Scalp trading is a extremely quick style of trading where you enter and exit positions within a time frame of seconds to minutes executing many transactions within a day. Although your goal will be for profits of only 1 or 2 cents per transaction/trade, when you consider the amount of trades you will be flipping, this can amount to healthy profits. Furthermore, profits can still be had even when your trade breaks even. Why? Because if you add liquidity to the market, the ECN will provide you with a rebate. Incorporating this one strategy could generate a good income. To be specific, scalp traders work at exploiting the bid-ask spread. They buy a stock on the bid then quickly sell at the ask. Since this style of trading performs better with low priced stocks that don’t move much, scalp traders build their account by transacting large volume. Scalp trading has no homerun profits, but at the same time there are lesser not being profitable and so it is a safer method of trading the stock market. 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 commissions and direct access to NYSE floor routes. Both of which you would have a hard time finding at your E*trade or Scottrade broker. 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, you will need to find a proprietary trading firm that will educate you.
Finding a good prop firm means locating a firm that will let you to trade their capital as well as offer rates that are discounted. Most prop trading firms will let you join their firm with only 5 or 10 thousand dollars. For that, they will let you trade with $100,000 or more if you are a proven successful trader. It’s not unusual for a proprietary trading firm to accept a $10,000 deposit and provide you with the ability to trade with $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 prop trading firm for your scalp trading method will be price and routes offered. Ask them how many floor routes they have and if they can provide you with your own personal floor broker. Any good proprietary trading firms will do this if you are a large volume trader. Next, see what their trade rates are. You will want to find a firm that will charge .0005 to .0007 per share. On a 2,000 share trade, that would be 1.00 to 1.70 dollars in and out; much better than your $8.95 per trade rate at Scottrade. Be sure to also confirm that they pass the rebates back to you because as you will learn, the rebate portion of the trade will be your bread and butter to profitable scalp trading.
There are many courses available that teach the the finer elements 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, many floor routes and scalp trading seminars. Good trading.
Affinity Trading is an professional educator in the art of Trading Stocks for a living. In addition to day trading courses, Affinity also offers a scalp trading program. Visit the website today for more info. Click now for: Day Trading Careers.
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