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THE MARKET WHISPERER 33 3

This may sound reasonable to you, but you must also take into account
the sad fact that when you lose (at least 30% of your executions will end
up as losses), the loss plus the commission will total $120. The weighted
average is definitely to your detriment.

The solution: unlike the method of charging one cent per share, which

will only be worthwhile if you operate in quantities of up to 2000 shares

per click, when you trade in large fixed amounts, you need to ask your
broker to define a different commission system based on the Per Trade
Commission Plan rather than the Per Share Commission Plan. If you

trade in large amounts, it is probable that you will be able to close on a
price of $3 to $6 per click of the button, unlimited in quantity.

In actuality, large-scale traders usually receive commissions rather
than pay them. How? When you set your bid and ask orders and wait for

their execution, you are adding liquidity to the market! When you do that,
as we have already learned, you receive a commission of $2 per 1000
shares from the ECN. With a simple calculation, you can understand that
the relatively small quantity of 10,000 shares will bring you an ECN return
of 0.2 cents per share, which is $20, while you paid only $6. What would
happen with a quantity of 100,000 shares? The ECN return is worth $200,
while the commission you pay is still $6. Can you see where this is going?
I am familiar with traders who make their living from buying and selling a

share at exactly the same price, for profits of hundreds of dollars from the
ECN return alone. If they’re lucky, they also manage to earn another cent
per share.

Sound easy?

No, it isn’t easy at all!

One Cent Scalping: the Method

• First find a low-priced stock
This should ideally be in the $5 to $10 range, with low volatility and a

volume of tens of millions of shares per day. The candidates change during

different periods of market activity, volatility, and price. Remember that

volatility is this method’s worst enemy. Just imagine how much you could
lose if the stock moved ten cents against you! This is also why you MUST
operate according to the following rules:
1. The stock must be moving sideways with no trend, or in industry terms,

the stock must have a locked price
2. The stock must show no volatility and movement of up to 5-10 cents

per day