Scalping - is it something thrown upon?

[maxima]

I have just found out that what I've been doing for a few weeks and that I could do well on small bets in SB called - 'scalping'...

I've been for a day here reading/writing... I've got an impression that scalping is sort of activity not very welcoming by service providers (SB/CFD) but also in the community..

Is it something like - if you are a doctor then that is cool. But if you do legal abortions then you will eat your lunch alone outside the hospital and feminist activists will throw dead cats in your window?

Is this the case?

 

[shadowninja]

They don't like it because they can't hedge your bets so easily and newbies tend to lose money doing it (and usually blame the company).

 

[maxima]

They don't like it because they can't hedge your bets so easily and newbies tend to lose money doing it (and usually blame the company).

But surely this is not more immoral than any other type of trading? Or is it

 

[timsk]

But surely this is not more immoral than any other type of trading? Or is it

Hi maxima,
Broadly speaking, scalping relates to the size and duration of a trade, it has nothing whatsoever to do with morality. Some 'investors' look down their noses at us 'traders' because we go long and short the market, often with little or no knowledge or interest in the instrument we're trading. All we tend to care about is making a profit on a consistent basis. Investors only go long the market and, by ploughing their hard earned into stocks (or whatever) they claim that they're underpinning the economy by encouraging growth and, therefore, the moral high ground belongs to them. From their lofty perspective, all traders - including scalpers - do little more than provide liquidity to the markets at best and, at worst, undermine economic growth by shorting the market. Needless to say, this is not a view that will get much truck around here!
:cheesy:
Tim.
P.S. I almost forgot, the bottom line is - if scalping works for you - good on you, go for it!

 

[gooseman]

of you can make scalping work for you then fair play. it's more abou market mechanics and inefficiencies than any 'macro' or econometric knowledge....but then again if you're sitting on a big bid/offer waiting to pick up a lot or two and get smashed don't go crying about it....

 

[maxima]

Hi maxima,
Broadly speaking, scalping relates to the size and duration of a trade, it has nothing whatsoever to do with morality.

Tim.

P.S. I almost forgot, the bottom line is - if scalping works for you - good on you, go for it!

Thank you

Yes it does work on small SB bets (£1) for a few weeks.

But after all reading here it appeared that you wont be able to make money consistently with SB/CFD companies on bets £25-50 (which was my plan).

Now I am looking into 'real brokerage' for that and see it very hard to make any money using real future contracts for FTSE for example. Fees are killing whole idea. Or you have to slave 14hr a day just to make living risking to lose everything in nerve breakdown one day....

Now I am really confused.

 

[gooseman]

scalping thro a broker loses your edge....

 

[maxima]

well.. can you please tell me - how the real boys are doing this?

P.S. broker - I meant as opposite to SB/CFD companies. Of course through automated system, not phoning them to buy a contract or two.

 

[gooseman]

dma-direct market access on their own terminals. locals.

 

[maxima]

sorry I dont know what 'own terminal' does mean.

are you saying there is remote version of real floor trading? you buy remote access to LIFFE floor or something and trade FTSE without a broker? :-0

 

[maxima]

They don't like it because they can't hedge your bets so easily and newbies tend to lose money doing it (and usually blame the company).

Thank for the answer.. But CFDs supposed to be related to real future contracts/shares.. Why would it be uncomfortable for CFD companies?

 

[gooseman]

sorry I dont know what 'own terminal' does mean.

are you saying there is remote version of real floor trading? you buy remote access to LIFFE floor or something and trade FTSE without a broker? :-0

you're kidding right?

liffe is all screen-based....has been for a while.

 

[timsk]

well.. can you please tell me - how the real boys are doing this?

As gooseman says, you need the right kit to do it properly, along with detailed knowledge of level II quotes and lightning fast reactions. Scalping used to entail buying at the bid and selling at the ask, thereby capturing the spread. Profits are small but frequent; some scalpers taking many hundreds of trades in a single day. Now, the term tends to apply to a very short lived trade which results in a small profit. It's frowned upon on these boards only in as much as it is next to impossible to do with a SB broker because their spreads are that much wider than those of a DMA broker. Also, you have no choice but to buy at the ask and sell at the bid, so each and every trade starts its life at a huge loss relative to the expected profit. For example, if the spread is 4 points and you're scalping for a 2 point gain, then the risk:reward is 2:1. If you're day trading and looking for an 8 point gain, then this statistic is reversed to a more healthy sounding 1:2. The longer the duration of the trade, the greater this ratio is likely to become, 1:10, 1:20, 1:100 and beyond. Hence the reason why newbies are directed away from daytrading and towards longer term timeframes. Actually, the risk is a lot worse than I've suggested here because risk implies potential loss whereas, in fact, the loss is guaranteed on every single trade. Even with DMA it's very very difficult; the spread, slippage and commissions combine to produce a lethal cocktail that kill off all but the most gifted professionals with deep pockets and state of the art kit.
Tim.

 

[maxima]

you're kidding right?

liffe is all screen-based....has been for a while.

cool. good to know. so are you saying that here on this forum are people who trades directly on exchange?

just curious - how much of capital do you need to buy 1 yr access to that and to trade 50 contracts? few millions? and they are still stting and writing on forums...

I will never stop to be amazed by human nature :cheesy:

good for you guys! :clap:

 

[gooseman]

cool. good to know. so are you saying that here on this forum are people who trades directly on exchange?

just curious - how much capital you need to buy 1 yr access to that and to trade 50 contracts? few millions? and they are still stting and writing on forums...

I will never stop to be amazed by human nature :cheesy:

good for you guys! :clap:

yeah of course-it's quite a common practice.....asssuming you have some capital (10-20k) you can sit down and pay your monthly charges to trade. plus your costs per lot. monthly charges run from a grand upwards depending on systems/newsproviders/platforms etc.

you can make a great living on it however you haemmorage money when you don't trade or have a crappy month.

actually this forum is so active as it can be quite a tedious way to make a living.

 

[maxima]

Thank you timsk, very comprehensive... Really appreciate..

 

[maxima]

you can sit down and pay your monthly charges to trade. plus your costs per lot. monthly charges run from a grand upwards depending on systems/newsproviders/platforms etc.

I am sorry to bother you that long but - just a bit more details so I can start thinking

Are you saying that DMA to LIFFE is about 1k a month?

Can you trade directly on exchange on margin?

Thank you

 

[gooseman]

I am sorry to bother you that long but - just a bit more details so I can start thinking

Are you saying that DMA to LIFFE is about 1k a month?

Can you trade directly on exchange on margin?

Thank you

you need to go through a company (arcade) who will clear your trades-you can't just 'buy' access. these companies-for a monthly fee-will provide you with a system to trade and a seat and whatever else you want in terms of data, cahrting packages etc.

the capital you put up is used as margin....

somewhere on the board is a list of arcades...schneiders etc.....

 

[new_trader]

I have just found out that what I've been doing for a few weeks and that I could do well on small bets in SB called - 'scalping'...

I've been for a day here reading/writing... I've got an impression that scalping is sort of activity not very welcoming by service providers (SB/CFD) but also in the community..

Is it something like - if you are a doctor then that is cool. But if you do legal abortions then you will eat your lunch alone outside the hospital and feminist activists will throw dead cats in your window?

Is this the case?

Maxima, more often than not, scalping means going with the immediate trend in prices and taking a fairly small profit. It is almost impossible to do this successfully through a S/B or a CFD simply because you aim to make a few points profits after commission. There is no transparency with S/B or CFD providers and their spreads are too large. I opened my Direct Access account with $US5000 and there are no monthly fees at all and it is suited to most styles of trading you can think of, including scalping.

Online Futures Trading - Open E Cry ™ a Direct Access Trading System

 

[maxima]

you need to go through a company (arcade) ...
somewhere on the board is a list of arcades...schneiders etc.....

understood. thanks for your time!