Question about Scalping

[awhoa99 10]

As it pertains to scalping and scalpers, what kinda profit are they looking to make?? I know that they want to keep profits small and losses smaller, but what kind of profit are they willing to take. 5 cents, 10 cents, 15 cents.....I know it depends on what the stock is doing but are they willing to take a 5 cent profit on something?? Also, do scalpers mainly use time and sales or do they use something else? Would pivot points help a scalper in anyway?

[Soultrader 12]

Hello awhoa99,

 

I have a trading buddy of mine who is mainly a scalper. From my observation, here is what I can tell you. He trades off the tape 90% of the time using a 3-5 tick stop. So in stocks he would be using a couple cents up to a 5cents. His exits are all scaled out. Because his technique is only trying to capture short term moves, he scales out half at +5, a quarter at +10, and the rest whenever the markets tell him.

 

I do not think the average trader can profit from his methodology. He is super quick on his entries and is right almost 70% of the time. I do think it takes years of tape reading to master this kind of skill.

[Wallstreet 10]

Yes I agree, the scalping traders have short time but it can be very profitable if the exit strategy is strictly followed. I guess a novice trader can use it and after experimentation can follow a technique of their own with education and exposure.

 

Can anyone help me with the limitations with this kind of trading?

[Soultrader 12]

Yes I agree, the scalping traders have short time but it can be very profitable if the exit strategy is strictly followed. I guess a novice trader can use it and after experimentation can follow a technique of their own with education and exposure.

 

Can anyone help me with the limitations with this kind of trading?

 

Couple limitations I can think of:

 

1. Scalpers tend to do 40+ roundtrips day with enormous volume

2. Will not catch the bigger swing.

3. Staring at tape all day

 

But this would not be considered a limiation from a scalper point of view. This is their trading style and they tend to be good at what they do. They are very quick to pull the trigger and very quick to exit at the first warning sign as well.