Here are a few idea’s to help you see some of the benefits of Scalp Trading.
There are many forms of trading with different objectives. One form, is often called “Scalp Trading“, with the objective to take a small portion of a move out of the middle. Depending on the time frame that you trade will largely determine your risk. “Scalp Trading” a 5 minute bar charts, you will be risking more than trading 1 minute bars, but your returns will be larger. The opposite is true as well, while risking much less on the trade, your reward will be smaller.
Given the fact that trading the S&P 500 emini futures carries a potential 50 to 100 times leverage, you don’t need to make very large point returns to day trade for a living, if in fact you can be consistent and that is the key. Will you be able to make 2 to 3 points per day and call it quits? Many traders can not and do not, which is a big reason why they struggle. If you are not skilled and trade during the slow period of the day, it can ruin you and your account.
The best times to trade, I believe, is the first 90 minutes and 11:30 to 12:45 West Coast time. Starting this New Year, I will be trading during those times mainly. I spent too much time last year trading during the more difficult times of the day. I still made my daily goals but I could have accomplished the same thing with a lot less time trading the open.
Some of the benefits in learning to “Scalp Trade the S&P emini’s” is that you usually have multiple opportunities to find winning trades. When you trade “Tick Charts” as opposed to minute charts, you have the ability to cut your risk down much smaller than minute charts. Reducing your risk per trade is key. But finding the trades that will produce income is also important. The two go hand in hand. I usually risk one point or less when trading in this screen and my return is equal to my risk. The difference here is a high winning percentage. I have an additional screen set up for trending markets and am able to trade those setups for several points, but still only risking 1 point or less as well.
“Scalp Trading” gives you the ability to get in, get out and get done. You need to know where to get in and where to get out and when should you finish for the day. Those are all things I discuss in my “Emini Trading Course” at www.sniperdaytrading.com
If you know where to get in with a high degree of accuracy, and get out with a reasonable amount of return compared to risk and when you should stop for the day, you could be well on your way.
When in “Scalp Mode”, I teach and trade with the momentum. If I start to lose that trading edge, I will look to exit the trade. The signals I use are clear. A trader needs to know if he is trading with the trend or trading counter trend, relative to the time frame he is trading. That is very important to determine targets and manage risk.
I have all of this layed out in my emini trading course and make it pretty clear. It does take some time to grasp, but it is really not hard to learn and straight forward. Some of the custom indicators I use can make it easier, but all of the trades are derived from “Price Action” in combination with “Support and Resistance“. I mentioned this in an earlier post, but it bears repeating.
Another benefit in learning to “Scalp Trade”, is the ability to adjust yourself to changing markets. Everyday is different and you never really know what kind of market you are going to get until the price action starts to reveal it to you. Only then will you know what screen to trade out of. Each is set up differently for the conditions. You have options, is the bottom line. If all you know is how to trend trade, then you are at a disadvantage. Looking for trend trades that are not trending means, stop outs and losses. The market trades in a confined “Chop Zone” much more than it does trend.
Limiting yourself with only one set of conditions does put you at a disadvantage in my estimation, not to mention the time you may have to sit out, waiting for conditions to become favorable again for you.
While a trader is in this scalp mode screen, he needs to be very conscious of his entry. The entry will determine how much heat he takes after the trade is put on, which is why you need to be like a Sniper, Trading for his daily income.
I personally feel this is like having a double-sided nickle in my pocket, no matter what side you flip it, it always comes up heads. Well, that is how I see it. Anyone who pursues a trading career or try’s to supplement income, needs to always have “Trading Discipline”, that is a must. Without it you will struggle. I cover many of those issues in a training series of “Mental Exercises” for day traders I put together.
Trading is a skill of the mind, money and method. You will need all three to be successful. If you are lacking in the mind or method, give my “Emini Trading Course” a try, I believe you will glad you did.
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Tags: Day Trading, Scalp Trading
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