Question:
My question is how big a move do you typically look for on a fairly quick intraday scalp trade ? I know we take what the market gives and the skill is to know “when to hold em and when to fold em”..but I wonder what the mindset is.
Example: watching LVS pull back to 46.70 today just before 12:00est, I saw the buyers come in and defend 46.70. Went to 46.90 in under 2 minutes, my thought is to cover half position and look for another 20 cents or so…depending on price action. I have limited capital so my question is how you what you would be thinking in this situation. Thank Guys !
Bella Responds
I like how you are thinking through this trade for your playbook. Oh the old scalp. That play no one wants to admit they make, just like Seinfeld never watched Melrose Place. As I say to our guys a scalp
is a legitimate trade. Here is what never will happen. Trader A takes their check to bank after a week of scalp chops.
The bank teller looks at the trader, looks at the check, finds her manager for whispers, and then says,” I am sorry but we cannot cash this check because it is the byproduct of Scalping.” Not gonna happen.
But in this day and age of HFT battling HFT battling third party HFT for a half a cent, the Scalp Trade has been deemphasized on the best intraday trading desks. The programs are just too fast programming out many of the easy traditional scalp plays. So we adjust but still can find an easy scalp here and there.
For me a Scalp Trade is a move to move trade. I scalp a long because the Tape has demonstrated clearly that the next move is most likely up in the stock. I get long and when the stock finds that higher ground I get out. This move is generally the spread of the stock plus a little more. We are talking 20-50c for most of these trades. But more specifically I pay the offer and sell when the stock slows on the tape (stops going up). Or I pay the offer and hit the stock when a bid I spot as protection is about to get hit out.
It’s long into the next move, taking no risk, both hands on the wheel, fast reacting, small profit trading.
Mike Bellafiore
Author, One Good Trade
2 Comments on “Traders Ask: The Intraday Scalp”
Mike, if I understand you correctly, does this mean your not a fan of taking partial profits? You’d rather see the whole position through to the end?
I’m not big on the partial profits thing myself but a lot of traders seem to recommend it.
I like taking partial profits. That is a very difficult thing to learn as a trader. That is not something I would like to teach via a blog as opposed to in person. Too hard.