This has been an interesting subject for me for some time. Before the flash crash Paul Rotter became famous as the 'Eurex Flipper'. Below is a portion of one of the few interviews he gave.
I believe Rotter worked without benefit of software tools other than a trade client and seeing the level2 order book.
To succeed at this today you would have to trade very large size and at the millisecond speed instead of post-minute. Also you would probably signal alerts at the broker before you placed too many trades.... I believe Rotter quit this trading when he became too visible and competitors starting to wait for him to trade, his trading became predictable and lost his edge (I believe).
Paul Rotter - aka "the Eurex Flipper"
Paul is arguably the single largest and most successful individual futures trader on planet Earth, executing trades on the Eurex exchange primarily in the Bund, but also in the Bobl and Schatz interest rate futures. He trades between 200-300,000 round turns daily using the X_Trader platform, and clearing through GNI Touch.
q: what are your strengths as a world-class trader and where are the differences between you and other traders?
a: it's the ability to get more aggressive in winning phases, taking bigger risks, and scaling back in losing times. this is against human nature. the best thing is to have somebody around who is neutral to trading, that switches the terminals off, when a certain loss level has been reached for the day.
q: you are known as a order book-scalper, could you please explaining to our readers what you are doing and what your strategies look like? what is your tactic?
a: it's some kind of market making where you place buy and sell orders simultaneously, making very short-term trading decisions b/c of certain events in the order book (level2). for example, I usually have lots of orders in different markets at the same time, pretty close to the last traded price. the resulting trades are usually a zero sum game, but I get a pretty good feeling for what is going on and then ultimately can make a decision for a larger trade.
q: how long are you usually in a position?
a: since I do trend plays very seldom and actually scalp the market, i constantly get fills in different markets on both sides which can cause constantly changing positions for hours. sometimes i change my opinion several times within a couple of minutes, which is not pretty hard for me, since I'm only looking for the next 3-5 ticks.
q: during your professional career, have you always been a scalper or did you try other strategies (momentum/swing) as well?
a: yes, I have always been a scalper, but I am adjusting my strategies to different market situations all the time. on volatile days I of course have less orders in the market and do more 'single trades', although I usually hold them only for a couple of seconds.
q: your strategies only work on electronic exchanges?
a: yes, b/c you cannot handle that much orders in a pit, looking for counterparties and so on. computer exchanges grant fast order flow and are not as easy to manipulate.
q: as a scalper, are you trying to run stops?
a: well, yes, but because of the increase of liquidity in the last couple of years, the fast spikes caused by stops are not happening that often anymore. apart from that, that stops often are not where you would suppose them to be, because the other market participants are not silly either or learned their lesson in the past.
Google Rotter or Flipper for more....