00:01 - 00:02
Hi, everyone.
00:02 - 00:03
I’m Al Brooks.
00:03 - 00:05
Thank you so much for your attention.
00:05 - 00:08
I’m creating a series
of videos on scalping.
00:08 - 00:11
The first video is going to
be about the rules for scalping,
00:11 - 00:15
and then the other videos in the
series will be about how to scalp.
00:15 - 00:17
I hope that you find the material useful.
00:20 - 00:25
This is the first of a series of
videos that I created on scalping.
00:25 - 00:26
In this first video,
00:26 - 00:29
I want to talk about some general
rules that scalpers should follow.
00:33 - 00:35
Today I’m trading with a 2-minute chart.
00:36 - 00:37
Every bar is 2 minutes.
00:37 - 00:39
This is 2 minutes later, 2 minutes later,
00:39 - 00:43
and the red line is a 10-bar
Exponential Moving Average.
00:43 - 00:47
When I’m scalping, I often put up a
10-bar Exponential Moving Average
00:47 - 00:51
instead of my usual
20-bar Exponential Moving Average.
00:54 - 00:56
A scalp, it simply is a quick profit,
00:56 - 00:59
and you often enter
and exit on the same bar.
01:00 - 01:03
For example, if you
sold with a stop 1 tick
01:03 - 01:06
below the low of that bar,
you’d get filled right there.
01:06 - 01:11
If you were scalping, you might have a
limit order to exit with a 2-point profit.
01:12 - 01:16
And if you did, you would’ve
been filled right here,
01:16 - 01:19
2 points below your entry,
all within the same 2-minute bar.
01:23 - 01:25
Can you scalp for 1 tick? No.
01:25 - 01:27
You’ll certainly lose money.
01:28 - 01:31
These are minimum sizes that
traders should use when scalping.
01:31 - 01:34
You should never scalp for
less than 1 point in the Emini.
01:34 - 01:39
In the Forex market, you should
never scalp for fewer than 10 pips.
01:39 - 01:43
And for the stock market, you should
never scalp for less than 10 cents.
01:49 - 01:52
In general, the profit that
you’re going to make as a scalper
01:52 - 01:55
is about half the size of an average bar,
01:55 - 01:57
and the risk is about
the size of an average bar.
01:58 - 02:00
If you sold below the low of this bar,
02:00 - 02:02
you might have a stop
above the high of the bar.
02:03 - 02:06
Now, if the risk is twice the reward,
02:06 - 02:10
you have to be right 67% of
the time just to break even,
02:10 - 02:14
and that’s excluding
commissions and mistakes.
02:15 - 02:19
You really need to be right 70% or
more of the time just to break even,
02:19 - 02:21
and most traders cannot
do that consistently.
02:21 - 02:27
But a great scalper can win 90% of
the time, and he can make a lot of money.
02:31 - 02:36
This is a time & sales window for the Emini,
and I want you to focus on the size.
02:36 - 02:40
You’ll see that most of
the position sizes are small.
02:40 - 02:44
This is a 2-second period
between here and here.
02:44 - 02:47
That’s 2 seconds, and this is sampled data.
02:47 - 02:50
This is not all the trades
that took place in 2 seconds.
02:50 - 02:52
Far more trades took place.
02:53 - 02:56
However, it shows the point
that I want to make:
02:56 - 03:00
that most of the trading is done
with very small position sizes.
03:03 - 03:10
You know that 95% of all of the volume
traded in the Emini is done by institutions,
03:10 - 03:15
and 75% of it is done by high frequency
trading firms, which are scalping,
03:15 - 03:18
and they might scalp for
1 tick, or 2 ticks, or 3 ticks.
03:21 - 03:26
How can an institution with hundreds
of millions of dollars in the account
03:26 - 03:29
or in the fund make any
money by trading one contract?
03:30 - 03:32
Well, they can’t.
03:32 - 03:33
But that’s not what’s happening.
03:33 - 03:37
It might look like that’s what’s happening,
but that’s not what’s happening.
03:40 - 03:44
The institution is repeatedly trading
one contract and building a position.
03:45 - 03:48
Very often, the position
will be several hundred contracts,
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maybe even thousands of contracts big.
03:50 - 03:55
You’ll sometimes see a very
large position – maybe 407 contracts
03:55 - 03:59
or 809 contracts – being
traded, and some of that
03:59 - 04:02
is from institutions
closing their positions.
04:08 - 04:12
If high frequency trading firms
are trading most of the volume
04:12 - 04:16
and most of them are scalping,
shouldn’t you be scalping as well?
04:16 - 04:17
You know they’re making money.
04:17 - 04:21
No, you cannot do that because
you cannot scalp the way that they do.
04:25 - 04:29
They have carefully tested algorithms,
all their trades are automated,
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they have tremendous flexibility
in choosing their position size.
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For example, a trade might end
after just five entries, five contracts.
04:39 - 04:44
The computer may determine that the algorithm
is no longer valid and it will exit.
04:45 - 04:48
At other times, the trade
may go on a long time.
04:48 - 04:52
They may enter 300 times or even
1,000 times before they take profits.
04:52 - 04:56
So a huge variation in position size.
04:56 - 04:57
You cannot do that.
05:01 - 05:05
If you want to trade like a
high frequency trading firm, fine.
05:05 - 05:07
Get a $200 million account,
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hire a group of quantitative
analysts to write your software,
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pay them $500,000 each a year,
05:14 - 05:17
and then you can trade like
a high frequency trading firm.
05:17 - 05:21
Obviously that’s not realistic,
and you cannot trade like that,
05:21 - 05:25
even though most of the trades that
you see taking place are traded that way.
05:29 - 05:31
This is a couple hours of trading.
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The Emini, 2-minute chart.
05:38 - 05:41
In general, if you’re
looking for a stop entry,
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you’re looking to trade
in the direction of the trend.
05:44 - 05:48
If the market’s below the Moving Average
and you have a bar closing on its low,
05:48 - 05:50
turning down from below
the Moving Average,
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it’s reasonable to look to sell on
a stop 1 tick below the low of that bar.
05:54 - 05:57
Here’s another bar turning down
from the Moving Average.
05:57 - 05:59
You sell below the low of that bar.
05:59 - 06:03
Here’s a third one, and you could
sell below the low of this bar.
06:03 - 06:07
I’m not going to go into the
reasons why the probability is less,
06:07 - 06:10
but if you did sell below that bar,
you’d get filled here.
06:10 - 06:13
You could scale into shorts,
selling more as it goes up
06:13 - 06:18
as long as it does not go above that
bar or the ii, consecutive inside bars.
06:19 - 06:23
You could take your profit when the market
fell back to your original entry price.
06:23 - 06:27
You could get out around
breakeven on your first sell and then,
06:27 - 06:30
if you scaled in, you’d make
a profit on your higher sells.
06:34 - 06:37
If you’re looking to buy with a stop,
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what you want to see is
the market above the Moving Average.
06:40 - 06:43
You want to see a bull bar
turning up from the Moving Average,
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and you want the bar
to be closing on its high.
06:45 - 06:48
Then you’ll buy 1 tick
above the high of that bar.
06:48 - 06:49
Several more examples.
06:49 - 06:52
Here we tried to reverse,
but it’s going back up.
06:52 - 06:56
A bull bar closing near its high,
turning up from around the Moving Average.
06:56 - 06:59
You buy above the high of that bar
and get filled right there.
07:04 - 07:08
Sometimes the market is far from
the Moving Average and it reverses.
07:09 - 07:11
Sometimes you can take a reversal trade.
07:12 - 07:15
An ii, consecutive inside bars,
in a bear trend.
07:15 - 07:19
Often the final bear flag, which
means you’ll soon get a reversal.
07:19 - 07:22
And here we have a decent
size bull bar closing on its high.
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You could buy on a stop 1 tick above the
high of that bar, and then get filled here.
07:30 - 07:33
I’m going to talk more
about these types of trades
07:33 - 07:37
in Part 2 of this series
of videos on scalping.
07:43 - 07:49
Now, this is a video on scalping, but most
traders should swing trade and not scalp.
07:49 - 07:52
You need a positive Trader’s Equation,
and by Trader’s Equation,
07:52 - 07:56
what I mean is your percentage
of winning trades times
07:56 - 07:59
the size of your average
win has to be greater
07:59 - 08:03
than the percentage of your losing
trades times the size of your average loss.
08:04 - 08:08
You’re not going to be calculating
that every time you put on a trade,
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but you have to be aware of it.
08:15 - 08:19
It’s difficult to structure a trade
with a positive Trader’s Equation
08:19 - 08:23
when you’re scalping because
the reward is usually less than the risk,
08:23 - 08:26
and therefore you need to
win more than 70% of the time.
08:26 - 08:31
In fact, a good scalper is going to
be winning 80% to 90% of the time.
08:34 - 08:36
It’s easier just to swing trade.
08:36 - 08:41
If you take that short, you hold onto
the trade until the trade is no longer valid.
08:41 - 08:44
You have a credible buy signal here
and you’d get out there.
08:44 - 08:50
This is a small profit, but sometimes
swing trades result in very big profits.
08:50 - 08:53
Reward’s much, much bigger than the risk,
08:53 - 08:58
and therefore you can win 40% of the time,
30% of the time, and still make money.
09:05 - 09:08
When you look at this chart,
it looks like, “Gosh, it’s easy.
09:08 - 09:13
I sell here, I exit with 2 points here
or above this bar, and I’ll make money,
09:13 - 09:18
and I just keep doing that
all day long.” This is 1 bar.
09:18 - 09:19
Every bar is 2 minutes.
09:19 - 09:23
This is just a few minutes later,
and you’d make a pretty good profit.
09:23 - 09:26
However, when you look at
this chart, nothing’s moving.
09:26 - 09:29
This is a picture of the market,
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and a picture can be very different
from your experience in real time.
09:35 - 09:41
For example, this really good-looking
buy signal bar may have been a bear bar,
09:41 - 09:45
and then in the final second,
suddenly closed on its high.
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And this bear bar closing on its low,
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may have been a doji bar
with a close in the middle.
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It may even have been a bull bar,
and then in the final couple seconds,
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suddenly closed on the low of the bar.
09:55 - 09:58
If you’re looking to place an
order below the low of this bar
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and the market is falling quickly,
you don’t know exactly
10:02 - 10:04
where the low of the bar
will be until the bar closes,
10:04 - 10:08
and by then the market may be
several ticks below the low of the bar.
10:12 - 10:15
I’m highlighting perfect looking signal bars,
10:15 - 10:19
but many of them only
became perfect in the final second,
10:19 - 10:21
and it then becomes
too late to take the trade,
10:21 - 10:24
so you’ll end up missing
a lot of the very best trades.
10:28 - 10:31
Also, you sometimes have signal bars
10:31 - 10:35
that are perfect until the final
second, and then they become bad.
10:35 - 10:38
So the opposite happens, and
you don’t have enough time to think
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that the market is no longer
doing what you thought it will do.
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For example, you might be looking
to sell below the low of a bar.
10:46 - 10:50
The bar is closing on its low,
and then in the final second,
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it closes several ticks
above the low of the bar,
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and then you take the short
and you end up taking a bad trade.
10:56 - 11:00
You did not have
enough time to change your mind
11:00 - 11:01
about what you were planning to do.
11:04 - 11:06
Here’s an analogy.
11:06 - 11:10
Here’s a little statue of a
jackrabbit sitting on your desk,
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and here is a jackrabbit in real life.
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This is what it’s like when you’re
looking at a chart at the end of the day.
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It’s easy to grab a trade
because the bars are not moving.
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But in real time, it’s like
trying to catch that jackrabbit.
11:28 - 11:32
It’s easy to grab a jackrabbit
when it’s a statue on your desk,
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but it’s not so easy to grab a jackrabbit
when it’s running across a field,
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and it’s not so easy
to trade when the bars
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are actually changing constantly
as you’re trying to place a trade.
11:47 - 11:51
A professional scalper, he’s
going to enter with a stop order
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when he’s betting on a successful
breakout, when he’s looking for a trend.
11:58 - 12:00
For example, we’re below the Moving Average.
12:00 - 12:02
We have an ii.
12:02 - 12:03
We have a bear bar closing on its low.
12:03 - 12:06
The trader will sell with
a stop below the low of that bar,
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betting that we’re going
to go down quite a bit.
12:09 - 12:13
So he’s betting that the breakout
below this bar will be successful,
12:13 - 12:16
that the market will fall
enough for him to make a profit.
12:16 - 12:18
But that doesn’t always happen.
12:21 - 12:23
When he’s buying
with a stop, he’s expecting
12:23 - 12:26
that the market will go far enough
above the high of the bar – in other words,
12:26 - 12:29
that the new trend will continue far enough
12:29 - 12:31
– for him to be able to
scalp out with a profit.
12:32 - 12:34
So he’s betting on a successful breakout.
12:34 - 12:37
But not all breakouts are successful.
12:44 - 12:49
Sometimes a trader will expect a breakout
not to go very far, and instead reverse.
12:49 - 12:52
In that case, he’s going to
be entering with a limit order,
12:52 - 12:54
which is the opposite of a stop order.
12:54 - 12:58
A stop order, you’re betting
the trend will continue.
12:58 - 13:00
You buy above this bar,
betting we’re going to go up.
13:00 - 13:04
A limit order is betting
that the breakout will fail,
13:04 - 13:06
so you might sell at the high of this bar,
13:06 - 13:10
betting that it’s not going to continue
up and instead it’s going to reverse.
13:12 - 13:15
Limit order traders often
have to use wide stops,
13:15 - 13:18
and they also often
scale in after their position.
13:25 - 13:28
So, for example,
we have a good reversal up,
13:28 - 13:32
a big enough bull surprise so that traders
13:32 - 13:34
will expect at least
a small second leg up.
13:35 - 13:39
And therefore, even though this is
a credible sell signal, some traders,
13:39 - 13:43
instead of selling with a stop below
that low, looking for a trend down,
13:43 - 13:47
will buy with a limit order at that low,
13:47 - 13:49
betting that it will go only
a little bit below the bar
13:49 - 13:51
and then have a second leg up.
13:51 - 13:56
Or it’ll go lower, they can buy more,
and then we’ll get the second leg up.
13:56 - 13:59
So the limit order, bulls betting
on a second leg up after this,
13:59 - 14:04
are betting that if we do go down,
we’ll have a second leg up
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before the selloff makes a new low.
14:06 - 14:11
So, he’ll put a stop below
the low of that bar, this line here.
14:11 - 14:15
He’ll buy with a limit order at the low
of that bar and he’ll buy more lower,
14:15 - 14:18
maybe 1 point lower, 2 points
lower, 3 points, 4 points lower,
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betting that we’ll get a second leg up.
14:23 - 14:27
As I said, he’ll often buy more
as the market goes against him.
14:27 - 14:32
He might buy 2 points below his
first entry and then 2 points below that.
14:32 - 14:38
So, he buys here, he buys more 2 points
lower, and then 2 points lower again.
14:41 - 14:44
And then when it gets
back to his first price,
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he can get out breakeven on
his first entry and with a profit here,
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2 points, and with a profit here, 4 points.
14:51 - 14:56
Or he may hold part or all of his
position, hoping that we begin a trend up.
15:02 - 15:07
Beginners should only be trading
with stop orders and not scale in.
15:07 - 15:10
Most traders, in fact,
should always be trading with stop orders
15:10 - 15:11
and they should not be scaling in.
15:11 - 15:14
You want the market
to be going in your direction.
15:14 - 15:16
You’ll have a better chance of making money.
15:18 - 15:21
Example: you sell below that bear bar
15:21 - 15:25
or you buy above this bull bar,
looking for a reversal up.
15:28 - 15:33
You will lose too much money with
limit orders scaling in and using wide stops,
15:33 - 15:36
even though professional
scalpers often do that.
15:41 - 15:45
As a scalper, your reward
is small relative to your risk.
15:45 - 15:48
That means you have terrible risk/reward.
15:48 - 15:54
Every trade has three variables:
risk, reward, and probability.
15:55 - 15:59
Those three variables are what you need
to consider when you’re placing a trade.
16:01 - 16:04
You can look at risk/reward
as a single variable
16:04 - 16:06
and probability as the second variable.
16:06 - 16:10
As a trader, in general
you’re either going to have a trade
16:10 - 16:14
with really good risk/reward
which always has bad probability,
16:14 - 16:20
or a trade with really good probability
which always has bad risk/reward.
16:20 - 16:26
A scalper, he has bad risk/reward,
so he needs very high probability.
16:31 - 16:33
Look at the lottery, for example.
16:33 - 16:36
Your state makes money
by selling you a lottery ticket.
16:36 - 16:40
They have a very high probability
of being able to keep your one dollar,
16:41 - 16:43
but they have terrible risk/reward.
16:44 - 16:46
Sometimes they have
to pay a million dollars
16:46 - 16:49
to a person who bought
a ticket for one dollar.
16:54 - 16:58
A scalper has more risk than reward.
16:58 - 17:00
He has terrible risk/reward.
17:00 - 17:03
He can only make money
if he has a very high probability.
17:03 - 17:07
There are things he can do
to increase his probability.
17:14 - 17:20
The two that scalpers most often use
are they scale into trades
17:20 - 17:24
– they add to their trade as it goes against
them – and they use a very wide stop.
17:24 - 17:27
Some scalpers don’t even use stops at all
17:27 - 17:29
if they’re very confident
about their position.
17:30 - 17:33
Scaling in and wide stops
increases your risk;
17:33 - 17:37
however, it greatly
increases your probability.
17:38 - 17:40
Professional scalpers, they trade small.
17:40 - 17:45
Very small, so that if the market
goes quickly far against them,
17:45 - 17:49
they’re not going to lose more on that
trade, than they would on any other trade,
17:49 - 17:53
and they also will not panic if
the market goes far against them.
17:59 - 18:02
For example, let’s say the scalper
thought this was a Sell Climax,
18:02 - 18:05
and that this was
the start of a reversal up.
18:05 - 18:07
He might buy the close of that bull bar,
18:08 - 18:12
but he might want to use a wide stop
or no stop at all and scale in.
18:15 - 18:19
He might buy more
a point below that bear bar,
18:19 - 18:23
betting that this will be the final bear flag
and that we will not fall very far.
18:27 - 18:31
But what will happen with
the beginner? He’ll see 3 bear bars.
18:31 - 18:33
This body is bigger than that body.
18:33 - 18:38
This body is bigger than that body, and
he’s afraid the market’s going to crash.
18:38 - 18:41
He’s seeing the market accelerate down
and he can’t take the pain.
18:41 - 18:45
After a few bear bars,
he will exit right here
18:45 - 18:47
and take a very big loss on this position.
18:50 - 18:55
Beginners, they have
an incredible talent at exiting
18:55 - 18:57
right before a trade goes their way.
18:57 - 18:58
That’s just the reality.
18:59 - 19:01
They’re weak traders.
19:02 - 19:06
Weak traders usually exit right
when the market is about to reverse.
19:06 - 19:08
Once all the weak traders have exited,
19:08 - 19:11
there’s no one left
to make the market go down.
19:11 - 19:15
As the market’s going down, the
weak bulls are selling, selling, selling,
19:15 - 19:17
and then once you have a very big bar,
19:17 - 19:21
the final bulls give up
and there’s no one left to sell.
19:21 - 19:24
No more weak traders left,
and the market goes the other way.
19:32 - 19:36
Now, what would a professional trader do
if he bought that close?
19:36 - 19:40
Well, he’d see the ii,
bear bar closing on its low.
19:40 - 19:42
He knows it’s probably going
to go at least a little bit down.
19:42 - 19:45
He might exit below the low of that bar
19:45 - 19:48
or he might even reverse
– reverse to short.
19:52 - 19:55
Alternatively, he might be confident
19:55 - 20:00
that an ii is a Triangle
on a smaller timeframe chart.
20:00 - 20:03
If you have a Triangle late in
a bear trend, and you get a bear breakout,
20:03 - 20:07
the market’s probably going to
come back to that Triangle later on,
20:07 - 20:09
so he might hold onto
his position and then wait
20:09 - 20:12
for a bull bar closing
near its high, a reversal,
20:12 - 20:16
and then buy more above
the high of that bull bar.
20:18 - 20:22
And then when the rally gets back
to around his original entry price
20:22 - 20:28
or below that bear bar, or if the
bars start to stall, he might get out.
20:28 - 20:31
If he did that,
he’d have a loss on that entry,
20:31 - 20:34
he’d be out around breakeven on this entry,
20:34 - 20:37
and he’d make a profit on this lower entry.
20:37 - 20:40
Basically, the whole trade
would be a scratch trade.
20:40 - 20:42
He’d have a small profit.
20:42 - 20:45
However, by not
panicking during a big selloff
20:45 - 20:48
and being able to do the right thing
– buy more,
20:48 - 20:54
betting on the reversal – a scalper
is able to avoid a loss on a bad trade
20:54 - 20:56
and sometimes he’ll make money.
21:00 - 21:04
Professional traders, just like
beginners have an uncanny ability
21:04 - 21:08
to get out exactly at the
wrong time, professional traders
21:08 - 21:13
are very good at entering
just before the trade goes their way.
21:20 - 21:24
I mentioned that some scalpers
are confident about their position
21:25 - 21:27
and they’ll trade even without a stop.
21:28 - 21:31
This is because they’re
trading small enough; therefore,
21:31 - 21:33
the risk will never be too great.
21:37 - 21:40
Most traders cannot trade
small enough position sizes,
21:40 - 21:44
and they cannot use
wide enough stops to do that profitably.
21:44 - 21:47
Therefore, that’s really
not an option for most traders.
21:51 - 21:52
Remember that beginner.
21:52 - 21:54
He bought here, he bought here.
21:54 - 22:00
At some point he has to get out,
and 3 big bear bars – a lot of beginners
22:00 - 22:02
would get out below that third bear bar.
22:02 - 22:06
Remember, this beginner
has been scalping for 2 points, and here,
22:06 - 22:10
he’s going to lose
– what is that? 8 or 9 points on that,
22:10 - 22:13
and then he’ll lose
6 or 7 points on that,
22:13 - 22:18
so he’ll lose 13, 14 points on one trade,
and he’s been scalping for 2 points.
22:18 - 22:23
So that one trade
wipes out six or seven good trades.
22:28 - 22:33
A lot of scalpers, when they’re
starting out, think that all they need to do
22:33 - 22:36
is get a little bit better, but they
really don’t understand the math.
22:36 - 22:41
Unless they can use wide stops and scale
in and greatly increase their probability,
22:41 - 22:44
it’s impossible to make
a living as a scalper.
22:52 - 22:55
As you know, I trade
mostly the 5-minute chart.
22:55 - 22:58
Now, what about scalping
on a 1-minute chart?
22:59 - 23:02
The problem is you don’t have
enough time to make decisions.
23:02 - 23:06
Just like on this 2-minute chart,
everything looks easy.
23:06 - 23:08
You see the close here,
you see the close here.
23:09 - 23:13
Real time, the bars often look
very different before they close.
23:14 - 23:17
But if you print out a chart at the
end of the day, everything looks perfect.
23:18 - 23:20
But if you’re trading a 1-minute chart,
23:20 - 23:22
even a 2-minute chart,
most traders cannot do it.
23:22 - 23:24
They don’t have enough time
to make decisions
23:24 - 23:27
and they’ll end up making too many mistakes.
23:30 - 23:34
And yes, your stops are not too far away.
23:34 - 23:36
You might lose 2, 3, or 4 points.
23:36 - 23:40
However, your account will bleed
to death from a thousand papercuts.
23:46 - 23:49
Now, why am I making
this video if most traders
23:49 - 23:51
are going to lose money if they scalp?
23:51 - 23:57
Well, first of all, I get a lot of
requests to make videos on scalping.
23:57 - 24:01
Also, the patterns that you’re
looking for when you’re scalping,
24:01 - 24:03
are the same as
the patterns that you’re looking
24:03 - 24:06
for when you’re swing trading,
so it’s an opportunity to practice.
24:08 - 24:10
The faster you get at recognizing a pattern,
24:11 - 24:13
the better chance you have to make money.
24:13 - 24:14
So, it’s good to practice.
24:19 - 24:23
It’s important to realize that
most swing trades do not go very far.
24:23 - 24:26
Most of them end up as scalps,
and therefore,
24:26 - 24:29
if you know some basic scalping techniques,
you can improve the profit
24:29 - 24:33
that you make from
the swing trades that do not go very far.
24:37 - 24:40
Finally, some scalpers
are truly great traders
24:40 - 24:42
and they make an incredible amount of money.
24:43 - 24:45
It’s interesting to think
about what they’re doing.
24:45 - 24:49
In fact, one of the traders in my chatroom
– he’s been in the chatroom for years
24:50 - 24:54
– he runs a hedge fund
and he’s an extremely good scalper.
24:54 - 24:58
I’ve seen some of his results,
and I’m confident
24:58 - 25:02
that he makes 20 or more points
trading the Emini everyday scalping.
25:03 - 25:07
So, it’s interesting and fun to think about
what successful scalpers are doing.
25:15 - 25:17
I want to go back to
the point that I keep making.
25:17 - 25:20
It’s easier to make money as a swing trader.
25:20 - 25:24
Swing traders, they can enter a
little late, they can enter a little early,
25:24 - 25:27
they can exit a little late,
they can exit a little early.
25:27 - 25:30
They don’t have to trade perfectly,
and they can still make a lot of money.
25:30 - 25:33
A scalper, every tick matters.
25:33 - 25:37
They must enter and exit
precisely at the right time.
25:37 - 25:39
They cannot make mistakes,
and it’s really too difficult
25:39 - 25:42
to do that long term for most people.
25:45 - 25:49
If you play golf, anybody
can hit a great shot occasionally,
25:49 - 25:53
but it’s really hard to hit
72 of them in a row like a pro.
26:01 - 26:03
Scalping and thinking
about scalping, it can be fun.
26:04 - 26:07
Everybody knows that
scalpers make a lot of money,
26:07 - 26:09
and it’s reasonable to think,
“Hey, why not me?”
26:13 - 26:16
Well, first of all, you need
the ability to do it, and it’s difficult.
26:16 - 26:18
Most traders do not have that ability.
26:18 - 26:22
And then equally important
is you have to be having fun.
26:22 - 26:27
Your career has to match your personality
if you’re going to do it forever.
26:28 - 26:33
As I said, most traders will make
more money and have more fun swing trading.
26:37 - 26:39
Everybody tries scalping at some point.
26:39 - 26:44
However, you should look at it as a hobby,
which means something fun to try.
26:48 - 26:52
Hobbies cost money,
and most scalpers will lose money,
26:52 - 26:54
or they’ll find it too stressful, not fun.
26:55 - 26:58
If you do it, only trade
a small position size,
26:58 - 27:02
and do not spend too much time
or too much money doing it.
27:02 - 27:04
Remember, your career is as a swing trader,
27:04 - 27:07
and that’s where you should
be focusing your energy.
27:10 - 27:11
Look at this chart.
27:12 - 27:15
It’s an example of scalps over
the course of a couple of hours,
27:15 - 27:19
and on this scalp you can make 2 points,
on that one you can make 2 points.
27:19 - 27:22
If you sold below here, you’d lose 3 points.
27:23 - 27:27
But when you add all of that up,
you’d make about 18 points,
27:27 - 27:31
$900 per contract in a couple of hours.
27:36 - 27:40
In Part 2 of this series, I’m going to
go through every one of these trades
27:40 - 27:42
and explain what is going on.
27:48 - 27:49
Again, I’m Al Brooks.
27:49 - 27:51
I want to thank you so
much for your attention.
27:51 - 27:55
I hope that you found
this information about scalping useful.
27:55 - 27:58
I also wish you the best
of luck in your trading.