Today, in this segment of "What Else Ya Got", Tom Sosnoff and Tony Battista examine scalping in an electronic world.
To start to trade you first must be permissioned for all products. Then you have to familiarize yourself with the risk and tick sizes for each product. For example, a tick in the /ES (E-minis) is $12.50 and the contract has a nominal value of $106,000. It's important to be familiar with their corresponding options, ETFs and pairs.
The following traits are important for scalping:
To have the ability to multitask in trading.
To have the capital to scalp or day trade and to maximize the use of your capital.
To understand liquidity and leverage of the most active instruments.
To have an advanced understanding of implied volatility.
To be an active trader and always stay small.
To be able to approximate the daily range based on the current active ATM implied volatility.
To be able to assess perceived price extremes at both ends of the opening range and realize that two-way trading is difficult.
To be comfortable with the rinse and repeat mentality "and not back off."
To set reasonable profit targets for intraday trades.
To be able to recognize when you are in the wrong product and when the move has exceeded your expectations.
Tom said that he has about 10 friends that he stays in touch with from his trading floor days. Tom said that, "everyone of them scalp just to stay sharp."
Watch this episode of "What Else Ya Got" with Tom Sosnoff and Tony Battista to gain insight on how to better scalp and day trade in our electronic world.