Mmm!.........Scalping
I live for: "instant Gratification"...............For a few months I have been doing 200+ (daily) RT's in the DAX.
My average hold time is probably less than 1 min.........my longest - probably 12-14 mins............and you know what? - I think it is a mugs game, here are a few reasons:
1. you will compete with arcades doing mega volume with very low commisions, they have fast feeds, fast execution and fast news.
2. you will compete with computers with ARB programs which buy and sell the spreads (for example: in the dax) between Bunds, Eurostox, Dax "cash", Ftse etc. markets are all related (not something that the "retail" trader is always aware of!)
3.I have tested quite a few "electronic front ends" i.e. X-Trader, J-Trader, Ffastrade etc, etc. you can, If you look hard enough, find very low commisions (for a reasonable number of monthly trades)........................but these deals may lead you into a trap!! the "upfront" platform fee makes you (me) feel like you must trade and because of low (per side) fees, you want to trade and so you do lots of trades!! I listened to a talk given by Mark Fisher (MBT Trading) he said: These platforms are "like crack cocaine for the middle classes."
4. You will need VERY secure communication lines and a professional back-up (broker) team to "offset" your position when, through no fault of your own...........phone lines fail.
5. If you are paying the asking price (for a buy) then it's going to be difficult to profit. If you are joining the (best) bid.........then a lot of times you may not get filled!! a frustrating event.
In defense of this approach, I would say the following:
1. If you have fear of "pulling the trigger"......this may mostly remove it. When I trade once or twice a week , I get scared but because you are doing so many trades then the next trade result means less. (for a start you don't have time to think soo much) Like a casino, you have a very small edge but have a lot of customers. (trades)
2. I once read a line that said that: until you have done 5 - 6000 trades, you cannot call yourself a trader, you will not have experienced every type of trade (including unexpected news items!!)
3. If you want to trade with a minimum account size, you can i.e. margin. You could trade a 1 lot a lot of times for small returns (positive) a la: costco, walmart model etc.
There are more things to say and could be said better by others with more experience. Those who trade this way and who average 1 tick per completed trade are probably very few........and deserve their medals.
I will pull the plug on this method (soon I hope) It is addictive and if profitable your heart will want to keep doing it but in my head I know it will do me little good. The sensible thing is to have the market make the money (trade for longer term where you don't need to screen watch) rather than me make the money.
On thursday the sweat was running down the inside of my right arm, I had clicked the bid column instead of the ask!! and sometimes I sleep poorly.
xs
