Today we are going to discuss how to scalp trade your way to consistent profits.

Scalp Trading is one way for day traders to pick up small pieces of profit with high probabilities of success. While day trading, you do not always have the luxury of picking up large swing trade moves. You either take what the market gives you, or you wait for your conditions to be met, which for some can be quite a while.

With only having one tool in your bag, you could be at a disadvantage against other traders. When the market goes into a low volatility mode, many day traders can see there trading equity suffer. It does not have to be that way, if you know how to scalp trade.

You will get many opportunities during the session to find low risk area’s that can yield you 1 S&P emini point in a minutes or less. If you are trading the emini futures market, 1 S&P emini point represents $50 dollars and is broken up in 4 equal increments of $12.50 each tick, totaling $50. If you trade just 3 contracts, something you could do with a $5,000 account, that 1 S&P point now becomes $150 dollars. Trading for 2-4 S&P points per day, gives the trader a nice $300-$600 dollars profit on the session. The key to this is consistency, doing the same right thing, over and over again.

Scalp Trading, is said to be one of the hardest forms of trading, because you can not allow the trade to work against you very much, forcing you to take large stops and losses. Most day traders do not know how to do that, whether they are trading stocks, forex futures, commodities etc.

This form of trading focuses on looking for a small window of opportunity, where the odds are on your side, possessing the “Trading Advantage” necessary to exploit price action. In my opinion, “Trading Stops” rule the trading markets. Traders have been trained to always place protective stop orders when day trading and in-fact all forms of trading. That is good advice and do believe very necessary. With traders placing stop orders to protect there initial trading position, invariably they cannot all be right. It is in this form of POSITION CLUSTERING that gives the fuel to advance prices long and short.

A scalp trader is going to look for that position clustering as a potential sign of future movement. If prices can get to a trigger point, you will often see a sudden spike in prices long or short. It is in this knowledge which gives the trader the advantage over other traders. Traders most often use there protective stop to exit there initial position if there assessment on the trade proves them wrong. What successful traders do is, use that to there advantage and place there orders in the same location as those who want to exit. While the struggling day trader is exiting his trade at a loss, the successful  trader is entering at that same moment. One traders exit is another traders opening position.

A typical trader enters his trade long, he places a stop where he feels it is safe from not getting hit. Since most traders are wrong, what do think happens?  They get stopped out to the successful trader on the other side. A scalper is going to take that opposite position short, enter, and then be buying that position back locking in a quick point or two.

Traders are always talking about controlling risks and that is a real concern that needs to be addressed. Any time you are in the trading markets, you are at risk. Granted, when you have a trading stop, that risk is somewhat limited, but non the less, you are exposed to some degree. The longer you are in the trading markets, by definition, you have greater exposure, thus, greater risk. As a trader with the objective of taking 2 S&P points out of the trading market, your exposure, again by definition is limited based on the amount of time you are invested. A typical day if trading the early morning session on the S&P 500 emini futures, could see yourself invested for only a few minutes for the day. You are picking your spots, like a trained sniper, hitting a small window of opportunity and leaving for the rest of the day.

Scalp trading takes less time, giving you the ability to get in, get out, and be done.  Many traders can not afford to sit and watch the market for several hours, scalp trading offers them the ability to participate for 30 to 60 minutes in the morning and still go about there day. Many other trading methods and approaches demand that you monitor the entire session to take advantage of there opportunities as they are presented to you. This form of trading does not demand that from you.

What it does demand is that you are focused and disciplined. You cannot afford to be sloppy with your entries, but need to enter with purpose and the trading edge. Lose the trading edge, get out of the trade. Do not wait to be stopped out. A scalper is going to protect his capital and take only small loses. If you are targeting 1 S&P emini point or 10 Dow points, an equivalent, then you will not risk more than the amount of your expected profit, a one to one ratio.

One point plus on the S&P’s is a worthy target and 10 points+ on the Dow emini’s is about the same. Both are equal to $50 dollars profit per trading contract. With commission costs for this kind of transaction being about $4 dollars, you net $46 per contract traded for the complete transaction.

If a trader could learn how to trade this way when needed in general, he can take that same knowledge and expand it, to stretch out his profits by trading larger time frames. The frequency of the trades and setups forces a trader to learn that much faster, because he is being exposed to many more trading setups.

Learn to scalp trade and you can trade any liquid market for a profit. Increase your time frames for greater point returns as price action dictates. You are in the driver seat.

Are you ready for a Road Trip?

Related posts:

1. Scalp Trading
2. Scalp Trading Lesson Today -
3. Scalp Traded The NASDAQ Emini’s Today
4. “How To Trade The Futures Market”
5. Only One Trade Today – Quick and Easy !

Tags: 1 S&P emini point, Scalp Trading