Thank you so much for your attention I'm creating a series of videos on

The first video is going to be about the rules for scalping and then the other
videos in the series will be
What about Honda Scout I hope that you find the material useful
This is the first of a series of videos that I created on scalping
And this first video I want to talk about some general rules that scalpers should
follow
Transferring with a 2 minute chart
Every bar is 2 minutes this is 2 minutes later 2 minutes later and the red line is
a 10 bar exponent
Moving average
When I'm scalping I often put up a 10 bar exponential moving average instead of my
usual 20 bar exponent
Moving average
And you often enter and exit on the same bar
For example if you sold with a stop one tick below the low that bar you'd get
filled right there
And if you were scalping you might have a limit order to exit
What's a two-point prophet
And if you did you would have been filled right here two points below your entry
all within the same 2
Can you Scout for one ticket
Is currently lose money
Is our minimum sizes that Traders should use when the scalping you should never
scalpel less than one point in the a mini
In Forex Market you should never Scout for
Fewer than 10 Pips
And for the stock market you should never Scout for less than 10 cents
In general the prophet that you're going to make as a scalper is about half the
size of an average bar
And the risk is about the size of an average bar
If you sold all over this bar you might have a stop above the high of the bar
Now if the risk is twice the reward
You have to be right 67% of the time just to break even and that's excluding
commissions
When's and mistakes
You really need to be write 70 or more of the time just to break even and most
Traders cannot do that consistently
Play what a great scalper can win 90% of the time and he can make a lot of money
This is a time in sales window for the mini and I want you to focus on the size
You'll see that most of the position sizes are small
This is a 2-second period between here and here that's 2 seconds
And this is sample data
This is not all the trades that took place in the two seconds far more trades took
place
Harvard shows the point that I want to make that most of the training is done with
very small position
Physician sizes
You know that 95% of all of the volume traded in the evening is done by
institutions
And 75 percent of it is done by high-frequency trading firms which are scalping and
they might scalp
How can an institution with hundreds of millions of dollars in the account or in
the fund make
Play money by trading one contract
Well they can't but that's not what's happening it might look like that's what's
happening but that's not what's happening
Institution is repeatedly trading one contract and building a position
Very often the position will be several hundred contracts maybe even thousands of
contracts big
He'll sometimes see
A very large position maybe 407 contracts or 809 contracts being traded
And some of that is from institutions closing their positions
If high frequency trading firms are trading most of the volume and most of them are
scalping shouldn't you
Ruby scalping as well you know they're making money
No you cannot do that because you cannot sculpt the way that they do
They have carefully tested algorithms all their trades are automated they have
tremendous flexibility and choosing
The position size
For example a trade might end after just five entries five contracts
The computer May determine that the algorithm is no longer valid and it will exit
Another times the trade may go on a long time they may enter 300 times or even a
thousand times
Variation in physician size you cannot do that
If you want to trade like a high-frequency trading firm fine get a 200 million
dollar account
Hire a group of quantitative analysts to write your software pay them $500,000 each
a year
And then you can trade like a high frequency trading firm
And obviously that's not realistic
And you cannot trade like that even though most of the trades that you see taking
place are traded that way
This is a couple hours of trading the a mini 2 minutes chart
In general if you're looking for a stop entry you're looking to trade in the
direction of the trend if the market
It's below the moving average and you have a bar
Closing on a slow turning down from below the moving average it's reasonable to
look to sell on the stop one tick
Moving average you sell below that far is
The third one and you could sell below the Love This Bar I'm not going to go into
the reasons why the probability is
Pause but if you did sell below that bar you'd get filled here
You could scale into shorts telling more as it goes up as long as it does not go
above that bar or the II
Consecutive inside bars
And you can take your profit when the market fell back to your original entry price
you can get out around break even on
Your first cell and then if you scale then you'd make a profit on your higher self
If you're looking to buy
With a stock
What you want to see is the market above the moving average you want to see a bull
bar turning up from the moving average and
Turn off the bar to be closing and that's high and you'll buy one ticket above the
high of that bar several more examples
Turning up from around the moving
And get filled right there
Sometimes the market is far from the moving average and it reverses
Sometimes you can take a reversal trade and I I consecutive inside bars and a bear
trend
Often the final Bear Flag which means you soon get a reversal and here we have a
decent size
Bull bar closing on a tie you can buy at a stop one take above the high that bar
and then get filled here
I'm going to talk more about these types of Trades
In part 2 of the series of videos on scalping
No this is a video on scalping but most Traders should swing trade and not scalp
You need a positive Trader's equation and buy a Trader's equation what I mean is
Your percentage of winning trades times the size of your average win has to be
greater than the percent
Times the size of the average loss
You're not going to be calculating that every time you put on a trade but you have
to be aware of it
It's difficult to structure or trade with a positive Traders equation when you're
scalping
Because the reward is usually less than the risk and therefore you need to win more
than 70% of the time
In fact a good scalper is going to be winning 80 or 90 percent of the time
It's easier just to swing trade if you take that short you hold on to the trade
until the trade is no longer valid
You have incredible bicycle here you get out there
This is a small Prophet but sometimes swing trades result in very big profits
reward
It's much much bigger than the wrist and therefore you can win
When you look at this chart it looks like gosh it's easy I sell here I exit with
two points here or above
The spa and I'll make money and I just keep doing that all day long and this is one
bar every bar
However when you look at this chart nothing's moving
This is a picture of the market
And a picture can be very different from your experience in real time
For example
This really good-looking Buy Signal bar may have been a bear bar and then in the
final second
Suddenly close on its high and this beer bar closing on the floor and may have been
a doji bar with a
In the middle it may even have been a bull bar and then in the final couple seconds
suddenly closed on the lower the bar
Is falling quickly you don't know exactly
What are the low of the bar will be until the bar closes and by then the market may
be several ticks below the lower the bar
I'm highlighting perfect looking signal bars but many of them only became perfect
in the final
Second and then becomes too late to take the trade so you'll end up missing a lot
of the very best friends
Also you sometimes have
Signal bars that are perfect
Until the final second and then they become bad so the opposite happens and you
don't have enough time to think
The market is no longer doing what you thought it will do
For example you might be looking to sell below the lower bar is closing on its low
and then in the final
Call second it closes several texts above the lower the bar and then you take the
short and you end up taking a
That's right you did not have enough time to change your mind about what you were
planning to do
Here's an analogy
There's a little statue of a jackrabbit sitting on your desk and here is a
jackrabbit
In real life
This is what it's like when you're looking at a chart at the end of the day
It's easy to grab a trade because the bars are not moving
But in real time it's like trying to catch that Jack Rabbit
It's easy to grab a jackrabbit when it's a statue on your desk but it's not so easy
to grab
Play Jackrabbit when it's running across the field and it's not so easy to trade
when the bars are actually changing possibly
Cuz you're trying to place a trade
A professional scalper he's going to enter with a stop order when he's betting on a
successful Breakout
When he's looking for a trim
For example for below the moving average we have an II we have a bear bar closing
on its low
The tradeable assault with a stop below the law that bar betting that we're going
to go down quite a bit so he's betting that the
Will be successful
Is remarkable fall enough for him to make a profit but that doesn't always happen
When he's buying with the stock he's expecting that the market will go far enough
above the high of the bar in other words that the new
Trend will continue far enough for him to be able to scalp out with a profit
So he's betting on a successful Breakout
But not all breakouts are successful
Sometimes a tradable expect a breakout not to go very far and instead reverse
In that case he's going to be answering with a limit order which is the opposite of
a stop order a stop order you betting
The trend will continue you buy Above This Bar then we're going to go out
A limit order
Is getting that the breakout will fail so you might sell at the high of this bar
betting that it's not going to continue
And I said it's going to reverse
Limit order Traders often have to use wide stops and they also often scale in after
their position
So for example
We have a good reversal of big enough Bowl surprise so that Traders will expect
At least a small second leg up
And therefore even though this is incredible cell signal some Traders instead of
selling with a stop
Blow that low looking for a trend down will buy with a limit order at that low
betting that it will go
Only a little bit below the bar and then have a second leg up or it'll go lower
they can buy more and
And then we'll get the second leg up so the limit order Bulls betting on the second
leg up after this our bedding that
If we do go down
Will have a second leg up before the sell-off makes a new low so he'll put a stop
below the
Lower that bar this line here
He'll buy with a limit order at the low of that bar and he'll buy more lower maybe
one point lower two points lower
What's 4.4 vetting that will get a second leg up
And as I said he'll often buy more as the market goes against him
Hey Mike by two points below his first entry and then two points below that
And then two points lower again
And then when it gets back to his first price he can get off break even on his
first entry and with a prophet
Here two points and with a prophet here four points or he may hold part or all of
his position
Open that we begin a trend up
Beginners should only be trading with stop orders and not scale in most traders in
fact should always be
Training with stop orders and they should not be scaling in
You want the market to be going in your direction you have a better chance of
making money
Example you sell below that bear bar or you buy Above This full bar looking for a
reversal
You will lose too much money with limit orders scaling and using wide stops even
though professional
Call scalpers often do that
As a scalper your reward is small relative to your wrist
That means you have terrible risk reward
And every trade has three variables risk-reward and probability
Those three variables are what you need to consider when you're placing a trade
You can look at risk reward as a single variable and probability as the second
variable
And as a trailer in general you're either going to have a trade with really good
risk reward which always
Always has bad probability
Or a trade with really good probability which always has
Bad risk reward and a scalper
He has bad risk reward so he needs very high probability
Look up the lottery for example your state makes money by selling you a lottery
ticket
They have a very high probability of being able to keep your $1
But they have terrible risk reward
Sometimes I have to pay a million dollars to a person who bought a ticket for $1
Excalibur has more risk than reward
Is terrible risk reward
You can only make money if he has a very high probability
There are things you can do to increase his probability
The two that scalpers most often use are they scale into trades they add to
Portrayed as it goes against them
Can I use the very wide stop some scalpers don't even use stops at all if they're
very confident about their position
Scallion and white stops increases your risk
However it greatly increases your probability
Professional scalpers they trade small
Very small so that if the market goes quickly far against them they're not going to
lose more on that trade
And then they would on any other trade and they also will not panic if the market
goes far against them
For example let's say
The scalp or thought this was a sell Climax and that this was the start of reverse
a lot he might buy the clothes of
About bull bar but he might want to use a wide stop or no stop at all and scale in
He might buy more
A point below that bear bar bidding that this will be the final Bear Flag and that
we will not fall very far
But what will happen with the beginner he'll see three bear bars this body is
bigger than that body
This body is bigger than that body and he's afraid the Market's going to crash he's
seeing the market accelerate down
And he can't take the pain after a few bear bars he will exit right here and take a
very big loss
On this position
Beginners they have an incredible Talent at exiting right before trade goes their
way
Directions to reality
Their weak Traders
Weak Traders usually exit right when the market is about to reverse
Once all the weak Traders have exited there's no one left to make the market go
down as the Market's
What's going down the week Bulls are selling selling selling and then once you have
a very big bar
The final Bulls give up and there's no one left to sell no more weak Traders left
in the market goes the other way
Now what would a professional Trader do if he bought that close
Well he'd see the III
Beer bar closing on its low he knows it's probably going to go at least a little
bit down he might exit below the low of
That far or he might even reverse reverse the short
Alternatively he might be confident that and I I
Is a triangle on a smaller time frame chart and if you have a triangle late and a
beer Trend and you get a
Is there a break out the Market's probably going to come back to that triangle
later on so he might hold on to his position and then
And wait for a bull bar closing there is high a reversal and then buy more above
the high of the bull bar
And then when the rally gets back to a round is original entry price or below that
bear bar
War if the bars start to stall he might get out and if he did that he'd have a
I need to make a profit on this floor entry
Basically the whole trade would be a scratch trade
Heat up a small prophet
However by not panicking during the big sell-off
And being able to do the right thing by more depending on the reversal
Excalibur is able to avoid a loss on a bad trade
And sometimes he'll make money
Professional Freighters just like beginners have an uncanny ability
To get out exactly at the wrong time professional Traders are very good at entering
Just before the trade goes their way
I mentioned that some scalpers are confident about their position and they'll trade
with even
And without a stop
This is because the training is swollen up there for the risk will never be too
great
Most Traders cannot trade small enough position sizes and they cannot use wide
enough stops to do
Do that properly therefore that's really not an option for most Traders
I remember that beginner he bought here he bought here at some point he has to get
out and
Free Big Bear bars
A lot of beginners we get all of that through the Bear bar
Remember this beginner has been scalping for two points and here
He's going to lose what is that eight or nine points on that and then he'll lose
So that one trade wipes out six or seven good trades
A lot of scalpers when they're starting out
I didn't think that all they need to do is get a little bit better
But they really don't understand the math unless they can use white stops and scale
in and greatly increase their
It's impossible to make a living as a scalper
As you know I trade mostly the 5-minute song
Now what about scalping on a one minute shower
I promise you don't have enough time to make decisions just like on this 2-minute
chart
Everything looks easy you see the clothes here you see the clothes here
Real time the bars often look very different before they close
But if you print out a chart at the end of the day everything looks perfect but if
you're turning one minute chart even
Set a 2-minute chart most Traders cannot do it
They don't have enough time to make decisions and I'll end up making too many
mistakes
And yes you stops are not too far away you might lose two three or four points
however
What account will bleed to death from a thousand paper cuts
Now why am I making this video if most Traders are going to lose money if they
Scout
Well first of all
I got a lot of requests to make videos on scalping
Also the patterns that you're looking for when you're scalping are the same as the
patterns that you're looking for when your
The faster you get a recognizing a pattern
The better chance you have to make money so it's good to practice
It's important to realize that most swing trades do not go very far most of them
end up as scallops
And therefore if you know some basic scalping techniques you can improve the
prophet that you make from the swing trades that do not
Finally some scalpers are truly great Traders and they make an incredible amount of
money
It's interesting to think about what they're doing in fact one of the traders in my
chat room he's been in the chat room for
He runs a hedge fund and he's an extremely good scalper I've seen some of his
results
I'm confident that he makes 20 or more points trading in many everyday scalping
So it's interesting and fun to think about what successful scalpers are doing
I want to go back to the point that I keep making it's easier to make money as a
swing Trader
Swing Traders they can enter a little late they can enter a little early they can
exit a little late they can exit a little early
They don't have to trade perfectly and they can still make a lot of money a scalper
every took matters
I must enter in exit precisely at the right time they cannot make mistakes and it's
really too difficult
Can you play golf anybody can hit a great shot occasionally
But it's really hard to hit 72 of them in a row like a pro
Scalping and thinking about scalping it can be fun
Everybody knows that scalpers make a lot of money and it's reasonable to think hey
why not me
Well first of all you need the ability to do it and it's difficult most Traders do
not have that ability
And then equally important is
You have to be having fun your career has to match your personality if you're going
to do it forever
And as I said most Traders will make more money and have more fun swing Trading
Everybody tries scalping at some point
However you should look at it as a hobby
Which means something fun to try
Hobbies cost money
Animal scalpers will lose money or they'll find it too stressful not fun
If you do it only trade a small position size and do not spend too much time or too
much money doing it
Remember your career is as a swing Trader and that's where you should be focusing
your energy
Look at this chart it's an example of scouts over the course of a couple of hours
and on this
I hope you can make two points on that one you can make two points if you sold
below here you'd lose three points
But when you add all of that up you'd make about 18 points $900 per contract
In a couple of hours
In part 2 of the series I'm going to go through every one of these trades and
explain what is going on
I want to thank you so much for your attention I hope that you found this
information about scalping
I also wish you the best of luck in your training