Scalping Aussie stocks

[MS+Tradesim]

What a great thread, thanks MS and other contributors.

You're welcome. Thought it was time I added something a bit more substantial.

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?

Totally depends. Sometimes there's plenty going on across lots of shares and kept busy most of the day. The majority of time is spent stalking the trades. Actual execution is rarely more than a few minutes. On average, though, I would say volume does drop off over the middle of the day.

For me, the open is hard to trade as plenty of things go up quickly and then settle off and stay flat. Like this morning, I lost one tick on CER. It looked ok, but there was just no follow through volume so I exited. Afternoon tends to be nice as you find the shares that have held up through the day and are continuing to attract buyers.

 

[beamstas]

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

Edit: TH beat me

Oops

Thought it was 9 cents and 12 cents, not 0.9 cents and 1.2 cents

My mistake

Brad

 

[CanOz]

MS, Great Stuff! A couple of years ago in the big resource bull there were heaps of penny stocks making big moves on tons of volume almost every day or every other day. This strategy would have been like taking candy from a baby back then....do you recall those days?

Cheers,



CanOz

 

[Jack Payback]

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.

Do you trade on news or announcements or just fast movers?

 

[cutz]

I'm not sure how relevent this is but this system of brokerage appears to be attractive for interday scalping of aussie stocks, http://www.traderdealer.com.au/Why-Use-Us.aspx?sec=TradeLikeAPro .

 

[sails]

I'm not sure how relevent this is but this system of brokerage appears to be attractive for interday scalping of aussie stocks, http://www.traderdealer.com.au/Why-Use-Us.aspx?sec=TradeLikeAPro .

It's one of the plusses with TD - works the same with options and allows for scaling during that day provided it's inside their limits.

 

[Nero64]

Did Anyone see PNO today, it went from a low of 0.003 to 0.015 (500% Gain). Imagine putting 1,000,000 shares on that.

I was tempted to get on it seeing it at .011 then in the space of 5 mins after I read its background it went to 0.015. Then it went back down to .011 again.

I can just imagine 1000s of people doing this daily like you MS&T. I tried it last year with Coal and coal seam Gas stocks. Made a bit of light change, it was fun to.

 

[MS+Tradesim]

In adding to the overall picture I'll run through a setup that didn't work out with the result I didn't take a scalp on it. I was watching IMI at the 0.007/0.008 level as posted earlier. I was hoping it would co-operate the way PNO did.

Something that's important to me is the 'feel' of how the orders and transactions are flowing. It has to feel 'easy'. IMO, if the action makes you feel like getting behind and pushing or zapping a few modems on the other side of the exchange to clear the sellers, then it probably isn't going to work.
This played out like that.

1) At around 14:30 there was plenty of action at 0.008. You can see the size of the buys. The orange dotted line goes around one at 14:35:15. On the DOM buyers bulk at the 0.008 level.

2) One seller starts the off-load with 2,000,0000 then a few more bigger sellers follow up. What I'm looking for now is a lack of further selling, perhaps a pause and then buying at 0.009 to start. But others dump in and the price is flipped back. The DOM keeps flipping 0.007/0.008 to 0.008/0.009 and back again but all transactions are occurring at 0.008.

3) 10 mins later you can see some brave soul take a little nibble at 0.009 for 50,000. But there's no follow-up and the sellers keep unloading at 0.008. At 14:49:26 another small bite at 0.009 for 150,000. This is why I never set price. I only follow it. I just want a small bite of the pie. I'm not trying to cause anything to happen. This example shows why. If no-one else shares your view, then it isn't going anywhere.

4) There's no follow through. The sellers are motivated and they're unloading.

5) Worse, you can see the buy line at 0.007 is diminishing but that was occurring without transactions. That means the orders are being pulled. The buyers are expecting the sellers to keep going now. It's no longer a question of can it keep rising, but how far are they prepared to push down?

 

[MS+Tradesim]

6) Skip forward about 10mins and the outcome is clear. The buyers never had a hope of overwhelming the sellers who were prepared to keep feeding in stock at 0.008. When this occurs, sideliners start thinking about the fact that they're just not going to see any better and they're prepared to push down further so 0.007 gets the next wave.

This stays on the watchlist to see if tomorrow brings another assault from buyers.

 

[MS+Tradesim]

MS, Great Stuff! A couple of years ago in the big resource bull there were heaps of penny stocks making big moves on tons of volume almost every day or every other day. This strategy would have been like taking candy from a baby back then....do you recall those days?

Yeh, but I was trend trading then, which was easier and maybe more profitable.

Do you trade on news or announcements or just fast movers?

Not really looking at news. The movers are usually running for a reason and sooner or later it shows up in a speeding ticket or an announcement. Although both PNO and PRR gave good trades today after news. In that case, trading the news was coincidental. They were both already on my watchlist.

And that's about all of it. Just screen-time and practice. After a while you can see what's happening in the DOM and COS and you just wait for good setups.

 

[Jack Payback]

And that's about all of it. Just screen-time and practice. After a while you can see what's happening in the DOM and COS and you just wait for good setups.

Thanks for the insights.

Cheers.

 

[skyQuake]

MS did you catch the DYL run today? It was almost the same as what you put up!

 

[MS+Tradesim]

MS did you catch the DYL run today? It was almost the same as what you put up!

Didn't see it till too late. Only got 2 ticks on it. Have been wasting most of the day looking for an entry on WOW. Long or short. Trying to set a position trade on it.

 

[skc]

Hey MS, have you tried the IB book trader to do your scalping? It seems ideal, although you will still need another feed as IB don't provide full depth.

 

[MS+Tradesim]

Hey MS, have you tried the IB book trader to do your scalping? It seems ideal, although you will still need another feed as IB don't provide full depth.

Thanks for the suggestion. It looks 'weird' on stocks. I'm so used to seeing the side by side style of DOM, it's hard to adjust, but I agree it could be useful.

 

[MS+Tradesim]

MS did you catch the DYL run today? It was almost the same as what you put up!

If 0.28 gets decimated, might get another bite.

 

[skyQuake]

If 0.28 gets decimated, might get another bite.

Agree, first test was fast and vicious, but it looks like there's a dedicated buyer coming to break those highs.

 

[MS+Tradesim]

It's like magic. Orders flood in at a round number and the action just stalls. Everyone's waiting for someone else to make the first move.

 

[MS+Tradesim]

This is why as a scalper you never want to set the price. You want to follow the movers. Dunno what 10 shares is about but it never traded at that price again. Next run was down. In any case, like the IMI setup I ran through before, a new high on low/miniscule volume is dangerous.

 

[Nero64]

MS,

So say you have

Last price .205

Buy Sell

116,978 .20 743,125 .205

then

Buy Sell

116,978 .20 606,145 .205

Since the sell number is going down and there is not enough buys to fill the excess supply prices will go back down to .20 right.

Just to note I used the DOM to buy into IPL yesterday after a 7% plunge. I could see the buyers stacking up and the price just hovering 1-2c up and down and it finished off its lows. Today it went down to 2.05 to finish at 2.11 which suggests to me that there was absorption volume in play. Will see how it pans out.