Q: Mike – so since scalping is dead, can you explain how Shark has hundreds of trades a day? (What I saw in the Playbook from his results on SMB ChopTracker)? Is it basically he takes a low risk entry and then is just adding and subtracting to his position with the ebbs and flows of the tape? Just curious so I won’t “scalp” or get into bad habits of overtrading.
@mikebellafiore
I was asked this question during a recent Webinar “Trading Fundamentals: Things Great Traders Do and Never Do”. I love this question as there is so much to learn from the answer.
Scalping is not dead. Pippen from The PlayBook scalps all day right behind me on the desk. In this market with HFTs scalping is just very difficult. Only the elite scalper can profit with our present market structure. (By the way, this will all change again and scalping will come back for most intraday traders when access to all dark pools is universal.)
Shark will make some scalp trades which will increase his trading volume. He has the trading skill to scalp which again is very unique in our markets. I would not recommend many start by learning how to scalp in this market. Only those with the ability to process information at absurd levels like Shark and Pippen and PTO ought to try.
Shark mainly position trades strong and weak stocks. What he does do uniquely is take off his positions faster than someone like myself or some others on the desk. Doing so makes him much more consistent than others. Doing so can leave him out of some of the biggest moves in a stock. But taking profits is his trading style. This fits his personality. All of this manifests more trades.
Finally, Shark was taught by GMan to trade. And GMan trades a lot. Both traders would agree that they sometimes trade too much. Spencer used to write 8-10 million shares a month, which was trading too much. But as experienced CPTs they can make enough P&L to make a few too many trades. And remember they trade at firm cost (we do not markup commissions), which is quite cheap, so their commission costs are minimal compared to the Arcade and Retail trader.
As I said in The PlayBook, I have never worked with a trader who had a better mindset than Shark. I hope you take away the power of the right mindset from reading about Shark. Yeah, Shark is a pretty damn good trader today, but in a few years he will be so much better.
Related blog posts:
Scalping and Stress
How to Combat Overtrading!
You can be better tomorrow than you are today!
Mike Bellafiore
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