Day Trading Evolves Into Scalp Trading
Scalp trading is an extremely quick method of trading where you make trades in a frame of time from seconds to minutes transacting a lot of trades within a day. Even though your goal will be for profits of only 1 or 2 pennies per transaction/trade, when you consider the amount of trades you will be flipping, your results can be substantial. Furthermore, you can still make a profit even when your trade breaks even. Why? Because when you add liquidity to the market, the ECN will provide you with a rebate. Focusing on this alone can manufacture a nice daily return. Specifically, scalp traders trade in between the bid-ask spread. They purchase a stock at the bidding price then immediately sell the same position at the asking price. Since this style of trading does best with low priced stocks that don’t move much, scalp traders profit by transacting large volume. Scalp trading has no big profit trades, but at the same time there are fewer chances of losing and so it is has a lower risk level than swing trading or day trading. But wait, not just anybody can scalp trade.
Low commission rates and the proper tools are an absolute necessity. It requires extremely discounted scalp trading rates and direct access to NYSE floor routes. Both of which you would have a hard time finding at most discounted brokers. So how can you do this? There are proprietary trading firms that take you on as an experienced professional trader. And if you are not, there are some proprietary trading firms that will teach you.
Looking for a good proprietary trading firm is about locating a company that will let you to trade their capital and have deeply discounted commissions. Most proprietary trading companies will allow you join their firm with only 5 or 10 thousand dollars. With that, they will provide you with $100,000 in buying power or more if you have a profitable track record. It’s not unusual for a proprietary trading firm to take a $10,000 deposit and provide you with buying power of $300,000 but you need to realize that they will want a percentage of your profits. Many will take 10 to 50% but that will depend on your profitability. The more profitable you are, the less they will ask for.
The most important decision when looking for a proprietary trading firm for your scalp trading style will be price and floor routes offered. Ask them how many floor routes they have access to and if they can assign your own personal floor broker. Most proprietary trading firms will do this if you are consistent in trading good volume. Next, see what their trade costs are. Ideally, you want to find a firm that will charge from .0005 to .0007 per share . On a 3,000 share trade, that would be 1.50 to 2.10 dollars per roundtrip trade; much better than your $8.95 per trade rate at Scottrade. Also make sure that they pass the rebates back to you because as you will learn, the rebate is just as important to your scalp trading.
There are many courses available that teach the the specifics of scalp trading. Get educated so you have a better chance for profits. Furthermore, if you would like a place to trade, the proprietary trading firm below offers the above rates, good floor routes and extensive trader education. Successful trading.
Affinity is most know for their online day trading courses that range from 2-day online courses to live hands on 5-day trading labs. They show people a how to implement micro trading into their toolbox of trading tactics.
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