To beat the bots and HFT’s via “manual” HFT trading (ROFLMAO), IMOO (in my opinion ONLY) a trader who is scalping 1 to 8 points in ES, up to 12 pt or so on more volatile days, has to be psychologically prepared to break, at minimum, at least three cardinal rules, namely: 1) the first rule to break: never average down aka only losers average down. A scalper of say ES must learn to average down, or scale in, whatever his heart desires to call it. Without it the bots and HFT’ers will eat his cake, his hat, his shirt but leave him his pennies. By “learn to average down” I mean knowing which context to do it in (the larger and more immediate contexts), and “how” (size and frequency..i.e. adding on targets). He may make a profit on all his average down contracts or he may make money on all but the initial entry. Or he may lose on his first two entries but still end up with a profitable averaged down trade. The important thing for a scalper is to “make money” and have a high win rate. He only has the session to end profitable. 2) The second rule to break: Cut your losers and let your profits run. A scalper of the ES needs to learn to “grab” his profits as the market gives them to him. Be johnny on the spot. Forget dreams of a big run. Yes, at time they (big runs) will happen, but more often than not a trader will have a scalping profit...get greedy for more...hold on, or even scale up adding to his profitable position, only to find that minutes or seconds later “Shazam” it has dissipated before his eyes, the trade has soured, and when it gets like buttermilk he can’t stand the pain anymore, so he makes some jalapeño cornbread (his SL) and eats it, crying, as it burns going down. If a big run does occur a nimble scalper can always get back in, usually compounding profits at the same time (by getting back in at a better price than his previous exit...i.e. in a bull run at a LOWER price than his previous scalp exit before the run continues.) A scalper just has to train himself to do so and execute. 3) the third rule to break: be concerned with INITIAL R:R calculations. Instead, use appropriate PA SL’s (according to present PA being drawn on the chart taking into account the present volatility) not set dollar amount for SL’s. Instead of being concerned about initial R:R be more concerned with actual R:R (how far the market went against you before it gives you a scalpers profit.) and actual PT’s. Often times you will be able to exit with a profit on a 3 or 4 or even 10 to one on actual risk. Just take it! Don’t worry about what happens afterwards. As said in #2 above you can always get back in. In addition, remember that context..context..context (larger and immediate) is much more important than any single setup used for entries and exits. A scalper should use the traders equation to vet probabilities of a trade rendering a profit as opposed to a loss. Mentally do the equation or actually tabulate it by writing it down. Don‘t take a trade if he can’t see a positive traders equation. He will find that some of the best looking setups fail because of poor context and some of the worst looking setups succeed because of good context. Probabilities calculations must be correlated with contexts. Finally, if a trade moves against the trader he must have pinpointed, in his mind, a point where he will accept that his premise is wrong....i.e. a “give up point” if you will. And he must have a plan in place on how he will recuperate his losses, as quickly as possible. For me, that is usually doubling up or tripling up on a setup in the new direction. A scalper has to make back his losses quickly as he is flat at the end of the session, therefore he is constrained by time to get back into profit before the session ends. This is especially true on averaged down positions. He must exit them immediately if his “give up” point is reached. This journal explains this stuff in a bit more detail. You may find it useful to read through it. A scalper needs to use tactics and strategies that render a high win rate.
Good Evening Volpri, I love your readings. LOL hahahahahaahahhahah, the blue part is very very funny. LOL hahahahah. Thanks for posting. It is good to read go trading readings.
Thank you. I hope it elucidates and not obfuscates. Learning to scalp intraday requires more than one strategy and more than one setup. And a willingness to bend some time honored rules. A trader needs several strategies and setups because he can wait hours for his one setup to appear, then it fails instead of succeeding. Then he runs out of time in the session waiting for a second or third occurrence of the same setup.
Hello Volpri, I agree with you on this one. What I have notice that helps me day to day is after a loss trade, I have the confidence to know that another setup is coming in about 5 to 30 minutes. So my mental is calm knowing this. Detecting those buying and selling pressures around key locations on the chart and exiting a high probability locations has helped me. I may not get the whole move in that first or second leg, or even the third leg, but I exit with a profit in a logical non regret fashion. Knowing those odds of a win versus a loss in the heat of the moment is crucial for me. Also, if I do not like what I see, I can always wait for more information/bars.
That is right. When a trader has several setups for different contexts he will usually have all the trades he needs to end the session as a profitable scalper. As a scalper I don’t worry about getting the whole move on any one trade. I take what the market gives me knowing (like you just said) that in a few minutes another trade opportunity will appear.
volpri, Yes, I understand. It is tempting to hold on to the trade waiting for more money, especially on ES today. For example, about a hour ago. I took this trade at blue dot, a bit late, but I wanted some follow through on this one. I instantly start losing, stop at orange dot. Price pulled back to support and EMA and made terrific bull bar, I felt good seeing that bull bar, to my surprise I see a doji bar. No big deal, context is bearish, maybe bears still want to bring it down, I wait and I think I better see a bull bar after this. I see it, I wait. Another bull bar, I wait, a big bear bar. I am out for a for profit. I am not suppose to see this bear bar when two bars to the left a bear doji bar, nope I am out for small profit. I thought price would go to black line resistance there, but nope. I have come to the conclusion , this is the best I can do for now. I have to take what market gives me until other wise. Please don't mistake me, I would love to be a great intraday swing trader and get those big yummy +2RR trades, but I do not know how, I do but waiting to see your profits vanish, man I don't like that too much. Scalping at a decent target a few times a day is just practical for now. Now sometimes I hold for that big lick money, like friday, i got $500 on ES, but the context was awesome, nice bull bars, it made sense to hold. But for this trade, I couldn't hold. Something didn't look right here. I also knew the context was bearish, and my trade was low probability compared to context. Today was a very interesting day on ES
Hi Volpri This was a very interesting conversation. May I ask a question regarding Brooks’ books? I purchased the original book prior to realizing he has a new series. Because of my intense studying and backtesting based on prior price action approaches I learned, I am finding the book to make sense and am able to follow it just fine. I saw that the reviews stated the book was hard to comprehend. If I am following it well enough, Is there any reason the three new books should be used in stead? For example, are there techniques or insights that are only available in the new books? If 95% of the content is in the original book, but is perhaps not as clear or well organized, I could live with that. Thank you in advance for any thoughts you may share. mike
Hi Mike I have his original book and his trilogy but in my opinion his course is by far the most helpful!
I agree. The books are more for reference. A good introduction to Al's video course is the Best Trades video course for around 69 dollars. You can find it at daytradinginsightdotcom