Scalping Rules (The secrets to scalp trading success)

most retail Traders believe they can learn a good scalping strategy and quickly become profitable well unfortunately the reality of trading is very different at our proprietary trading firm our professional Traders break the day down into segments the open midday and close and they know what types of scalping strategies work during each segment this allows them to avoid many low probability trades and capture the actual best risk reward trades in this video we'll be revealing important scalping rules teaching you how to best Scout for a living and which types of scallops to take during each segment I'm Mike bellafuri and we're one of the top proprietary trading firms located in New York City and proud to have developed number seven and even eight figure per year Traders we hope you agree this is the top YouTube channel to help you grow your trading account [Music] thank you so what are some of the better times to scalp scalping is a type of trading with a defined recurring High expected value EV is just simply the probability and the risk to reward it's simply multiplying the probability of being right times the reward minus the probability of being wrong times the loss again it's simply multiplying the probability of being right times the reward minus the probability of being wrong times the loss we've spoken at length about EV Lance talks about it Bella talks about it we talk about it a lot on the desk in our daily report cards you'll see the term EV High EV used a lot when people are talking about specific traits scalping is looking for those really high EnV moments and taking full advantage of it in our work as scalpers we're actively listening for those highest EV moments they get presented each day they're presented multiple times each and every day we really need to take a moment to distinguish scalping from tape scalping tape scalping is like usually an intra bar scalp so even on a one minute bar it's something you see on the tape and you're in and out while that's present most of the time within even a one minute bar that sort of scalping you're just reading the tape you're making adjustments that's not really the type of scalping we're talking about here there is high EV in that but what we're talking about is scalping that uses the information that's presented by the participants by the bars that are built through the day to guide us and offer us a setup but then we wait and we watch and we execute in that highest EV moment so let's talk about some of the times of day because in scalping not all of the times of day are equal you know the general guidelines say to focus on the open and the close and then not trade outside of that and it may be true at times and it may even be true for most stocks at most times that you need to focus on the open or you need to focus on the clothes but what happens if if we look for those High EV moments those those really high quality scalps the participants that only trade that way that forget about the the anything outside of the open or the close they're actually going to leave those unique opportunities those unique moments of high EV throughout the day they'll leave them for us and if we understand what we're looking for and what Clues we might look for it can really offer us some really good ideas into what's setting up in this session we're going to break the trading day down into four quarters the open the morning the midday and the close and we're going to discuss the different types of high Eevee scalps we're most likely to be offered in each quarter of the day let's break down the day into four times a day and let's talk about some of the scalp some of those High EV scalps you might find during each part of the day so the first quarter we're talking about the open this is roughly like eight o'clock till till 10 14. I include eight o'clock because if there is enough volume and liquidity and range you can trade in the pre-market usually after eight o'clock till 9 30 is kind of Ideal so you can get some really high quality scallops just focused there but if you're going to trade pre-market make sure that there's enough liquidity enough range and there's definitely got to be enough flow to it that you can pick off those High Eevee moments the open's really the most common time of day for scalping it really is such a priority for everyone because there's just more order flow off the open there's more volume more range more liquidity it's really often the most participated time of day across every time frame so participants that are trading on higher time frame may put orders out just for the open intraday Traders maybe trading the volatility that occurs right on the open even Buy and Hold investors they may be just putting in an opening order or starting an order on the open that they're going to trade through the day but the open is really an important time so here's some of the setups that we can look for since the open's about prioritizing the ideas and focusing to see what's really happening it really gives us the chance to scalp in day one earnings names you know names that have a fresh Catalyst from either the pre-market or even the after hours the night before we consider those day one earnings names or day one news Catalyst names it's the first full trading day after that news was out day two names specifically names that made a directional move on day one typically names that kind of closed in the upper or lower thirty percent of the day's range and traded above average volume and especially ones that have larger than average range in play market names so names that are trading at like really highly important key technical levels so levels that we would score like positive eight or above maybe positive seven in the right circumstance but in play market names are really something that you can focus in on right on the open and then stocks that have made a significant pre-market move again anything that from eight o'clock till 9 30 was trading a lot of volume a lot of liquidity a lot of range had a nice flow to it and when we say flow it was just the patterns were setting up it showed a lot of participation those can be a name that you focus on right on the open as well what are some types of scalps that you can take on the open well the most common one would be fade scalps so you're going to let it extend into a prior level either a Chase up or a quick kind of pop and grind up into a level or same thing on the downside kind of a quick order flow chase down or a sustained seller that just won't lift won't lift won't lift and then as soon as they lift you take the Fate so you're going to let it extend into a prior level and you're going to take the fade it gives you a defined moment you know usually on the tape you can see a really clear turn it gives you a clear risk to reward and on the open many times these are if you really see it these are really high probability trades because what happened somebody had an opening order and it just got taken all the way down and then as soon as that order is gone it's done it's going to grind itself back up or same thing on the upside a very on the downside if so if there's really a buy order that flashes everything up as soon as that buyer is gone it's just gone it's gonna grind itself back down those are examples of fade scalps turn and go scalps so we let the turn get put in we let the momentum kind of start to get back on our side and confer and then we take that scalp so that's for Traders who aren't really fighting for the low or the high and maybe somebody who's trading a little more off the chart you'll see the turn get put in and that first move down but it's still got enough range to the upside or to the downside that after that turn gets put in you're looking for that continuation turn and go scalps are a really good version of a a scalp that you can take using the chart alone you rarely need to really use the tape on those because you'll see It'll be very obvious range break scalps so opening range break higher time frame range break you know we were talking about those technical levels if you see those break you know any sort of those range break scalps can be very powerful on the open because we're seeing that participation occur so if we can break and particularly if we can hold outside of that range for a very brief period of time you know maybe one to five or ten minutes we can look for a continuation there for that range break scalp that you can get right on the open so we're defining the morning here is as 10 30 to 11 30. that can shift a little bit depending on now in play the market is if the market is in play Then the Morning will shift a little bit earlier usually if the Market's not in play the stock that you're focused on probably you're thinking about 10 30 to 11 29ish that's the morning period the morning offers uniquely key elements of scalping most of the time the price discovery that that occurs on the open has happened and a trend if any you know if there's going to be any trend on the day the trend usually will have been established already or starting to establish itself the alternative is maybe a push has happened through the opening period but not really a believable push or a sustainable push and then we're looking for some sort of normalization to occur so these scalps can often catch Traders off guard especially the traders who assumed and and they stop listening to the stock from the open they didn't adjust to what's occurring in the morning they just think oh it's the open and it's going to Trend all day so we can really take advantage of this as a scalper because we're getting presented with a really high EV moment because we're paying attention to what's actually happening we've observed what happened in the open but then we're gravitating to what's happening in the morning because that's the period we're in we can let those opportunities really fall into our lap and here are some of the ones we look for since the mornings about seeing the information presented from the open and then using that information from the first quarter to update the narrative you know that story on the day and we can adjust our trading plan as needed we can scalp in those day one Catalyst names that have a very distinct trending pattern so we're going with the trend there day two Catalyst names oftentimes we're going with the prevailing trend from day one so an example would be a quick pull into a prior support level that occurred on the open and then we start to see that that say say something closed high of day bigger than expected range really good rival pretty good Catalyst maybe the next day on day two we're watching for that opening drive pull in and then we're seeing a little bit of balance and then we're looking for the buyers to step back in and continue the day one Trend to the upside you know that's what we mean by going with the prevailing trend from day one another opportunity is is Market names just Market names that may be traded on strong arval on the open you know the relative volume was there early during the open and that drove a directional move but when we kind of noticed the r voltages dropped off really really quickly that drop-off signifies that okay there was a participant right on the open but that dropped off so quickly that we can oftentimes look for a nice reversionary scalp and then finally clean traits sector trades where we can identify a theme or a sector showing us unusual strength or weakness from the open and we can quickly identify the in-play names for that sector and we can really make some very nice scalps in those names by using the information that was presented on the open here are some types of scalps we can take in the morning you know fade scalps again we let the fade happen we look for a turn and then we let the other Traders pay us the people who are assuming what happened on the open was going to continue into the morning Trend scalps so if something was breaking out with volume it cleared levels and then spent a significant period of time above those resistance levels or below those more important support levels we can look for an opportunity to go with and make Trend scalp so we're going we're trading with the trend that's there on the day continuation scups when this is when a stock has made a move and when the move is started but then tries to stop and and just can't really stop what I mean by that would be a hard down move and then maybe a quick retracement and it looks like it's going to break higher but then it can it just continues to the downside we can use that information that occurred on the open to make a really good continuation scalp that brings us to the midday the midday is the period of time that occurs from 11 30 to about 1 30 129 say that midday period tends to be trickier the period where traders in general can get trapped they're thinking they're scalping but they're really just banging away at a stock and kind of hoping the types of setups we can look for the keys we look for here in the midday would be stocks with fresh news surprisingly clean price action and what we mean by that is names that are holding Trend unusually well and showing more participation than we'd expect that clean price action you know you can kind of see it as the price action goes up and instead of wicking everywhere and getting really choppy it just kind of sustains and it has a nice little flow to it those tend to be the best names for looking for continuation or continuation scalps or even potentially breakdowns and fade scalps in the midday period it's just trading with more volume more liquidity better flow and it's easier for us to look for those opportunities and then finally stocks that are trading into important levels for uh either tests and and and maybe continuations or rejections of those levels these are the setups that we're looking for in the midday so the types of scalps to take in the midday you know unless there's unusual volume we're mostly taking fade trades lots and lots of fade trades and throw in an occasional Trend continuation trade which is really actually a style of fade trading so most of the time we're fading quick extended moves say something moves quickly into a key support area in the middle of the day well a lot of times you can scalp that looking for a fade trade looking for a reversionary trade the alternative that Trend continuation trade why we say it's a fade trade is because you're looking for the trend to start art to be established you know say we're trending to the upside and then what we're actually going to do is we're going to fade a pullback we're gonna do less chasing in the middle of the day less less buying and looking for breakouts and more buying if something's pulling back looking for the trend to continue or shorting if the stock is rallying after a trend has been established to the downside looking for that to continue the clothes this can be the trickiest part but really one of the most rewarding times to scout the clothes is defined as 1 30 till about four but really what we've found on our desk is most of the time the things that are setting up start to set up around that 130 period so maybe the trade doesn't really start until two o'clock but usually by 1 30 we're starting to see signs that there might be something there the close is when the volatility and the volume often comes back in but the funny thing is we're often looking for kind of that continuation scalp from the trend that started to establish itself so just like on the open where we're talking about a little bit more often we'll look for a continuation scalp on the close a lot of times the highest EV trades are continuation scalps we'll look for the participants that kind of started that move at that 130 period to drive the price action into the close here are some types of setups we can look for into the close we can always look for a stock that has been holding outside of a higher time frame level you know anything that made a move and has been holding outside of that higher time frame level we can look for a pattern that we like to call a 515 consolidation so if something's trading directionally a little bit on the day and it has five 15-minute bars if those five 15-minute bars get tight and the volume kind of gets down a little bit we'll look for that continuation trade off of the break of that range so a 515 consolidation and then range failures that just couldn't break out so maybe at 1 30 we started to try and make a move but it never could break out a lot of times we can we can fade that move we can take that scalp for that reversionary trade because traders that were buying in anticipation of that breakout happening just aren't going to be rewarded and we'll kind of pull in and usually get a nice scalp continuation you know reversionary scalp here are some specific types of scalps that we can take into the close you know those momentum breaks those moves that everybody calls the Power Hour type moves those are really a good one but you need to make sure you have increasing volume you need to make sure you have a clean move outside a range and you need to make sure you have really defined opportunities to trade you can't really buy and and hold that unless you have some very clear moments to get involved and then the continuations moves that Fred that started from much earlier in the session you know either 1 30 or maybe even a little bit before there we covered a lot in this in this little course but here's some overview thoughts you know scalping and really trading in general but really specifically scalping the type of scalping that we're talking about here where you have a defined setup that has really high EV it can sort of have this kind of Rhythm to it on the day and that Rhythm is a little bit of price Discovery and then tread and then price Discovery and then Trend it's this pattern that kind of repeats itself over and over again and even just by being aware of that thought that price Discovery and then Trent price Discovery and then Trent we can adjust our trading and our Focus to really move towards the scalps or the types of Trades that made the most sense to us so if something had price discovery on the open maybe we'll look for more trending trades in the morning and then after that trending trade occurred and net scalp was done through the morning we'll look for Price Discovery during midday and we'll be able to evaluate is there the potential of a trending move into the close as the trades alternate between price Discovery and trending price Discovery and trending you know they'll make a move and they'll reset they'll make a move and they'll reset we can use that four quarters idea to put ourselves in really good positions over and over again and just by being aware of it we can make the adjustments we can take advantage of the opportunities that are presented to us by the market by the stocks that are in play each and every day most importantly by looking for the right types of Trades at the right time of day we can capitalize on the highest EV moments that the market offers us every single day so you're an active Trader not doing as well as you want not doing as well as you deserve and you just can't figure out why you can't become profitable no matter how hard you try well let me show you why this is your competition the traders in this room this room right here is full of elite Traders some of them are making seven and even eight figures a year in fact our top guys have made nearly 20 million each in net trading profits in a single year let's head to my office so I can share more so you're probably used to seeing videos of lavish Trader Lifestyles trading gurus trading off of a laptop for an hour a day heck maybe even 15 minutes a day and then them relaxing on some secluded beach for the rest of the day well all I can tell you is that our Traders train like pro athletes they live and breathe the markets and are continually working on their trading skills because at our firm that's what we've found it really takes to make it in this game I'm Mike bellafuri co-founder and managing partner of SMB Capital One of the world's top proprietary trading firms located in Midtown Manhattan and we're always looking for trading talent to hire and develop and not just to trade in-house on our desks but also to trade from their own home entirely using our firm's capital and we have numerous Traders doing just that allowing them to make upwards of seven figures trading the firm's Capital without risking their own money but to even get a shot at something like that you need to have the right training that's why we're doing a new three online presentation in which we share how you can get an interview with SMB to become an in-house a remote Trader trading firm Capital without risking yours and gaining access to to all of our firms coaching and resources and the best part you don't have to be a profitable Trader yet in fact we prefer to mold profitable Traders with our methods and our techniques that's why we have just three simple criteria that can earn anyone an interview we're looking for highly ambitious and determined traders who fit our culture first and foremost so if you believe that could be you sign up for the free one hour online presentation by clicking the link that's in your top right corner of your screen now

Channel: SMB Capital

Views: 32,254

Keywords: stock market, day trading, smb capital, trading, investing, markets, wall street, stock trading, options trading, options income, economics, finance, scalping, scalping strategy

Id: tsWGAUIE25s

Length: 23min 38sec (1418 seconds)

Published: Wed May 10 2023