Ben Tippen traded for over 18 months before finding a strategy and trading method that worked for him and finally made him a consistent trader.
I haven't done many interviews with scalpers lately, mostly because many traders have given up on the tactic that was wildly popular when stocks were quoted in fractions. But there are groups of traders out there who are still scalping stocks profitably because of fast order routing capabilities and drastically reduced commissions.
In this interview, Ben Tippen talks about how he makes a living scalping one to three cents per share on trades by buying on the bid and selling on the offer. He talks about how he does this, why it requires patience, and how other traders might be able to take advantage of the same things he does to make money this way.
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Tim Bourquin: Hello everybody. Thanks for joining me for another show this week. We're going to be speaking with Ben Tippen and he's a trader that is going to talk to us about how he approaches the markets and ways he finds opportunities. So, Ben thanks very much for joining me on the phone today.
Ben Tippen: Thanks, Tim.
Tim Bourquin: Well I'm calling Ben here internationally. You're over in London, correct?
Ben Tippen: That's right yeah. I live just near the outskirts of London.
Tim Bourquin: Okay, so do you trade US markets or you trade European markets?
Ben Tippen: No, just the US. Certainly the UK market for me is difficult to trade because of a number of reasons. The main reason is it's got stamp duty when you buy...
Tim Bourquin: Right.
Ben Tippen: ...buy shares over here and it's half a percent, which is huge.
Tim Bourquin: Yeah. Now I understand most traders are doing spread betting because they don't have to pay taxes on that. So why not do spread betting.
Ben Tippen: Well, the reason I don't like spread betting is because you're not actually buying or selling a real instrument. You know, although you don't pay tax on it, you're essentially trading against your broker. And although they say the price that you get is—you know it follows certain shares and stuff, it doesn't actually say it follows it exactly. And that allows them to play around with the price and I just think it gives them an opportunity to wheedle your money out of you, I guess.
Tim Bourquin: Right. All right so what hours do you have to trade to trade US markets from where you are?
Ben Tippen: I start—the market opens 2:30 pm my time and I normally start about half an hour before that preparing.
Tim Bourquin: Okay. So, not too bad.
Ben Tippen: Preparing.
Tim Bourquin: Not too bad in terms of hours. Not a bad lifestyle if you're an evening person I suppose.
Ben Tippen: No. I mean from my personal situation, which I won't go into too much detail about. But you know I'm a single parent and I look after my son. He goes to school during the day and it does allow me to earn a living without having to do a full 9 to 5 job.
Tim Bourquin: Absolutely. All right. So you're a full time trader, what markets in the US do you trade?
Ben Tippen: The NYSE and the NASDAQ, although I focus mainly on the NYSE.
Tim Bourquin: Okay, so index futures then?
Ben Tippen: No. No. Only stocks.
Tim Bourquin: Okay so...
Ben Tippen: Only on the NYSE. I only trade stocks on the NYSE and stocks on the NASDAQ.
Tim Bourquin: Understood. Okay. And do you have a basket of stocks that you trade on a daily basis or how do you decide what you're going to trade each day?
Ben Tippen: Obviously, you know the firm part of it, they cover news and there are a lot of eyes on the market. But for scalpers, we generally have a much smaller handful of stocks that we watch because the stocks have to fit very specific criteria. They have to be slow moving. You know I'm a scalper so I'm only looking for one to three cents moves. And I'm hopefully looking to take in the worst case is a cent against me. Now the stocks have to be very low priced to move smoothly enough for me to play that game. They also have to have good thickness i.e. volume on the bid and ask to allow me to control the risk and read the Level II more precisely.
NEXT PAGE: How Long Will These Trades Last?