What is Scalping?
Stock market is full of special terms that are confusing to the outsiders. One of them is scalping. So what is scalping?
In simple terms, it is a trading strategy of buying an investment and then very quickly selling it for a small profit. Sometimes the trader
sells security he just bought within seconds after buying it.
Obviously, the person doing scalping is not an investor. He does not care about fundamentals of the company or ETF he is scalping, or what they
do, or what prospects they might have. The goal is simple: to find the most probable way to make quick profit and execute it. The people
doing stock/ETF scalping are called day-traders: as the name suggests, they are in and out of their positions within a day. Day traders
usually don't hold securities overnight. They could buy security in the beginning of the day and then sell it at the market close. Or they
could trade in and out many times during the day.
Since very often the sale after buying comes so fast, the price could only move so much. Sometimes it's a few cents. Sometimes it's just 1
cent. How could one make money on 1 cent move? The answer is easy - volume. If you buy and then sell 20,000 shares for 1 cent difference,
you made $200 in profit (minus trading costs).
Best Brokers for Scalping Stocks
Obviously, with scalping the biggest expense the trader incurs is trade commissions. It could eat up trading profits really fast.
Especially considering that not every trade is profitable: not only you lose money on the trade, but you also pay commissions.
For this reason, it's extremely important for traders to find the best brokers for scalping stocks
which are free and reliable.
For $0-commissions, one of the best brokerage firm for scalping is WeBull. Yes, it charges no
commissions for stocks, ETFs, cryptos, and options trades (there is no catch) - read full
WeBull Review.
Another very popular broker for scalping is TD Ameritrade.
It has one of the most advanced trading platforms in the world—thinkorswim.
Scalping is definitely not for everyone. But if executed properly, with discipline and without
emotions, it could be a very profitable trading strategy.
Promotions
WeBull:
6 FREE stocks valued $34-$12,600 give-away at Webull.
Open WeBull Account
TD Ameritrade: $0 commissions + transfer fee reimbursement.
Open TD Ameritrade Account
TD Ameritrade Scalping Platforms Overview
TD Ameritrade offers scalpers three trading platforms: web browser, thinkorswim, and mobile.
thinkorswim is the desktop and laptop platform that scalpers usually use for trading. Let's take a look at it.
thinkorswim
Read detailed thinkorswim platform review under this link.
Trade Architect
After logging into the website, users can immediately launch Trade Architect into a separate window. On this Java-based platform, they will find everything they need to trade: market news, security research, charting tools, and trade buttons. There is also account information, watchlists, and tools to generate trading ideas.
Investors can track market indexes and watch financial news on CNBC or tastytrade. Trade Architect also displays news relevant to a particular security under investigation.
Trade Architect also boasts a handy zoom feature that allows users to easily zoom in or out of the application, giving greater control over the platform.
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Spotlight on similarities
Both platforms can be used to trade stocks, options, ETFs, and complex options. Unfortunately, fixed income and mutual funds cannot be traded on either platform, although quotes are available for mutual funds. Streaming charts and Level II quotes are available on both systems. Conditional orders can be placed on either platform. Live CNBC streaming is also available on both programs. Streaming quotes are also displayed on both platforms.
Both systems are customizable, with a selection of different background colors and the ability to dictate what windows are displayed. The default font on thinkorswim is rather small, although traders can enlarge this font.
How is Trade Architect different from Thinkorswim
The first difference between thinkorswim and Trade Architect that investors will notice is that Trade Architect is browser-based, whereas thinkorswim is a desktop application. Seasoned investors might prefer the desktop-launch, while new investors might find the web site platform simpler.
One advantage that TD Ameritrade has over other brokers is their offering of forex and futures. Thinkorswim offers investors the ability
to trade forex, futures, and options on futures, but Trade Architect does not. That's one difference that really stands out, given
TD Ameritrade's reputation of offering those financial products. Trade Architect simply has little value for traders who use
TD Ameritrade for those products; although Trade Architect does display futures quotes.
Both systems offer technical analysis tools. However, Trade Architect offers only 50 tools, while thinkorswim offers more than 400. A second advantage that thinkorswim has is its paperMoney, a practice account where traders can practice using the platform with no risk of real money. Such a feature is a real benefit to investors who either need to learn the platform or who want to practice trading in general.
One advantage that Trade Architect has over thinkorswim is the availability of third-party research. Research information is displayed on Trade Architect for each stock that is entered on the system. Clicking on a link opens a new window with a research report from TheStreet.com, S&P Capital IQ, or similar analyst. Unfortunately, thinkorswim does not display such security analysis, making the platform weaker as a research tool. The website has the most research information.
In addition to live CNBC streaming, thinkorswim also offers a selection of on-demand CNBC recorded videos. Trade Architect only offers the streaming service.
Thinkorswim offers more customization of its chart than Trade Architect does.
Overall feel
Trade Architect's interface is a little more user friendly and easier to navigate. Thinkorswim's default typeface is smaller, and more information is displayed
throughout the platform, making the system a little more difficult to navigate. Thinkorswim has a more sophisticated and professional feel to it and will suite
better experienced scalpers. Novice scalping traders would probably have an easier time navigating through Trade Architect.
Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
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