Master Day Trading in Just 30 Days: Lesson #12
In the last lesson discussed how to use our swings (zig-zag) and trends to make tiny scalp trades. Hopefully you’re having some fun with the homework. This lesson will be a short one – we’re going to discuss how to select the best scalp trades.
Make no mistake about it – you can make a scalp trade just about any time. But as with all trades, you can put the odds even more in your favor by applying some common sense rules.
The most powerful advantage you can secure when scalping is to make sure that your trades are in the direction of the dominant trade. For day-trades this means that the HOURLY charts must be in an up-trend if you are taking long trades ; they must be in a down-trend if you are taking short trades.
Ideally, the daily charts will also be trending in the same direction!
The second most powerful thing you can do is make sure that there is sufficient volatility. If a market only moves 20 ticks per day on average, then you shouldn’t be trying to scalp for 4 ticks! If you do, it means that you would be trying to take 20% of the range out of the market in a day trade. It is almost impossible to do this consistently!
Finally, really stack the deck in your favor by:
- Initiating your long scalps when price is bouncing off support
- Initiating your short scalps when price is repelling from resistance
Questions About Scalp Trades?
if you have questions about concepts presented in this (or any other) lesson article, contact us for a one hour coaching session. You’ll be surprised how much you can learn in 60 minutes!
The three guidelines outlined above can help keep you out of the more mediocre trades. By using them they reduce the number of trades you will make on any given day but increase the odds that you will emerge with a profit.
Your hardest task will be sticking with the guidelines. As someone new to the markets you will feel the urge to make trades even when there are no good trades setting up. You need to resist that urge otherwise your mediocre trades will nickle-and-dime your account to death.
Coming Up Later
- Identifying Support And Resistance Levels
- Using multiple time-frames to fine-tune your trading entries
- Determining how to set your stop points and the trade-offs of each tactic
- Understanding trading as a numbers game