January 2012
Intermediate to advanced
576 pages
16h 41m
English
CHAPTER 16
Extreme Scalping
There are high-frequency trading firms that make tens of millions of trades a day on a basket of 4,000 stocks, and they scalp for just a penny profit on each trade. That form of scalping is as extreme as it gets, but it is something that average traders without supercomputers located right next to the exchanges cannot hope to do. I have a friend who is an extreme scalper in the Emini, placing about 25 trades a day and scalping for two ticks per trade. I could never get him to tell me whether he used a protective stop or how big a loss he would allow. He also would never clearly answer my questioning about scaling in. Some traders are resistant to telling too much about what they do. I am not sure if it is because of the unrealistic fear that the world would copy them and their system would no longer work, or if they would be embarrassed to have people realize that they take lots of trades but still net only a couple of points a day. However, he did say that he trades about a hundred contracts per trade. A mutual friend told me that he had been to his $2 million house, and I believe that he is making over a million dollars a year.
Although I think this is possible for the very few people who have a personality that would allow them to do it, it would be virtually impossible for most traders, so most people should never attempt it. In general, since scalping usually requires the risk to be greater than the reward, the winning percentage has to be at least ...
