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We see trading as going for a walk in a shallow pond where the bottom is covered with small coins. You pick up the coins one at a time as you walk; however you always have the risk that you can topple over and get wet losing everything. Scalping Scalping is a method of trading that is short-term, so any profit comes just from very short-term transactions lasting just a few minutes. The [http://iticsoftware.com/scalping-forex forex scalping] strategies reviewed in this article meet the definition of scalping. These are methods of transaction performance with a high probability of making profit, very small stops and predetermined profit milestones. According to one of the most successful trader-scalpers, scalping is an opportunity to earn a million dollars, having performed a million transactions. The management of risk Scalping entry techniques are quite simple but the aspect of risk management is very important. Rules of risk management must be followed without question especially when things go wrong. Once you have the system set up with strict stops traders can leave quickly or have orders in place on the market. When this happens you need to learn to leave having minimized losses before they get too big. Three Categories of Scalpers 1. Play on time This category is divided into two types: Play using breakouts, quickly scalp at the breakout of a price range for just a few minutes in a chosen direction that the market moves in. - Play when the market makes dramatic movements (for example, at 10:00 and 15:00 New York time). 2. Trade against a trend Transactions are performed at definite moments during a session, when the market trend is indefinite. 3. Trade along a trend This is where any retracements should be traded on. Our view is that the S&P 500 futures market is the best [http://iticsoftware.com/scalping-forex forex scalping] market. We think this because it is one of the most active, accessible and liquid markets. Using scalping on the S&P 500 futures market, you can make a good profit. Play on time Strategy - 1 - 15-minute opening range breakout This is our favorite method, which requires only a phone and Internet connection to your broker. The 15-minute opening range breakout differs from usual opening range breakout tactics in that you make profit quite quickly and a transaction rarely lasts more than one minute. The model: You should wait for the very first 15 minute range to form Entry: Entry occurs via a buy stop that is 2 ticks over the initial 15 minute range maximum or through a sell stop that is 2 ticks under the initial 15-minute range minimum Exit: The position should be closed once a 1 point profit has been made Stop-loss: Exit at 1 point loss or one minute after opening the position Re-entry: You should look for a breakout in the opposite direction to occur. In this case, we double the size of stop. The same rules of exit apply. Chart 1 Look closely at the breakouts of the first 15-minute ranges for each day. Profit was made on each of the 9 transactions. Note: All charts show S&P 500 futures movements in August 2003. Circles and blue letters show the transactions that are profitable. The red colors mark unprofitable transactions. The time used is Chicago time which is +1 hour of New York time. Strategy -2 - shake-up at 10 o'clock As already mentioned, when it gets to 10 o'clock in New York, an attempt to reverse the morning trend often happens. The model: the initial 15 minute bar closes. If the market is near the day maximum within the first 30 minutes, be ready to open a short position. If the market is near the day minimum, be ready to open a long position. Entry: On positions that are short, you should enter on a sell stop 1 tick beyond the last 15 minute bar minimum. Long positions should be entered on a buy stop after the last 15 minute bar maximum has been passed by 1 tick. Exit: A position should be closed once a 1.5 point profit has been made. Stop loss: Once the position has been opened for a minute or a loss of 1 point loss has been made you should exit. Any orders that have yet to be executed are to be cancelled after 10.30. Re-entry: there is no re-entry Strategy 3 - the 15 o'clock shake up The S&P 500 futures market will often attempt to reverse when the US bond market closes at 1500 New York time. Buy model: If the market has been moving downwards for half an hour before 1500 then a buy stop should be placed. Sell model: Place a sell stop if the market had been moving up for 30 minutes before 15:00. The rules for exit and entry are the same as for the model before. You should cancel all orders after 15.30. Re-entry: this is not needed Chart 2: S&P 500, transactions at shake-ups at 10 and 15 o'clock The blue horizontal lines indicate entry levels. These were all profitable transactions. There were no signals for performing transactions on Tuesday and Wednesday. Trade against a trend For scalping short-term market movement changes we use 10 minute time intervals. Strategy - 4 - cent collector Model: Find bullish and bearish 'swallowed' candles on 10-minute candle charts. Classic 'swallowing' models are represented on the picture below. The entry: There are time limits so any transactions should be undertaken within the first and last hours of trading. For bullish 'swallowing': buy when the white body of the current candle is above the maximum of the last black candle. In bearish swallowing situations when the black body of the existing candle is under the last white candle's minimum you should sell. Exit: Close a position, having made 1 point profit. Stop-loss: Once the position has been opened for 30 seconds or you have made a 1 point loss you should exit. Chart 3: Cent collector (only at the first and the last hours of trade). 14 of 15 transactions were profitable in the given example Trade along a trend Strategy 5 - standard deviation and scalping Another name for re-entering at retracement. The strategy is very simple to understand; you enter the market only at major retracements. Model: Put a moving average on a 10 minute candle chart with period 10. Draw lower and upper limits with a standard deviation of 1. Entry: In case of an ascending trend, we buy on downward retracements, which touch the LOWER range limit, provided that the range is inclined upwards. For descending trends, as long as the range is inclining downwards, you should sell on rally that touches the upper limit. Exit: Positions should be closed if another limit is touched by the price (more likely) or 2 points profit has been made. Stop-loss: Use 1.25 point stop-loss or exit if there is a change in the range's incline. Chart 4: S&P 500, 10 of 14 transactions were profitable within three days. Strategy 6 - ANTI strategy It was Linda Raschke that was responsible for developing this strategy. The model: Period 7 and slow stochastic together with its moving average with period 10 to act as the trend filter on a candle chart of 5 minutes. Entry for buying: Buy when the stochastic crosses the moving average upwards at the closing of any 5-minute period Selling entry: when the stochastic is to cross the moving average going downwards at a closure of a 5 minute period you are to sell. Exit: You should close once a 2 point profit has been made. Stop-loss: Exit at 1.5 point loss or 3 minutes after opening the position. Re-entry: this is not necessary. 5 transactions that were profitable were made over three days using the ANTI STRATEGY as you can see below. Conclusion We have taken a look at the 6 scalping strategies and their strict risk management rules. Be ready for losses and avoid the temptation to earn more money by not closing a transaction in time. These strategies are not designed to make a lot of money straight away. Making a stable but small profit is what will be achieved from these strategies. Just imagine if you were to use all 6 strategies every day. The first three strategies chances of success are very high and even the last 3 have a success rate of 75%. You can make about 200 dollars per day trading one lot on E-mini S&P 500, This is not to be laughed at. Try trading 10 lots and the picture will change. You can easily earn enough money when you are clear on what you're doing (as long as you close your positions in time when you might make a loss). And remember: Having performed a million transactions, you can earn a million dollars.

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