Yesterdays post brought up some of the benefits of Scalp Trading, but today we will focus on techniques.

There are many ways to day trade, that is for sure and Scalp Trading, I feel ranks pretty high. This has been said to be one of the more difficult methods to master, but the rewards are great. Those who can excel in this type of trading can virtually write their own ticket.

Scalp Trading, will force you to learn so much more, so much faster than other forms of trading.  ”Price Action” is so much faster because of the smaller time charts that are often used. You will see pattern setups that are very difficult to see on minute charts.

When placing your orders to go long or short, you can not afford to have large draw downs. In fact, just a few ticks against you should be your maximum. But how do you do that? Well, there are tools you can use to help you see what is present in the “Price Action“, but it should be price that ultimately determines your entries. The tools can help, depending what you use and how consistent it is. Most tools for this kind of trading are not very good for most people, because they don’t know how to use them and don’t filter out the false signals that invariably turn up with generic indicators.

One of the key things to try to get a handle on is, why prices move in the first place? I believe I touched on this in an earlier post some time ago, but that is the question? The market has a “Natural Trading Rhythm” to it and we need to not only see it, but feel it. Getting in tune with this trading rhythm or trading vibration is key.

Scalp Trading can mean different things for different people and there are ways to minimize your risk and still maximizing returns. One such way is to scale out of the trade on certain setups. Every trade setup is slightly different and some produce bigger returns then others. Over time you will come to learn which one’s are better and on those trades, you can leave a portion of your trade open.

Taking half of your trade off, when you get to a break even situation is a great way to minimize your risks and still capture higher point returns on those special setups.

For me, I often take half of my trade off at 3 or 4 ticks and leave the other half run, when it is appropriate to do so. With this type of trading, I feel you have to trade with the momentum only. You can whether small pull backs of a few ticks once you have the room to do so, but you should not lose the over-all momentum of the move.

Placing the order where you are going to get a sudden burst of movement is all about understanding price action. A trader places his order to go long, at that point his stop is set under his entry somewhere. Other traders are going to place there stop order in the exact same place and so. You want to try to find out why and where those spots are. If you do, then you will be able to take advantage of that burst of energy that has built up and which give you the power behind the move, but, all to your benefit.

A lot of traders know where these spots are but are not conscious of it. Ask yourself, if I was in this trade here, where would I place my stop-loss order, long or short.? When you come up with the answer to that, often times that is where you will want to take the opposite side of the trade. It is a little strange to think that way, but that is exactly how you need to think in order to start understanding daily price action.

That is why I have come up with my website name. Trading like a “Sniper” is what it is all about. You can not afford to miss the mark and have a wide range for error. “Sniper Trading”, zooms into that small window, whether I am using my “Scalp Trading” screen or my “T-2″ setup screen. Both models narrow the entry down to that small window where the energy is built up, ready to explode.

Trading with this kind of focus can protect your trading capital by only allowing yourself to take small losses. Others may be taking 2-4 point stops on there trades, when trading the S&P 500 futures, but I think that is way to much. It is very hard to come back inside the session to recover losses like that, especially if the “Daily Price Range”, is narrow.

Setups like these also take a long time, where to often you run out of time in the trading session to ever recover.

To Recap:  Look at tick data, not minutes, look to place orders where other traders are placing their stops and consider splitting up your exits to reduce risk.

All of the above information is broken down and explained in my “Emini Trading Course“. If you have questions, I will be happy to answer them for you. Even if you just need some information about trading more profitably with your current approach. I am willing to help, it is not all about the money. I do enjoy helping traders. Visit my website and drop me a line  www.SniperDayTrading.com , the New Year is just ahead, start off on the right foot, take action.

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Tags: Emini Trading Course, momentum, Natural Trading Rythem, Price Action, reduce risk, Scalp Trading, Sniper, Sniper Trading, tick data, trading method, trading vibration, understanding price action