialist and broker in the financial markets is doing --- you can even time it to the second on most days.,


Agreed, it happens all the time, good post, not sure I could time it to the second though they don't like to make it too easy for us. And I don't know about those number codes either, sounds like a conspiracy theory to me, but what would I know - I trade futures not stocks.
mp

I'm still not sure I'm with you on the Spread Bet company front though, I just don't see why they would combine simple hedging of exposure with proprietry trading... Surely if the guys pressing the buttons can make money in the markets then just let them get on with that instead of wasting their valuable time executing trades that a monkey could do... If and if they don't have the skills to make money.......

It seems like two seperate business models to me 1) Acting as a "Bookie" for spread betters while hedging your exposure in the real markets, and 2) Proprietry trading.... and surely they're best kept apart

 

[mp6140]

Ah, of course - the global conspiracy that all institutional traders co-operate to take money from the "little guy", trading his 4 figure account.

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now aces --- NOT a global conspiracy but rather how brokers work and make money --- WHY do you think prices move up and down in a day, do it at specific times of day and are repeatable and predictable !

please aces, there are a lot of people on this site that may not like me, but few would think to argue how the market actually works.

i wish no fight --- if the brokers could not short to retrieve more shares at a cheaper price, they could no longer stay in business --- its what they HAVE TO DO to survive !

they allow the price to go up --- they sell their shares into the rally --- they short at resistance (they know it as well as we should !) which is also selling into the rally to the dumb money who buys at the top --- they turn the price down, by mutual agreement, even if its based on time of day (watch what happens at noon, EDT in the USA mkt) which "shakes" out (thats the USA term for it) the looser players and the ones who scare easily, and continue down to approx `1:30 PM EDT (USA mkt) at which time, having covered their shorts by buying the dumb moneys fear, they run the price back up again, heading for their next profit oportunity.

PLEASE UNDERSTAND THAT THEY DO NOT TRADE LIKE WE DO --- they are the pros, and their job is to make money constantly, in every direction they can, and while they certainly get it from us, the retail trader, only in the most specific of situations is that directed at any group or person.

its SIMPLY HOW THE GAME IS PLAYED, and if one knows how the game is played, headfakes and drawdowns become of no fear !

PLEASE -- i dont want another arguement where people come in and verify what i say --- understand how the market WORKS, which is nowhere like the way you trade it, and we can have peace here !

mp

 

[mp6140]

I'm still not sure I'm with you on the Spread Bet company front though, I just don't see why they would combine simple hedging of exposure with proprietry trading... Surely if the guys pressing the buttons can make money in the markets then just let them get on with that instead of wasting their valuable time executing trades that a monkey could do... If and if they don't have the skills to make money.......

It seems like two seperate business models to me 1) Acting as a "Bookie" for spread betters while hedging your exposure in the real markets, and 2) Proprietry trading.... and surely they're best kept apart

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since the name of the game is profit, it could be twenty businesses for all they care --- they have to MAKE MONEY, and they will use EVERY single opportunity presented to them.

this is CAPITALISM my friends --- there is NO concern for anything but the profit !


mp