subject: Scalp Trading For A Prop Trading Firm [print this page] Scalp trading is a extremely quick style of trading where you buy and sell a stock in a frame of time from seconds to minutes transacting many transactions during the day. Although your goal will be for profits of only 1 or 2 cents per transaction/trade, when you consider the high volume of shares you will be flipping, your results can be substantial. In addition, 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. Focusing on this alone can generate a good income. To be specific, scalp traders work at exploiting the bid-ask spread. They buy a stock on the bid then immediately unload at the ask. Because this style of trading does best with stocks that are under $10 that don't move much, scalp traders generate revenue by transacting large volume. Scalp trading has no big one time profits, but at the same time there are fewer not being profitable and so it tends to be a lesser risk style of trading. However, not just anybody can scalp trade. There are tools that are necessary and you must have discounted commission rates. It requires extremely discounted scalp trading commissions and privelaged access to the NYSE floor. Both of which you would have a hard time finding at your E*trade or Scottrade broker. So how can you do this? Well, you need to find a reliable proprietary trading firm that will take you on as an experienced professional trader. And if you are not, there are some proprietary trading firms that will educate you.
Finding a good prop firm is about finding a firm that allows you to trade their money and have deeply discounted commissions. Most prop trading companies will allow you join their firm with only 5 or 10 thousand dollars. With that,For that, they will let you trade with $100,000 or more if you have a profitable track record. It's not unusual for a proprietary trading firm to accept risk deposits of $10,000 and provide you with buying power of $300,000 but you need to realize that they will want a percentage of your profits. The profit sharing scale can range from you getting 50 to 95% but that will depend on your past history. 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 style will be price and order routing advantages offered. Ask them how many floor routes they offer and if they can provide you with personal access to a floor specialist. Most proprietary trading firms will do this if you are consistent in trading good volume. Next, see what their commission 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; an improvement over the $8.95 per trade rate at Scottrade. Also make sure that they pass the rebates back to you because as you will learn, the rebate can be an added bonus to profitable scalp trading.
Many courses are available that teach the the specifics of scalp trading. Become educated so you can improve your chances for success. In addition, if you would like a place to trade, the proprietary trading firm below offers the above rates, many floor routes and scalp trading seminars. Happy trading.
Scalp Trading For A Prop Trading Firm
By: anthonynunes
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