I come from a prop firm that’s heavily composed of traders that scalp for a penny profit on list of selective stocks that meet the necessary criteria. Yesterday, our firm has been banned for a week on using the routes on these selective stocks that are necessary to implement the penny scalping strategy from our provider due to selective traders “abusing” the routing privileges. My superior have informed the traders that it’s best for us to go home instead of attempting to trade other names since we won’t have an “edge.”
The advice from my superior advising us to go home due to the fact that we won’t have an edge directed an insulting vibe towards me. I thought to myself, if I’m able to read the tape on the selective stocks that I trade every day, shouldn’t I be able to read the tape on other stocks with similar criteria? Do I even have the right to consider myself as a trader if my credentials only allow me to trade the same stocks every day? What if in the future—and inevitably so—these stocks that I trade don’t meet the criteria to implement my firm’s trading strategy? After recently finishing reading your book: One Good Trade, I can only think about asking for your opinion. Do I have the right to consider myself as a trader?
1. I try and coach my own team.
2. Of course you are a real trader. You are a hyper active scalper. You do not have to go on the entertainment financial media complex and make longer term predictions to be considered a “real trader”. If you are working everyday at a style of trading, live, with real money into the market, then you are a “real trader”. As for your style the most profitable firms in the world employ it, HFTs, just with high powered computers.
3. It makes sense to me that you can slowly work to expand your game scalping other stocks and even other time frames. We encourage our traders to trade high beta stocks after becoming proficient is less expensive and less volatile stocks. In that same vein, you might try a High Beta Stock Scalp with 100 share lots as you are developing this trade and attempt to add this to your PlayBook.
4. I am not a fan of forcing a trader into one particular style. As a coach I have made this mistake in the past. Better to let guys express their trades with patterns that make the most sense to them. I have trained some guys who were not very good as intraday momentum traders who went on to be very successful traders in other products and time frames.
5. I hope you learned from One Good Trade the importance of process. So I ask what process will you develop to add other scalp trades to your PlayBook? You cannot just decide to start trading different stocks. You must develop a learning system for you to become consistently profitable in these new set ups.
I hope that helps. Thxs for reaching out to me and sharing your trading story.