The market rally is continuing from a call last week. I said that we were likely to rally on Mondays Open and it would be a surprise with an upside move. That rally is now continuing for its third day in a row into new high territory.
I started trading yesterday and continued today from the Holiday break. Things went well today and yesterday too, but I did have a few mistakes that could have easily been avoided in yesterdays trading. Basically, I tried to get out on a limit order with a better price than my stop. The two orders, were so close to each other I canceled the stop so I would not get a double fill, that is a mistake, but it does happen once in a while. I need to leave my stop and just try and get the better price if I can and if not, then risk the double fill, it would be safer that way. The other option is hit the close button and I do that at times to eleminate the problem I am talking about.
The next thing was, I tried to scale out, but hit the wrong order. I was short and needed to buy, but sold 1 adding to the problem not making it better. These kind of things do happen, but its what we do after they happen that makes a difference. The best thing to do when you have made a mistake is cover it, immediately. I did not do that, but tried to fix it by allowing for the price to heal my wounds.
Today, was a round of scalp trading small moves. I had one runner, but mostly very small moves long and short. Some were counter trend in my T-1 scalp screen, which I don’t usually do much of, but with limited moves early on, I felt the urge to act on it. The charts and trades for Tuesday and Today are below.
Today is above and Tuesday is below
If you can scalp trade a few ticks here and there and do it with low risk, keeping your overall risk reward profile to a minimum 1 to 1 trade ratio, that is acceptable. What is not acceptable is risking 6-8 ticks for 2-3 ticks of profit. There are not many trade methods that can keep your overall risk down to the level I mentioned, but this is one of them. This short term small target trading is not for everyone. I do use it as I see or feel the need to. I really did not have to go that route as there were a few good moves for several points, but I needed to be waiting for them. I missed a few of them today as you can see, but there was enough of the other to do just fine.
When the opportunities open up, you always have the ability to open up the trade for a more meaningful move. Tuesdays late session rally helped me come out ahead, but only if I left the trade open to accept the gains. I saw the move coming as per the method and that is why I let that run.
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Risk reward trade ratio’s are a guide to help balance your risk and reward, just like it sounds. If over time you are overly exposed to greater market risk than that of your reward, it will get played out with limited profit. Having a balanced approach is key to long term survival.
When scalp trading for small gains as I mentioned above, for me and my method, what is acceptable is risking 2-3 ticks for 2-3 ticks rewards. You do not always have to only target 2-3 ticks, but if the range is tight and the market stingy, then that is very much OK. Where everyone else is getting whip sawed back and fourth with losses, you are snipping off a piece here and there.
It is not always the best trading plan to do this type of trading all the time, but knowing how and when you need to, is a very big plus and does give you the advantage. I have a different screen setup than what you see above, because the objectives are different, that is my T-1 scalp trade screen.
Most often when trading the S&P, I use a 4-5 tick stop and will often close the trade out before my stop is hit one way or another. If my entries are good, I don’t have to worry much about the stops other than moving them up and just managing the trade. There are plenty of trades that a trader can risk very little and get a return of many times that risk. That may be 3, 4 or even 5 to one. Those trades do help to make up for mishaps and bring greater profitability to light.
If one’s objective is to only trade for higher risk reward ratio trades, than you will need more patients and the ability to sit through the quiet times to wait for the movers. Every trader is different and that is the beauty of my method. It is not one size fits all. Tailoring the method to match who you are as a trader is key and what I recommend to all traders within my trading method.
Sniper Day Trading is about finding low risk / high reward trades as well as small scalp trades, always still with low risk, but equal reward. What ever the market is doing, you can come out on top. The market can only go one of two ways, up or down. Finding the dominant trade direction for a small amount of time, is all we need to do. With the trade method its not that hard, without it, well, I won’t say.
Good Luck in all your trade adventures.
