Scalp Trading Methods

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After working a trading business plan, the prospective trader by

now has a very strong justification for trading, and should be looking to formulate strategies to extract consistent profits from the market. As promised, this issue looks to demonstrate an array of pit-like scalping methods with high accuracy.

Trading is a Wishing Well

How would you describe trading? In the words of motivational guru Tony Robbins, what metaphors you use to describe your Life affects
the quality of your perceptions, and ultimately your Life. So it goes with trading. Some people say it’s like a dangerous animal, waiting to pounce; others think of it as rough seas, waiting to be sailed. I like to
think of trading as a walk in a knee-deep wishing well full of coins –
be content to consistently pick up coins here and there, and avoid the temptation to go for a chestful of coins, lest you fall and wet yourself.

(Or worse, drown in knee-deep water)

Definition of Pit scalping

By the very nature of trading in the pits, scalping is best defined by
trades that are very short term in nature. This presupposes small
consistent profits from trades that last no more than a few minutes.
These methods presented here are exactly that – high probability
trades with extremely small risk stops and predefined profit objectives.
In the adage of the successful pit trader, it all about taking a million
trades to make a million dollars.

Risk Management

Whilst entry techniques here are self explanatory, the risk management
aspect of these trades are such that they must be followed without
question, or when the position doesn’t perform as expected. Being
relatively tight stops the trader must either be very fast in exiting, or
already have orders placed in the market after entry. The methods here
depend very much on taking these losses as and when they come –
taking larger than normal losses when they should have been taken
earlier will undermine week-to-week profits significantly

3 categories of scalp trades

These timing methods come under 3 classifications:

1) Time-sensitive trades
This comes in 2 forms:
· In opening range breakouts, where a quick scalp is taken minutes
after the open, in the direction of any market thrust.
· Trading to capitalise on the regular market turnaround times like
10am & 3 pm NewYork time.
2) Countertrend trades
Where trades are taken in known periods of trendlessness during
the trading day.
3) Trend continuation trades
These methods focus on entering the market in the direction of
a trend AFTER the trend has gone underway. They are also
classified as retracement trades. The Ultimate market for these scalping methods

As the S&P500 futures is, in my opinion, one of the most liquid, most
active and most electronically accessible market, these methods
represent the best known chances for picking consistent profits as a
trader-scalper.

 

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