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Scalping in Day Trading
 

Scalping in Day Trading

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By www.ProfitableTradingTips.com ...

By www.ProfitableTradingTips.com

Scalping in Day Trading

Traders who engage in rapid momentum trades are often scalping in day trading. These traders make their profit from the difference between bid and ask prices. Even in a flat market traders can profit from scalping in day trading. In order to successfully make a business out of scalping in day trading the trader needs to pay close attention to the market, always be aware of market fundamentals, and keep abreast of technical analysis. Despite the theoretical possibility of trading in an absolutely flat market the price of a stock constantly moves to some degree throughout the trading day. Thus when scalping in day trading one acts as a mini trend trader as well.

In and Out of Positions in a Hurry

There is a rhythm to scalping in day trading and it is fast. Traders seek to profit from the actions of traders to simply take the bid and ask prices of a stock. This strategy guarantees a profit if the trader acts quickly. It can result in losses if the stock price moves too quickly. As an example, Xyz Corporation has a bid price of $10.10 and ask price of $10.15. If the scalper can buy at the bid price and sell at the ask price he gains $0.05 per share, a small amount but a lot if repeated many times throughout the day. However, the market might move lower before he can complete his trade. Let’s say that the stock moves so that the bid price is now $9.90 and the ask price is $9.95. The trader who purchased for $10.10 now needs to sell at $9.95 if he wants to quickly exit his trade. The other choice is to continue the trade in hopes that the market will turn upward and not fall farther. This later course is anathema to scalping in day trading. When scalping a trader is never trying to outguess the market but simply helping to make the market and make repetitive small profits.

The Nature of Bid and Ask Prices

Bid and ask prices are available on markets across the world. By using this price system traders are able to execute trades immediately, so long as there are enough bid prices to match ask prices. The difference between bid and ask prices is called the spread. Gaining the spread on every trade is the goal when scalping in day trading. The ideal scalping trade would be instantaneous. Buy at the low price and sell at the high. Getting in and out in an instant would seem to be the ideal situation if dealing with absolutely static bid and ask prices. However, the market is never static so traders must look to market direction even when scalping in day trading. A successful scalper also engages in trend following in day trading.
Think of the Spread as a Bonus
Scalping in day trading takes advantage of market movement as well as the bid to ask spread. While trend traders use technical analysis to read market sentiment they attempt to ride out a trade to gain the maximum profit.

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    Scalping in Day Trading Scalping in Day Trading Presentation Transcript

    • By www.ProfitableTradingTips.com
    • Traders who engage in rapidmomentum trades are often scalping in day trading. By www.ProfitableTradingTips.com
    • These traders make their profit from the difference between bid and ask prices. By www.ProfitableTradingTips.com
    • Even in a flat market traders can profit from scalping in day trading. By www.ProfitableTradingTips.com
    • In order to successfully make a businessout of scalping in day trading the trader needs to pay close attention to the market, always be aware of market fundamentals, and keep abreast of technical analysis. By www.ProfitableTradingTips.com
    • Despite the theoretical possibility oftrading in an absolutely flat market the price of a stock constantly moves to some degree throughout the trading day. By www.ProfitableTradingTips.com
    • Thus when scalping in day trading one acts as a mini trend trader as well. By www.ProfitableTradingTips.com
    • By www.ProfitableTradingTips.com
    • There is a rhythm to scalping in day trading and it is fast. By www.ProfitableTradingTips.com
    • Traders seek to profit from the actions of traders to simply take the bid and ask prices of a stock. By www.ProfitableTradingTips.com
    • This strategy guarantees a profit if the trader acts quickly. By www.ProfitableTradingTips.com
    • It can result in losses if the stock price moves too quickly. By www.ProfitableTradingTips.com
    • As an example, Xyz Corporation has a bidprice of $10.10 and ask price of $10.15. By www.ProfitableTradingTips.com
    • If the scalper can buy at the bid priceand sell at the ask price he gains $0.05 per share, a small amount but a lot if repeated many times throughout the day. By www.ProfitableTradingTips.com
    • However, the market might move lower before he can complete his trade. By www.ProfitableTradingTips.com
    • Let’s say that the stock moves so thatthe bid price is now $9.90 and the ask price is $9.95. By www.ProfitableTradingTips.com
    • The trader who purchased for $10.10now needs to sell at $9.95 if he wants to quickly exit his trade. By www.ProfitableTradingTips.com
    • The other choice is to continue the trade in hopes that the market will turn upward and not fall farther. By www.ProfitableTradingTips.com
    • This later course is anathema to scalping in day trading. By www.ProfitableTradingTips.com
    • When scalping a trader is never trying tooutguess the market but simply helpingto make the market and make repetitive small profits. By www.ProfitableTradingTips.com
    • By www.ProfitableTradingTips.com
    • Bid and ask prices are available on markets across the world. By www.ProfitableTradingTips.com
    • Gaining the spread on every trade is the goal when scalping in day trading. By www.ProfitableTradingTips.com
    • The ideal scalping trade would be instantaneous. By www.ProfitableTradingTips.com
    • Buy at the low price and sell at the high. By www.ProfitableTradingTips.com
    • Getting in and out in an instant wouldseem to be the ideal situation if dealingwith absolutely static bid and ask prices. By www.ProfitableTradingTips.com
    • However, the market is never static sotraders must look to market direction even when scalping in day trading. By www.ProfitableTradingTips.com
    • A successful scalper also engages in trend following in day trading. By www.ProfitableTradingTips.com
    • By www.ProfitableTradingTips.com
    • Scalping in day trading takes advantageof market movement as well as the bid to ask spread. By www.ProfitableTradingTips.com
    • While trend traders use technicalanalysis to read market sentiment theyattempt to ride out a trade to gain the maximum profit. By www.ProfitableTradingTips.com
    • On the other hand a scalper will jump inand out of a position as the stock moves back and forth in its trend. By www.ProfitableTradingTips.com
    • Thus when scalping the trader has theopportunity to make money as the stock goes down as well as up even though iteventually moves in one clear direction for the day. By www.ProfitableTradingTips.com
    • By scalping in day trading the trader cutshis risk of losses, only trades when profit is clear, and only picks the best stocks and days for trading. By www.ProfitableTradingTips.com
    • Throw in a little range trading in daytrading to keep a clear sense of market direction and you have the complete stock scalper. By www.ProfitableTradingTips.com