Scalping Aussie stocks

MS+Tradesim · 21 April 2009

skc said:
Thank you MS for a great thread. I am glad that I have helped in a small way to enriched this forum .

Well, I figured I should do my bit to add some content too.

With your 1 tick stops, how do you place that order?

I don't. I have a limit order ready to go and finger on the trigger.

Would you exit as soon as the entry minus 1-tick price is traded? Or would you keep watching the DOM and wait till it gets too thin for comfort?

Keep watching the DOM. I like to see the sell-off on volume. Often a sell-down seems to be just someone who sends in a market order right before the price line flips so they get filled a tick below what they were expecting....that's my best guess anyway. EDIT: to clarify this, say the spread is 0.05/0.051 and then buyers flip it up to 0.051/0.052 but only a small quantity of order volume left at 0.051. A seller then flips it back by putting in a limit at 0.051 so the spread returns to 0.05/0.051 and a milli-second later a sell order goes through at 0.05 but no more selling occurs and then price flips back up....I suspect the sell at 0.05 was probably just a market order that the seller was hoping to get 0.051 but missed because of someone faster.

Is the screen shot Paritech?

Yep. Comsec discontinuing ProTrader 1 was the best thing to happen to me! I signed up for the real thing instead of their scaled down version. And Comsec Iress inspired me to just complete the move to IB for broking.

Thanks again.

All good. Might help someone else and also opens me to hear some constructive critiques.

MS+Tradesim · 21 April 2009

MS+Tradesim said:
What I'm looking for in the DOM is replenishing or pulling of orders at the action levels. Plus, the levels of activity reveal overall sentiment putting the odds for or against you.....in conjunction with the activity of the sideliners.

Nero64 said:
How or where can you extract this from the DOM.

Nero,

In reviewing the first trade from above, in at 0.055 and out at 0.057, you can see in the DOM what the sellers are angling for, and had I been focused I would have held longer and maybe got out at 0.058.

Below are the 3 shots and I've circled the lines at 0.058 and 0.059. As the action unfolds and price rises, the line at 0.058 is getting smaller and the line at 0.06 is bulking up significantly. 0.059 is also gaining some orders. I read this as the majority of sellers there are really hoping to get 0.06 and there are always the frontrunners so they're looking to get out at 0.059. But 0.058 is diminishing ie. orders are being pulled, and as the price is rising the buying lines are thickening nicely.

This is of course only the orders in the book and I'm also closely watching the COS to see how orders are hitting at the bid or ask. At the time there was lots of buying and little selling.

Nero64 · 21 April 2009

Hi MS + Tradesim,

So the rising number at .06 says more people are setting there profit target to .06 as they can see the price is rising, i.e the initial profit target sell is being ammended from .058 to .06 hence the former is getting smaller.

Why didn't you work this out when you bought in? - Is it the pressure or do you need hindsight after the fact.

I suppose you can't work this sort of stuff out in the normal Commsec DOM (Laughs and chuckles) so I need some real time data feed?

By the way PRR came out with a company presentation about their treatment for Ovarian Cancer, and they have hit an all time high. Who says news doesn't move the share price, i can't see how normal supply and demand could of moved it 88%.

saiter · 21 April 2009

MS+Tradesim said:
Nero,

In reviewing the first trade from above, in at 0.055 and out at 0.057, you can see in the DOM what the sellers are angling for, and had I been focused I would have held longer and maybe got out at 0.058.

Below are the 3 shots and I've circled the lines at 0.058 and 0.059. As the action unfolds and price rises, the line at 0.058 is getting smaller and the line at 0.06 is bulking up significantly. 0.059 is also gaining some orders. I read this as the majority of sellers there are really hoping to get 0.06 and there are always the frontrunners so they're looking to get out at 0.059. But 0.058 is diminishing ie. orders are being pulled, and as the price is rising the buying lines are thickening nicely.

This is of course only the orders in the book and I'm also closely watching the COS to see how orders are hitting at the bid or ask. At the time there was lots of buying and little selling.

This explains so much lol. Thanks

MS+Tradesim · 22 April 2009

Nero64 said:
So the rising number at .06 says more people are setting there profit target to .06 as they can see the price is rising, i.e the initial profit target sell is being ammended from .058 to .06 hence the former is getting smaller.

I don't know where the orders from 0.058 have gone. They could be sitting on the sidelines or they could have sold down already. But basically, watch the lines and the COS and you can work out probable outcomes. In this case though, 0.06 was a clear choice for sellers. Round numbers have a remarkable pyschological value. It can be used as an advantage to frontrun getting in or out. Often, people in those lines never even get filled.

Why didn't you work this out when you bought in? - Is it the pressure or do you need hindsight after the fact.

I'm normally working it out on the fly. Usually I pick up on the majority of those clues, but this wasn't a well executed trade. Nevermind. It is what it is, warts and all.

I suppose you can't work this sort of stuff out in the normal Commsec DOM (Laughs and chuckles) so I need some real time data feed?

If you want to scalp, a live data feed is a basic necessity.

Jack Payback · 22 April 2009

Can anyone recommend any books or resources on this topic?

Cheers

MS+Tradesim · 22 April 2009

Jack,

I don't know what's useful or not. I learnt through screen-time. I think that's the only real way to get it. This style is fast moving, so it doesn't lend itself to theory and detailed analysis that might help in longer term trading.

Learn on sim. Make your positions sizes smaller than you think you should. Cut your losses quickly. One loss left to run can wipe out a day's or week's profits. And if the loss is running away it won't come back.

Trembling Hand · 22 April 2009

MS+Tradesim said:
I don't know what's useful or not. I learnt through screen-time. I think that's the only real way to get it. This style is fast moving, so it doesn't lend itself to theory and detailed analysis that might help in longer term trading.

Learn on sim. Make your positions sizes smaller than you think you should. Cut your losses quickly. One loss left to run can wipe out a day's or week's profits. And if the loss is running away it won't come back.

XACTLY

Jack Payback said:
Can anyone recommend any books or resources on this topic?

Cheers

Don't do this cus you think its easier than position trading or because you can't make "normal" trading work. You scalp because you can see it working.

Jack Payback · 22 April 2009

Trembling Hand said:
XACTLY Don't do this cus you think its easier than position trading or because you can't make "normal" trading work. You scalp because you can see it working.

I'm still too much in newb territory to be attempting this, just exploring the concept, there's is not too much written about it.

Question for Tradesim - do you use DOM and COS only? Do you use chart indicators like MACD, relative strength, moving averages etc?

MS+Tradesim · 22 April 2009

Jack Payback said:
Question for Tradesim - do you use DOM and COS only? Do you use chart indicators like MACD, relative strength, moving averages etc?

I look at the chart prior to a trade but don't use any indicators. Just daily volume to confirm suitability and possible support/resistance areas to help focus potential entry/exit. Once I open the trade, I'm only looking at DOM and COS.

Listen to Trembling Hand. He's a very accomplished scalper.

skc · 22 April 2009

Slightly off-topic question:

Assume a DOM that looks like below...
$1.00, 2000
$1.05, 1000
$1.10, 1000

If someone just hit the market for 4000 shares, will he/she always sweep these orders up? Is it possible for anyone else to sneak in? e.g. If someone had a stop sell order at $1.05, or a stop buy for $1.05.

Does it depend on individual broker at all?

MS+Tradesim · 22 April 2009

skc said:
Slightly off-topic question:

Assume a DOM that looks like below...
$1.00, 2000
$1.05, 1000
$1.10, 1000

If someone just hit the market for 4000 shares, will he/she always sweep these orders up? Is it possible for anyone else to sneak in? e.g. If someone had a stop sell order at $1.05, or a stop buy for $1.05.

Does it depend on individual broker at all?

If they hit at market, yes, they will keep sweeping up until filled. What can happen and fairly frequently is a sell order going in a split second either side of the buy order hitting which results in the sweep not going as high. Say someone sends an ask at 1.02 for 1000.

I guess what you're describing is theoretically possible and may cover some instances of the event I referred to, but since contingent orders necessarily lag action I suspect it wouldn't happen very often. I could be wrong.

MS+Tradesim · 22 April 2009

3 ticks. Perfectly traded as I've been outlining above. It did keep on running though beyond the target. In future, might look at taking off say 2/3 at target and let a portion run. Moved too quick to take screenshots, sorry.

Looking beyond the scalping possibilities on this one, PNO is a micro biotech/pharm. company. Position traders might be interested in looking at it in light of what has happened over the last few days with PRR and NEU. This is NOT a recommendation. Just might interest some to check it out further for other styles of trading.

MS+Tradesim · 22 April 2009

This is a potential set-up. It looked interesting but stock kept getting drip fed into the line at 0.008. The buyers couldn't take out the line. It has failed in the minute or two since then, but it will stay on the watchlist for another opportunity.

Also, the buy/sell lines at the action area here are roughly even so the sentiment of the sideliners is key to whether or not this one can work. Buy orders weren't flooding into the buy side and the sells kept replenishing.

Jack Payback · 22 April 2009

MS+Tradesim said:
With respect to skc's question here:

I look for lower priced stocks preferably sub-10c but anything up to about the 40c mark works for me.

Can I ask why these stocks? Why would ASX20 stocks with high volume not be suitable?

beamstas · 22 April 2009

MS+Tradesim said:
3 ticks. Perfectly traded as I've been outlining above. It did keep on running though beyond the target. In future, might look at taking off say 2/3 at target and let a portion run. Moved too quick to take screenshots, sorry.

Looking beyond the scalping possibilities on this one, PNO is a micro biotech/pharm. company. Position traders might be interested in looking at it in light of what has happened over the last few days with PRR and NEU. This is NOT a recommendation. Just might interest some to check it out further for other styles of trading.

Am i correct in thinking you just made around $28,500 (after comms) in a few minutes?

Bloody hell

Nice one ms

Cheers,
Brad

Trembling Hand · 22 April 2009

beamstas said:
Am i correct in thinking you just made around $28,500 (after comms) in a few minutes?

You are out by one decimal point.

it was $285,000

Just kidding $3000

nomore4s · 22 April 2009

beamstas said:
Am i correct in thinking you just made around $28,500 (after comms) in a few minutes?

Bloody hell

Nice one ms

Cheers,
Brad

How did you work that out? I got $3000 before comms.

Edit: TH beat me

Timmy · 22 April 2009

What a great thread, thanks MS and other contributors.

Question for you MS re times, do you tend to take off the 'lunch time' and only trade the higher volume/activity parts of the day, or no?

MS+Tradesim · 22 April 2009

Jack Payback said:
Can I ask why these stocks? Why would ASX20 stocks with high volume not be suitable?

For me it's about bang for the buck. I'm only wanting to take a couple of ticks so I need high volume and low costs to make the small movement worth while. To do this on a top 20 stock you would have to take a smaller position and thus need far larger movement for similar returns.

Just say I'm shooting for 3 ticks on something at $0.05 and I take a 250,000 share position. If I get my target the round trip will cost me $20.60 in comms and gross $750.

To make $750 on a top 20 stock the numbers are very different. Take ANZ for example. I could comfortably take a position size of maybe 2000. To get a return of $750 before comms it would have to rise 38c. Assume I buy at 16.40 the entry comm is 26.24 and to exit at 16.78 another $26.85. That's now $53 for the round trip in brokerage plus movement of 38 ticks. But looking at a target of 38c is a very different ballgame.

I only take scalps that make sense for a move of a few seconds to a couple of minutes. That makes it easy for me to find targets at low price points and take a position size that is logical to the volume, DOM and intended target plus the total value of the trade is a lot less, meaning less brokerage.

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