Scalping

Rasputin1

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Im very new to SB and just reading and finding out as much as I can about the subject. I regularly come across scalping but dont really know much about it. Could anyone point me in the right direction to find out more. Also is it a viable form of trading?

Cheers Ras
 
Not viable with SB: spreads are too wide and price movements too unpredictable - some would say the quotes are deliberately manipulated against the market's direction to catch the scalpers.

Most people who say they are scalping are not really - in true form scalping involves taking a position and liquidating for a profit as soon as the position moves 1 pip into profit (or loss). It follows that the time in the market, and therefore exposure to risk, is very short. It also follows that you need a large principal to make the trade worthwhile and many trades in a day for a significant return. Most 'scalpers' are actually short-term daytraders - this allows a wider profit target and stop loss, and there are still no positions held overnight but daytrading is the most difficult form of trading.

Better to try your TA, trade management and money/risk control management on something with longer time frame such as swing trading before going head to head with the SB company. I have to see successful daytraders as like the gunslingers of the wild west - romantic, mavericks, answerable to no one, but mostly doomed to eat dust in an ambush.
 
If you are really scalping, ie taking 1 or 2 pips here and there, and making serious money, your SBer will soon notice and put you on manual, meaning your order could take 30 seconds to be processed. And why not? If you were them, you'd do the same. It's only fair. :)
 
If you are really scalping, ie taking 1 or 2 pips here and there, and making serious money, your SBer will soon notice and put you on manual, meaning your order could take 30 seconds to be processed. And why not? If you were them, you'd do the same. It's only fair. :)


Although I can understand why not, that doesn't mean it's fair.
 
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Although I can understand why not, that doesn't mean it's fair.

Why not? You have no chance of hedging a scalper's trades and they're taking your money with each trade - what do you propose they do? Let them carry on? Move to dealer? Tell them to sling their hook? What's fair?
 
Anyone scalping who isn't earning the spread on at least one side of the trade is either an idiot or a genius.

Thus spread betting is fundamentally incompatible with scalping.
 
yes the pure 1-2 pip scalps are bull**** only for rich futurestraders who could not calculate with numbers .
The ECN STP brokers got higher spread then SB brokers because they are for high volume traders .
If you could trade well , you get 5-15 points per trade and you stay 5 - 30 minutes in one trade .
So it doesent matter if the order takes 5 seconds .
The most SB brokers are faster in order than FuturesBroker because they give price from orderbook.
That is better than from CME where the chaos of orders come together to a collapse.
I learn so much but it is fact that every bad firm try to make wrong propaganda to get stupid lamms.
The point is not the spread , the point is the real spread .
Some got 4 pips that are normal on a fast market . The other got 1 pip that is a lie because you pay
commissions 1.5 pips and they stole you 2 pips on bad fills , then you got 4.5 pips not better.
So I would say a good broker must not make TV Shows and promotions to get traders , they will not give you
an account if you ask them for ......
You must have 5-15 points per trade , then you are well trader that is my optimum after 10 years trading
every day 4-8 hours .

take care of you



Anyone scalping who isn't earning the spread on at least one side of the trade is either an idiot or a genius.

Thus spread betting is fundamentally incompatible with scalping.
 
Why not? You have no chance of hedging a scalper's trades and they're taking your money with each trade - what do you propose they do? Let them carry on? Move to dealer? Tell them to sling their hook? What's fair?

T2W has been through all this before. I don't think scalpers would be expecting to make a profit every trade, and SB outfits don't hedge everything, as we know. Obviously it could cause problems if a punter tried to make huge bets for a few seconds, but the majority are staking £1-10 per point on markets that tend to have a balance of shorts and longs. Seems to me that SB companies don't like what they call scalpers because they don't want the system to be clogged up with a stream of trades from people who ultimately won't lose as much as the long-term punters.

On that basis I can understand why they'd want to get rid of scalpers, but don't the MiFID rules say they're not supposed to treat clients differently? Rather than adopt devious tactics, it would be better for them to tell us exactly what we're doing wrong, or define 'scalper' in the T&Cs.
 
T2W has been through all this before. I don't think scalpers would be expecting to make a profit every trade, and SB outfits don't hedge everything, as we know. Obviously it could cause problems if a punter tried to make huge bets for a few seconds, but the majority are staking £1-10 per point on markets that tend to have a balance of shorts and longs. Seems to me that SB companies don't like what they call scalpers because they don't want the system to be clogged up with a stream of trades from people who ultimately won't lose as much as the long-term punters.

On that basis I can understand why they'd want to get rid of scalpers, but don't the MiFID rules say they're not supposed to treat clients differently? Rather than adopt devious tactics, it would be better for them to tell us exactly what we're doing wrong, or define 'scalper' in the T&Cs.

When you're told they don't want your business and you're making a handsome profit, then that's pretty much being told what you're doing wrong. Don't SBers have two books? Gamblers (let them fight amongst themselves) and Profiters (hedge their trades)?
 
why would you scalp with a SB'er, and anyway they would be happy to have scalpers to be honest.
 
why would you scalp with a SB'er, and anyway they would be happy to have scalpers to be honest.

The reason why you might try is because the existence of spreadbetting in the UK means that there are virtually no futures brokers, especially ones offering low commission rates. If you're in the US, how do you know SB-ers would be happy to have scalpers?
 
I had a try at scalping, and as they say if the instrument is trending anything works. And made 50 60 points in a few hours, thought that was easy.

But as mentioned earlier, the spread the difference between the buy and sell price is the killer, then your commissions

eg

you buy the dollar at 100, you want to scalp 3 points
the buy is 100
the sell is 97

so to scalp 3 you have to make 6, because you are - 3 so as you open the trade. If you look closely, very closely, which I have right down to 10 second charts, the fluctuations in price bounch around 5 pips - no sweat.... so its pot luck really

then - yes your commission, you could be, and i have made 80 or more a day, trades, thats because the buy and sell are 2 trades, the people making the money are the brokers, try a demo account with MB trading, the platform is fairly good for beginners, even put a few hundred pound in there and watch your cash get eaten up with fees

Karl
 
The reason why you might try is because the existence of spreadbetting in the UK means that there are virtually no futures brokers, especially ones offering low commission rates. If you're in the US, how do you know SB-ers would be happy to have scalpers?

Virtually no future brokers really? Well you could be right but I would find one if you wanted to scalp, I am about to join a prop house in the UK and they scalp. If your doing good volume some broker will be interested. Well brokers would be happy to have scalpers because they trade so much and generate them money? Even if they do offer a better structure to scalp I would assume a bigger percentage of the profits would go on commissions compared to a swing trader because the scalper trades so frequently but at least they offer the scalper cheaper trades. With a SB company the more you trade the more often you pay the spread so the more they earn, so if your trading frequently there making more? Don't they just trade the thing themselves but offer it to you at a bigger spread, so your paying them each time for their service and scalpers use their service the most. The scalper is paying the same as a day trader and the spreads aren't even that good for day trading! I am new to this but I just ran through some figures and it just seems so crap to use a SB'er.

Good discussion on spread betting vs using a broker

When I read about successful scalpers they talk about looking to take a few ticks out the market, or take a portion of their volume out after 1 tick move then the rest after another 1 to 2 ticks. They look to pay about 1 tick in spread, and IG index for example is 3 ticks spread on GBP/USD. You would have to be really accurate.

For example using this method where you take half your volume out after 1 tick and then aim for 2 to 4 ticks for the other half, you gotta have a fair amount of succesful trades even with a 1 tick spread. If you use IG your already needing 3 ticks just to break even and say you have a stop loss of 2 ticks, your risking 5 ticks to make 1.75 and this assumes in a profitable trade once you have taken half the volume out at a 1 tick profit the other half does not fall back below a 1 tick profit.

+1 tick [half the volume]
+1-4 ticks (avg of 2.5) [half the volume]

Therefore a successful trade would on average get 1 tick for first half 2.5 ticks for second half which is equal to doing 1.75 ticks for the whole lot.

with a 70% accuracy on scalping you would be losing 1/4 of a tick per trade.

(-5 * 0.3) + (1.75 * 0.7) = -1.5 + 1.225 = -0.275

I think thats why when I browsed the forums it seems people are using much bigger stop losses for "scalping" and looking to capture bigger moves but isn't this more like day trading, so maybe that's because alot of people are using SB'ers. I thought scalping was not much better than a 1:1 risk to reward ratio.

Also I am pretty confused on some things, I read scalping is more to do with playing the spread or trading the spread. Is anyone able to explain to me what trading the spread really is and use an example, is this just for arbitrages? I also don't really quite understand how can a scalper make money from a market that doesn't move or has wide spreads, I think it's something to do with liquidity decreasing the gap but I don't see how it's profitable. Can someone explain?

I read an interview where this guy said as soon as he got the spread down to 1 tick or less he was able to be profitable and says it's a must. I always kinda thought by looking at the spreads that IG was ok'ish for long term bets, I think it's hard enough to scalp as it is and having twice as big spreads is just gonna make it far too hard imo. Of course someone's probably doing this but how many are doing it long term?
 
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What are you asking for in a sentence... you sound bright enough to put some cash on the table and try it

Karl
 
Hmm, I just read your post about scalpers clogging up the system. Maybe that's true but anyone trading big volume wouldn't be using a SBer and I think they just delay trades and have slippage enough to hedge themselves lol? I dunno, the spread makes it unprofitable so does it really matter that they haven't hedged themselves in every situation?

I am just asking: what is "trading the spread" and how can scalpers make money when markets don't move?
 
If you are really scalping, ie taking 1 or 2 pips here and there, and making serious money, your SBer will soon notice and put you on manual, meaning your order could take 30 seconds to be processed. And why not? If you were them, you'd do the same. It's only fair. :)

This seems crazy, you won't be able to profitably scalp 1 or 2 pips with a SBer so given you were making serious money you must be running seriously well I am sure they will fully support you to continue scalping.

Anyone scalping who isn't earning the spread on at least one side of the trade is either an idiot or a genius.

Thus spread betting is fundamentally incompatible with scalping.

Could you explain in more detail what this means?

Cheers,

No Rhino
 
Yes a question we would all like to know.

But out of interest, tune into a small time frame chart and tell me what you see - say 10 second

Karl
 
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