High Accuracy 1 Minute Scalping Strategy (Full Training) transcript

in today's episode I'm going to teach you the simple scalping strategy that I use in my own trading to capitalize on the shortterm burst of volatility that we see nearly every single day in the market I'm primarily using 5 minute and 1 minute time frames I do supplement that with a 10-second chart but I want to encourage you guys to keep it simple I think a lot of you are making this a lot more complicated than it needs to be so today I'm going to walk you through quite simply how to start scalping we're going to zoom in here on this slide deck we're going to have a great case study for my trades today on zpp as you could see I'm up over $10,000 on this stock and I did most of these trades in less than just two hours this morning so scalp trading is a strategy you can Implement every single day in the markets and let's go ahead and Dive Right In okay so we're going to full screen this slide deck here and you'll be able to see my my trades here on zpp zap this is a stock that when up today over 100% I mean this is a phenomenal move and these are the types of stocks that a lot of beginner Traders will struggle with because if you're not scalp trading you almost can't trade it because the stock is up too much you'll just feel like I I can't get in this High because I can't manage my risk but if we change our perspective and we focus instead on you know having a nice 10 20 30% winner to just a 10 15 20 cent winner now you've sort of adjusted the param parameters of the trade and you could find a spot where you can get in with 15 cents of risk and 253 cents of upside potential that is a scalp trade that's worth taking and so scalp Traders like myself are able to participate in these moves even when they get extended and in fact this can be where we have some of our best trades so these green dots are where I was buying buying buying the red dots are where I was selling and so this is classic scalp trading where I'm getting in and I'm getting out I'm getting back in I'm getting back out back in back out back in back out and I keep trading the whole range up but what's very important is that I do not overstay my welcome or trade the backside coming back down now when it starts to pull away again I'm ready to participate I'm trading again in these areas right here and in these areas here and in this uh dip right there looking for that curl back up through the high so what are we going to talk about in today's class the topics we've got five of them I'm going to Define scalp trading for you for those that don't understand exactly how it works I'm going to share with you the pros and cons of scalp trading because it's not all you know easy sailing it can be very challenging I'm going to share with you the tools required to scalp the skills required to scalp and I'm going to share with you my scalp trading strategy I'm also going to give you guys a PDF where you can download all of the rules of my strategy that will be pinned to the top of the comments so those are free gifts for you guys who are watching today's episode let's start with the definition of what scalp trading is scalp trading is a fastpac Bas day trading strategy you cannot scalp trade as a swing Trader or as an investor it is a day trading strategy and it's designed to capitalize on short duration volatility in price so when the price is really volatile and it's jumping up and down that's when we're scalp trading we don't scalp trade a stock that's going sideways if you get in a stock at five and you sell it at five you don't make money we want to get in at five and sell it at 525 530 540 550 or higher but for scalp Traders we don't usually try to hit home runs we take small base hits and we just do it again and again and again and these base hits add up to they can to substantial amounts of profit as the case has been for me although Al caveat that as always results are not typical and you've got to manage your risk when you're trading number three it's a high accuracy strategy for Traders who execute it correctly high accuracy I think is important because when you trade with 65 70 75% accuracy it's a real confidence booster it's like I I'm right more than I'm wrong I really know what I'm doing now there are some Traders out there that can trade with 30 or 40% accuracy and still make money because they occasionally hit home runs and that's great but it can also be disheartening when you're wrong the majority of the time I understand it can work and it can be part of a profitable strategy but you've got to have the emotional discipline to be able to tolerate those stretches of losses and well I I don't don't really have it and then number four scalp trading is a way to participate in a move up that would be unsafe for swing trading or long-term hold times as I already mentioned okay so what are the pros of scalp trading I would say one of the pros is that you're never married to a position at any time you can just hit the bid and bail out now for me I really like that scalp trading allows me to trade and participate in parabolic extensions because that really is where I make the most money I don't do super well trading stocks are within a 10 or 15 cent range you know they're going up a little bit then dropping back down that it's just not enough range for me to make a lot of money certainly even as a scalp Trader but but also if you're trying to hold for a bigger move that's just not enough range but the problem is unless you're in during this period of consolidation right so let's just say we have a stock that's made a move up has pulled back and is now kind of in range here this is the range where we've only got let's just say 15 cents of you know upside downside so there's not a lot of profit but by the time it finally is back up here well unless you bought and held during this consolidation to take profit well it's up too high unless you're willing to scalp and then you take a little micro pullback for the next leg up now someone who's taking a huge position probably wouldn't feel comfortable buying up here but for scalp traders who are jumping in and out of the market with often relatively smaller positions that's a perfectly reasonable place to take a trade so you can participate in those areas I also feel like as I indicated there's a big benefit to maintaining high accuracy by selling when you're green now I know a lot of Traders will struggle with um having winners that are really small and losers that are too big and that is one of the cons of scalp trading so the drawback to scalp trading well number one is that your commissions and fees is related to frequent Trading can be expensive now that's going to depend on the broker that you're trading with if you're using a commission free broker like thinker swim then you don't have to worry about commissions but you do H still have some fees that they pass on from the exchanges so they're small but they will add up if you trade millions of shares a day and some people do now one of the challenges with scalp trading is that most scalp Traders will have small average winners and that creates the biggest risk here which is that you can have an inverted profit to loss ratio we're going to talk about profit to loss ratios a little bit more as we get into this class here because it's an important concept to understand when it comes to choosing the best entries but the the long and short of it is that if you have relatively small average winners and you're not good at cutting your losses quickly then you'll have average losers that are bigger than your winners now if you've got really high accuracy you can still be profitable with that inverted profit to l l relationship but it just makes it harder so one of the things that's really important with scalp trading is that you cut your losses quickly however this is hard for a lot of beginner Traders for a multitude of reasons number one just instinctually they don't want to cut their losses you want to keep holding and hope that it turns around so you've got to fight your instinct to hold number two your educated intuition is not yet refined to be able to see the exit indicator before it's too late and number three depending on the tools you're using the platform and the hotkeys you may not be fully equipping yourself to move in out of the market as quickly as you need to as a scalp Trader but I'm going to help you with all of these things in today's episode so I I would say um the fourth risk is the loss of profit between the spread on Market orders a lot of beginner Traders are using Market orders and if you happen to have a stock that has a larger spread um and this is an example of one right here that I'll show you just just for the sake of it uh this stock right now has a 13 cent spread and the spread's jumping around it's 1588 by uh 15.95 so at times it's a 10 cent at times it's 8 cent and then at other times it's 1520 cents with a bigger spread like this if you buy at a market order you'll fill on the offer at $15.99 or 16 and then if you turn right around and sell on the bid as a market order you're going to lose 5 to 10 cents just on the spread so scalping becomes increasingly difficult as the price of the stock goes higher now there's definitely a sweet spot in terms of price that I'm going to share with you as we get into my strategy for scalping but just it's it's worth being aware of um one of the cons to scalping is the loss of profit between the spread on Market orders so the tools required to be a scalp Trader number one you're going to need software for finding volatility in real time and for me that's the day trade Dash scanner that I have on my uh screen and I'm using every single day for trading so these are the scanners right here that I'm using these have been developed by my own development team it's a subscription at Warrior trading that many of our members are are using so these are the scanners I'm using to find stocks to day trade you can certainly use social media you can use some free tools and free tools could give you a list of some of the most volatile stocks today but in in real time I like having this radar because it's actually telling me in real time ohvs right now this second is making a new high right so as this stock is pushing higher this is telling me instantaneously that that's happening and that's what I need if I'm just looking at a list that refreshes every 15 20 minutes that's not going to be sufficient all right so we need to have scanners we also need to have access to level two Market data level two Market data is what you just saw amvs right here it's available with all Brokers you just have to sub subscribe to it and some Brokers will make you pay a little extra for it number three you need at a minimum simple hot keys that will allow for Rapid order execution preferably more advanced hotkeys for complex orders would be great but if you don't have that at least simple hotkeys is a must so there's a lot of Brokers that offer simple hotkeys that you can get away with and it's good enough and there's a small number of Brokers that offer complex hotkeys we talk about those more in detail as well and then number five or number four you need software for your analytics I like to use Trader view for my analytics uh this is what I'm using right here you can see this screen this is um aggregating all of my trading data $12.7 million here in gross profit and it's giving me all of the metrics around these trades we're going to analyze some of these metrics as we go through this class because these metrics will show you where I'm trading the best the price range the time of day I think it as you're aspiring to learn how to be a successful Trader it makes a lot of sense to analyze the metrics of someone who's been doing it before you and is doing well right it always makes sense to learn from the mistakes of people um who have come before you and to learn from the successes as well all right so now let's get into the meat of what we're talking about here my scalp trading strategy and I'm going to break this down into five steps starting with step number one which is finding a stock that's volatile so of course I'm using my my scanners to find these stocks but what I'm specifically looking for on the scanners is a stock that has at least five times relative volume five times relative volume means the volume is five times higher than its uh 14-day average so if we look at umvs right now as it hits a high of 1720 right here we can see that the relative volume on The Daily is 10.39 that means this stock is trading on 10 times higher volume than average we already said my minimum threshold is five this is at 10 which is great uh zpp which is the stock that I traded today uh is actually a little lower this one's at four which is kind of interesting but this falls into the category of what we would call a continuation setup continuation setups are stocks that have been very strong for several days and we're riding that momentum higher however because of high volume in previous trading sessions the average daily volume is going to go lower because each of these previous trading sessions are increasing the daily volume so continuation stocks can be um one category of stocks that sometimes will fall just below your relative volume threshold but will'll meet the other criteria um number two demand should be up uh we want to see that the stock is up at least 10% on the day so five times relative volume that indicates high demand the stock being up 10% that indicates high demand demand envs is currently up 52% zap uh hit a high of just about 100% number three we like to see the stock has a catalyst all right so when we're talking about a catalyst generally speaking we're talking about some type of news event right we need to see if the stock has a reason to be moving higher in the case ofvs and zpp both of these stocks are examples of continuation where clear catalysts are not as obvious and I think that this is a challenge for a lot of beginner Traders because it's like you know why what is the Catalyst and a lot of people think that the Catalyst should be very much like a fundamental piece of news but it's not impossible the Catalyst can be something a little less tangible such as the stock is up 400% in the last 30 days and some shorts are starting to get squeezed out and the price keeps going higher that can be a catalyst number four I prefer to trade stocks that priced between $1 and $20 this is the kind of range that I like amvs currently up around 17 is at the high end of that range and you can see it's already back down to $ 16624 so when you get into the high end of this range the volatility is high but the ability to manage risk goes down so you kind of have this inverse relationship where as price price increases so does risk so price and risk here so when we get here I I kind of like to trade down you know if we go I don't know maybe down into the under $1 range the the risk is low and and also I suppose we've got another angle here on um exactly where profitability fits in so if we just map my profitability we'll find that let's just say for the make of argument that um we're just going to put you know some of my biggest winners I've had some big Winners up here which have been on GameStop but these have also contributed this high price high risk to some of my biggest losses right so I've also had some big losses so here's where you'll see plus you know $475,000 my biggest Green Day of all time but you'll also see minus $275,000 my biggest red day of all time and then down in here is where we're seeing more of kind of my standard green days of up around $55,000 daily goal so I found that when we're talking about this area which is lower risk this is when we're going to be looking at stocks that are generally priced between 2 and 20 again when you get to the high end of that range it starts to get a little riskier and number five I know that when I am trading stocks have a float of less than 10 million shares I tend to do better float is the number of shares available to trade so when we go back to the scanners here what we're going to see is that these stocks are telling us uh essentially how well they meet the criteria that I already know is where I find the most profitability so we're seeing here we've got the relative volume we've got the change from the close we've got the price we've got the total volume on the day and then we can see what the news catalyst is on this particular stock so if we tie in my metrics here all of this will support what I've already shared with you if we look at price and volum volume you're going to see that my performance is predominantly in you know the under $20 price range yes I've got some winners here but of course also have some bigger losers we look at Performance Based on relative volume and what we'll see is uh we've got to go over to instrument we look at performance by instrument volume and what we'll see is that when we have a stock that has high relative volume that's when I'm going to do better all right so this is performance by instruments relative volume right here okay so this is where you could see basically all of my profit is when the stock has five times higher volume today than average now this right in this area is um actually where zap is going to fit in zpp is going to be in this range here where the performance relative to the prior days relative volume is actually much lower and that's because it's a continuation stock so all of these metrics these essentially are defining the strategy but it's communicating it in a way that may be very hard for a beginner Trader to understand and so this is kind of that translation of what the metrics are saying the metrics are saying that this is where I make the most money this is where I find the most success now if we want to talk about some of the facts of my biggest winning tra of not just my biggest winning trades but the facts of my trading history in total a couple of highlights I'm right about 68.5% of the time again this is not just my opinion this is backed up by this data right here 68.5% of the time that's my accuracy and this is based on nine years of trading history and that's not my entire career that's just the trading history that I've been able to put into this um software here so my accuracy is 68.5% my average winners and average losers are approximately equal in dollar amount I profit therefore by having accuracy above 50% because if my accuracy was 50% and my average winners and losers are even then I'm a break even Trader but because I'm right 68.5% of the time I am profitable now my average winners are about 14 cents per share and my average share size is about 10,000 shares and my average profit per trade is $1,400 now in order to make 14 which which you could argue is a scalp trade the price needs to go up closer I would say to 30 cents now this is why I say that you'll never capture the perfect bottom to top of a move right you pull up a chart you've got a nice pullback you're never going to get the perfect entry and the perfect exit you may get a perfect exit you may get a perfect entry you'll never get both in one trade it just doesn't happen so I like to figure that realistically at best I might only capture half of the move and part of that is because of the factor that spreads play into a move and the fact that by the time I see my exit indicator the price is probably already going to pull back a little bit so at best I might capture half which means if my average winner is 14 cents a share if I don't think a stock has the potential to go up 30 cents I shouldn't even touch it that's the truth so for a scalp Trader you need to really ask yourself does this have the potential to give me X number of cents per share I would say 30 cents is sort of a good minimum because again even if a scalp trade is only three or four cents a share as it will be with some Traders you still want to know that you have the potential for a bigger winner now um as I said I'll never capture the perfect bottom and top of a move I have to accommodate for slippage and spreads and if I can't keep tight stops I shouldn't take the trade and so when I look at a stock like zpp that has the the degree of volatility plus the spreads that it's got I don't think that I could keep my stop to only 15 cents a share when you've got 20 cent spreads that's a 18 Cent spread so because of the spreads I don't think I can manage my risk effectively on the stock and in fact I tried to trade it and I learned that lesson today on just the trades I took on it and at that point I said all right I should leave this stock alone and focus on the one that's going to be easier to manage risk on that actually highlights a very important skill for scalp Traders learn to lean in and double down on what's working and totally leave and abandon what's not working if you got a stock that you're r on and it's just not working forget about that stock move on if you've got one that you're finding some success on hone in on that that's where you want to focus okay so now you know a little bit of um a few the facts of my uh trading strategy so step one is to find the stock moving and step two then is to find out what the catalyst is now I always like to see that we have a news Catalyst such as earnings clinical trial results or FDA approvals or a new contract now we can see what the news headline is right inside day trade Dash inside this platform but again I I'm not here just to tell you guys to sign up for day trade Das you can use whatever software you want if you want to go to market watch you want to go to Google or Yahoo finance you can you can use free tools like that and you can find the news so you in the stock quote window here for the software that I'm using I can pull up the stock and I can see what the news catalyst is now if I see there's no clear news Catalyst then in that case I understand that this is a continuation setup where the stock is moving higher and I can go back and check was there news back on this day here that sent the stock this much higher and we're still trading kind of in the you know the wave of that move that was created and if that's the case then I can understand that's the Catalyst in the case of meme stocks like GameStop and some of the others the Catalyst may just be that Traders like the stock and they're buying it and the price is moving higher and that's it's not invalid I mean that is a catalyst so the news Catalyst can be very clear or it can be a little bit more indirect however there are some multiplying factors when we have a headline that includes keywords of a current Trend like AI or Co or something like that that can create more buying power just based on the headline and you'll see that some stocks will keyword stuff their headlines with words that they think high frequency trading algorithms will pick up on like Amazon Apple Google Nvidia right bigname companies Walmart when you have a small company that puts out a headline and they've got one of those big names in the headlines Traders are a little faster to jump on up on it so a headline that includes keywords of a current Trend can do better not always sustained momentum if it's just keyword stuffing but it can still do better in the short term which is enough for a scalp trade if the stock fits within a current hot sector Pharmaceuticals Chinese AI that can also give it more attention and if the stock is a recent IPO initial public offering a recent special acquisition company or it has a recent reverse split these can all be daily setups that create more volatility so once I understand the news headline and whether or not the the stock has multiplying factors that's when I can begin to move towards step three step three is where I perform my technical analysis for taking a scalp trade so what I'm looking for here is finding a great entry and I'm going to come back to this question of does this stock have the potential to go up 50 cents or more my first profit Target is going to be 15 to 20 cents which would give me a to one ratio so if we look at performance by intrade price range this is interesting my total performance when a stock only goes up 9 cents from when I get in to when I exit well I clearly don't make a lot of money there but I've taken a good number of trades on stocks that don't give me that kind of big move in fact 2,000 trades that fall within that um trade that this is the distribution of Trades I've taken that fall within this price range of this is how much they move and then this is how much I've made so my the most profit is down here when stocks go up between $1 and $5 a share that accounts for more than 30% of my total profit right it's not the most uh trades I've ever taken the most are in the 50 Cent to a dollar range but interestingly 50 cents to a dollar produces substantially less profit than $1 to5 and I suppose that that makes sense based on the way this is broken down but I think what's important to understand here is that we're not going to make money if a stock isn't moving up very much we need volatility and it's easy for Traders to jump in a trade and think oh this could go up 5 cents and with 10,000 shares I'll make 500 bucks and then it drops 8 cents and it's like you only had the potential to make 5 cents but you lost eight cents a share that's not a good risk to reward ratio so when it comes back to risk management risk to reward ratios are important to understand okay so the Rel relationship they have is that if you risk a dollar to make a dollar you've got to be right 50% of the time to break even all right that's your break even point if you risk a dollar to make $2 you only need to be right 33% of the time to break even now as we know for my metrics my accuracy is 68% but my profit loss ratio is about 1: one and so as a result I'm profitable my break even point is 50% accuracy anything above that I'm green so so it's 67 68% I'm doing just fine but there could be a Trader who trades with 67 or 68% accuracy but is break even and theyd be break even if their losers are twice their winners on average that's not sustainable and I know that because when I was getting started I traded with a 2:1 negative profit loss ratio so my average losers were twice my average winners and that was happening because I was stubborn about cutting my losses and I hadn't developed the educated intuition to get really good at picking the strongest setups and and really having the best entries so as a beginner Trader naturally out of all the trades you take right you're going to have as a beginner a fair share of Trades that unfortunately you know we'll just say this is um dollar lost dollar lost and I don't know what we have over here but anyways you're going to have a fair number of Trades up here where you've got big losses and part of it is let's say quality so this is quality over here and this is a b c d f so you've got some big losses that are on F quality setups well why are you taking F quality setups well part of it is because you don't have the educated intuition you're looking at it you're thinking I think this is an a b or c you know an A or B setup but another Trader like myself would say no that's an F setup so now you've got all these unnecessary losses and that's what I had when I was getting started now I still had nice trades in here that were nice winners and you know maybe this is this is winner and then this is loss over here something like that so we could kind of a spectrum where this is your break even so you want to be focusing on down here where you're green and that's going to be focusing on a quality setups that's going to be the best place to focus so if you cut out all of these here if you cut out all the f quality setups you're probably going to cut out a lot of unnecessary losses now it may be true that occasionally you take an F quality setup and you have a winner it's not common but occasionally it's going to happen unfortunately that's one of the worst things that you can experience because it's going to encourage you to keep swinging for these terrible trades because there's a chance that maybe it will work it would be better if the market gave us very consistent feedback but the fact is the market will sometimes reward you even though you broke rules even though you didn't have the discipline the stock will happen to go in the direction that favors your trade and you win and that's terrible thing to have happened because it reinforces making bad decisions if the market always consistently punished us when we made bad decisions we would stop making those decisions but that you know intermittent kind of enforcement is the challenge so what we have to do is we have to rely on our historical data that tells us beyond a shadow of a doubt that when I trade this strategy over the long long term I am a profitable Trader and when I deviate from the rules that's when mistakes happen now you're probably wondering what the rules are for my trading so let's start talking about the entries okay so when I'm trading and I'm scalp trading I'm focusing on trading momentum I'm trading the trend this is so important many Traders over complicate this and end up not even trading the trend you're trading The Backs side of the move let's look right now at a vs I am sure there are Traders right now at this moment who are trading envs and who are losing money and you know what I would say you're trading the back side of the move the front side of the move when this stock was still moving higher was right in here front side front side front side a little bit of a steeper pullback rallying back up still on the front side we're holding above our moving averages when you have a moving average cross over here and you cross below the 20 moving average the price is now declining you are stair stepping back down so at this point here once we broke below that 20 exponential moving average there is no doubt that this is the backside of the move at least for for the time being and you shouldn't trade the back side of the move you're going to get chopped out you're trading against the trend now on zpp this morning I think I did a pretty good job of trading the trend we had a stretch here where the trend was really strong I crushed it and then I stepped back I waited during this period because once again we broke Trend we broke below this moving average we we weren't able to hold it we had a macd crossover macd is a simple indicator you can use on your trading when the macd is open I like to focus on trading to the long side when the macd crosses over some people will flip short but for scalp traders to the long side we just sit on the sidelines and wait now we did get a nice rally here and we got a couple of nice dips down here off of this support line those gave me a couple of nice trades but then I said I don't want to overstay my welcome and so again I'm sure there are traders that are overtrading the back side of this move here but they've missed the boat so here's what I would encourage trade the front side as aggressively as you can and then once we get that crossover a moving average crossover a macd crossover or we break below that 20 moving average leave it alone stop wait for the next setup wait for the next time either this stock goes back to the highs and shows that has a potential to continue that that Trend or wait for the next stock that shows up now imagine this imagine a Trader traded just the front side of the move here on on zpp and then they completely waited completely waited completely waited didn't trade any of this but thenvs starts popping up and they say you know what this is pulling up squeezing away I'm going to jump in this right here so taking these pullbacks and buying for this leg up well they probably would have done well on that because in this range the stock went from 13 150 up to 177 and you could easily be scalping this getting in getting out getting in getting out getting in getting out now where I traded a little bit earlier in the day was right in this area on this pullback and this was a Fine Place to trade the macd was open but as it turns out you know because of the spreads and everything else it dropped down I took a loss and for me I called it a day I didn't overstay my welcome I stepped out and said I've done well enough for today at $10,000 this is a good day for me it's a green day and I'm at Double my daily goal now we'll talk about when to walk away in a moment but when it comes to technical analysis what I'm looking for is a stock that is showing one of the following patterns I like to trade the first pullback as you could see right here we had that pattern Picture Perfect onvs this is a f minute scalping pattern you get that pullback right there and the way I trade this is I'm looking for the first candle to make a new high that's the pattern so we get the move up we get the pullback bottoming tail here first candle to make a new high is the entry and that's where I take a scalp I can get in right there for that first candle making a new high I set a tight stop I don't stop at the low of this pullback that's too far I use an arbitrary stop generally of 10 to 15 cents because I don't want my average losers to be bigger than that 15 cents is my average loser 14 15 cents I don't want them to be bigger so I set arbitrary stop at 15 cents I get in and I look for that continue uation I'm expecting a wave of buying to come in here because we have a 5minute pattern first 5minute candle to make a new high that's a scalp pattern now we could trade that on the one minute as well the first one minute candle to make a new high right there you have a squeeze up and a pullback first one minute candle to make a new high is right there first one minute candle to make a new high is right here first one minute candle to make a new high is right here it's the first one minute candle to make a new high after a move up and a little pullback so in fact on this one we have 1 2 3 four of that pattern that happened four times in a row then we drop back down here and we pull back down to the 20 so it doesn't look good don't trade it down here then it comes back up and number five there's another pattern right there so that's that same pattern and you you got five instance instances of it on zap from this morning now on zpp I can actually do something a little different um on this one I can show you let me just pull this back up so I'm going to full screen this this is going to actually show you um the individual trades here now it gets a little bit hard to read this but um let's see so right in here I bought this dip right it um this was about 660 so we had the first pop here at six added on the pullback a nice little pop up so that's that dip this was the same thing we popped up we pulled back then we pushed higher little dip pushing higher little dip pushing higher little dip pushing higher now the challenge is this is um I don't like using these charts they show my entries which is great but the charts aren't very good so they're hard to move in and out of so if we go back and look at it here now it's much more clear boom right there right that's the spot that little spot there at 660 that's perfect that's the pattern you want to trade now if you want to download my micro pullback strategy as a PDF I will put the link in the description and you can download that so it's going to cover the micro pullback strategy PDF and it's also got my small account strategy in that download as well right here we've got the half doll whole dollar and then this is the micro pullback when we get that pop up that little pullback just for a moment and then the push higher that's what we're looking for so I'm going to go back here on this one to right here so we've got that pop up this is at the half doll whole dollar very common that we see resistance right at these levels so let me pull this back up here on the chart so we're going to go for Z here let's see all right so on this one um we came up first to $6 little bit of resistance we pulled back we came we come back up nice pull back right there a little pull back right here and then it pushes higher now it ends up pulling back a little bit all right so it pulls back for a little bit right in this area notice the resistance that we were having see how we had this resistance level it kept coming up to it not holding dropping back down back down back down so this is an area where we had that resistance this is a stock that was respecting half dollars and whole dollars fairly well seven was um the whole dollar right around here and then it was right around 750 757 that we were having resistance so the price was really in this range every time it broke below seven what happened it got bought up right the dips got bought up but every time it broke over 750 what happened it dropped back down it wasn't able to hold and So eventually it had to break out of this range and in this case it broke to the downside buyers didn't come in anymore and sellers took over and brought it back down but we could have seen just the opposite happen and if we had levels that we would have been watching closely would have been around $8 the psychological resistance of eight and what's very common with a lot of these stocks that when you come up to these areas of psychological support and resistance you'll see big orders now you can see it on your level two window but I'm going to pull up another tool here um this is going to show you right down here look at all these big buyers down at 6 45,000 shares on the bid at 6 and then up here at 740 750 and then look at that up there at 8 so all of those sellers are sitting up there at 8 all of those buyers are sitting down here at 6 and it's been like that basically all morning so all morning we've had that seller stacked at eight they're sitting right at that level of psychological resistance so the way I would trade this type of stock is I'm looking for it to approach these levels and what I like to do is I like to catch that dip and then take that squeeze back up now one of the things that a lot of Traders struggle with is learning how to anticipate a breakout because when a breakout actually occurs the price can pop over this level so fast that you could miss the trade entirely so let me actually show you a couple of live trading examples of these really fast breakouts okay so this is a trade from zpp this morning now when I started uh on this trade I'm you can see I'm at $5,200 on the day I'm currently holding uh 1,700 shares at an average price of 740 so let's watch how this trade played out now the level that I'm watching is I know that there's a seller up around 775 so watch on this dip right here I'm studying the level two I'm watching The Price here I enter my order at 780 all I have to do is click the buy button I take a little more profit on the current position I'm holding at about 764 on the offer it dips down to 7 755 what I'm watching right here is the formation of a current 1 minute uh micro pullback so we had the squeeze up on two three four green Candles now we're pulling back a little bit and I'm watching for a dip trade right there I added to my position and I'm looking for the break through holding there you go there's 78 there's 80 I believed that once we broke 75 we would squeeze up to $8 a share and it happened fast all of a sudden by the time the price broke I'd be getting in right here if I waited for the price to break I would have been getting in right here now you can see I'm up $3,000 on this trade I had to be in a little early so let's back that up for a second I'm anticipating that the first 1 minute C will make a new high why am I anticipating that well look at this chart we have four big green candles in a row the stock is squeezing up are we on the front side of the move yes does this stock meet my criteria for being the type of stock I want to trade based on the percentage change the volume the fact that it's the most obvious stock in the market right now at this moment check check check check check and that means pullbacks are going to get bought up and as they get get bought up not only will the price go higher but people who may be holding short positions are going to be forced to cover covering means buying and so I'm expecting as we break to new highs each time we break to new highs the price is going to Surge higher and so I'm expecting that to happen now what gave me the conviction to buy down here at 760 was that there was a 10,000 share buyer sitting on the bid I saw that on the level twoo so I'm looking at the level two I see the buyers I see the ask where we've got the sellers and I saw a 10,000 share buyer at 750 right around there it was around 750 and so I thought to myself if I get in right here at 760 my Max loss is 750 I'll stop out if the price comes down here and there's 10,000 shares they're buying I can sell that buyer so now I know what I'm risking on this trade is 10 cents a share 10 cents a share times 8,000 shares I'm taking $800 of risk on this trade now it's a scalp trade it's still a very short trade I'm risking $800 which is 10 cents how much do I need to make on this trade well obviously you know 8 cents I I'd like to at least make 8 cents for 1:1 ratio but if I could make 16 cents or even higher that's great now what I knew was that there was a seller on the level two up around 75 I knew that because I had seen it when we first came up to this level we had come up to this level and right up here at 75 there was a seller so I I didn't want to buy at that seller because I didn't know if potentially that was going to be a big Wall of Resistance and the price wouldn't break so I got in a little early I'm waiting for the first candle to make a new high and then I'm in and I'm holding and I'm waiting and all of a sudden right there the buyer perhaps that was at 750 moved their order up what we know is that there's now a 19,000 share buyer on the bid right here at 760 and so when I see that I'm thinking this is bullish this is good short sellers are probably thinking the same thing except they're not thinking it's good they're thinking it's bad they better cover they better get out so what do they do all of a sudden buy orders start executing buy ERS start executing and we immediately look at all the green on the tape this is the tape that's the level two we see all of this green right here very bullish we go to 73 76 78 to 80 to 84 to 85 now a little profit taking here at 78 okay that's fine we hold 82 on the bid 86 on the offer 87 now we're at 95 I added at 75 and 93 small size using my hotkey we get 95 on the offer I put in order to take a little profit and then I cancel it I say you know what let's see if this thing can actually break $8 I'm in at $761 which means right now I'm up 39 cents a share okay this is a great profit to loss ratio right there boom that's a $4,000 winner and I'm taking some profit on the offer at 8:14 now how am I moving in and out this fast I'm using hot Keys that's one of the tools that you need to be able to use we'll talk about that in a second now let's go back up here all right so we're going to be right in here so this was where we were doing micro pullbacks all right so we did the first pullback right here which is essentially what we got on zpp it was a sort of a hybrid between a first pullback and a micro pullback the reason I say that is because it happened so fast it didn't happen to be an entry next to a half dooll whole dollar but as we came up to eight that actually was and maybe I'll highlight that again just for a quick second because that trade up around eight is worth noting because what's very common with these stocks is that we'll see this resistance up around this level so right up here I'll just back this up 10 seconds 10 seconds so watch right here we are we'll back it up one more so we come up to eight so let's see where's this trade all right oh we got to jump forward so we're going to come up to eight and right when we're up at $8 that that's where we kind of have that we we're sort of like right at that wall so where is this like right in here it was it was when we had 799 on the offer or eight on the offer it's fine it's it's like right here yeah this is the spot so we come up to eight and see how we have that wall right there at8 now we're going to pull back just for a moment and there are Traders 100% that buy right here at 8 and I actually added at $799 too for the break of eight then taking profit as it breaks through that level so that's a scalp at the half dollar and whole dollar that by itself is a trade getting in at $799 for the break of eight okay so we'll move this back up here now some of this requires an ability to read alos high frequency trading algorithms account for over 60% of the volume in the markets so you have to look for key technical levels where you're expecting a breakout a breakout is a surge of buying volume caused by short sellers stopping out and buy stop orders executing for long positions and manually entered limited market buy orders that are executing so how do market makers and Algos respond to these spikes in buying and selling they pull the offers they pull the bids that creates slippage which is basically worse for retail Traders but better for them and it amplifies the move this is where we will sometimes see these really big swings and that's what we ultimately want so my strategy for entry and exit requires reading the tape using the level two to your advantage to see where those big buyers and sellers are to watch the level two to watch the tape and to try to predict where we're going to get these moves now I want to share with you my entry and exit indicators so what for an entry indicator I like to see my preferred chart pattern which is going to be one of the patterns I just showed you the micro pullback the first pull back or an entry under a half or whole dollar by the way I break those down in more detail with the rules in my PDF so you can download that PDF print it out have it next to your desk and you can start practicing the strategies that I'm trading right now I always will recommend you practice in a simulator before you put real money on the line so I then understand my risk reward ratio I check the level two for possible resistance in the form of big Sellers and then I am pressing the buy button and I'm looking for the price to move up quick quickly if the price does not move up quickly I timed my entry wrong it's as simple as that my exit indicator is if the price stops moving up or slows down Green candles get smaller that for me is an exit indicator so as the price is moving up and green candles are getting smaller and smaller and smaller and smaller usually that means they're going to come back down right the fact that they're getting smaller shows the trend is getting exhausted I'd rather see the candles are getting bigger and bigger and bigger that's what we see during a parabolic move if I see a topping tail or a dogee pattern same thing so topping tail basically we'll just use a green candle here so price has been moving up candle's moving up and then up here we have this big topping tail right so that big upper candle wick that shows that the sellers pulled the price back down so topping tails and Topping Tails can also be a shooting star like this or it can just be a dogee or a gravestone dogee like that any of those topping Tails indicate a reversal is imminent so if I see that candle I'm G to get out before the reversal really well it's going to be a red candle but you get the idea before the reversal really pushes in full learning how to exit sooner is going to be a skill that you'll want to master get out sooner get in a little sooner get out a little sooner take your profit you've got to pay yourself all right so if I see big sellers on the tape or on the level too that can also be an indicator to exit when I try to follow the philosophy of breakout or bailout when I get in I want to see the price moving up like right now and if I don't I got to get out and certainly if my Max loss is hit I'm going to exit now I use hot keys for entries and exits these are the hotkeys that I'm using well these aren't all of them but these are the simple ones so shift one is to buy X number of shares you can type in the number of shares you want you could do 100 shares you could do a th you can do 10 ,000 doesn't matter it's to buy X number of shares at the ask price with a 15c offset for slippage that is a lot of slippage on most low price stocks but on higher price stocks I consider it to be acceptable shift two again buy and that's just a larger position so historically I've used 1,000 2,000 share positions recently I've reduced these to 250 and 500 shares just to accommodate the fact that in a lighter volume Market I've got to be a little more careful hotkey number three is Control Plus Q this cancels all open orders buy or sell it just cancels all the orders now my selling buttons control Z sell full position at the bid with 15 cents of slippage going down contrl X sell half of my position at the bid so I don't have to calculate the number of shares it's my full position half of my position a quarter of my position these three hotkeys sell on the bid these three hotkeys sell at the ask price so I sell at the ask price as you saw in some of those trades on zpp I'm getting out up here at 68 69 now of course I'll get out as long as there's green on the tape and there are people that are buying if there are no buyers I'll have to sell on the bid so I have hot keys for both buying uh sorry selling on the bid and selling on the offer even if the price drops quickly and there aren't a lot of buyers there could still be buyers when shorts cover so a short covering a position they could cover on the bid they cover on the offer if they cover cover on the offer they could buy my shares so I always try to sell my shares although I won't always get filled now step five of my strategy is to analyze my metrics I'm obsessed with analyzing metrics I want to know about my average winners and my average losers I want to know what I'm doing right and even more importantly I need to know what I'm doing wrong so I can stop doing it now what I know right now is that my average losers are actually about 18 cents a share um it's a little bigger than I said before I thought it was 15 cents 18 cents a share as the average losers uh fortunately my average losing trade well $1,500 versus $1,400 winners you know it's based on taking 10,000 share average this is about $1,400 winners my average losers aren't 1,800 which would be the case with average uh losing position of 10,000 shares so it shows that my average losers have slightly smaller share size which could indicate that I'm not quite as confident in the trade to begin with which is why I'm trading with smaller size something to be thoughtful of now of course we looked at Z and the Trad trading the wave up taking a break and then trading when I thought it was going to break out again taking a break trading when it starts to break out this is where I like to trade breakouts now I'm okay with buying off of support but I do want to be careful not to overstay my welcome so let's talk about the skills required to be a scalp Trader certainly you need to have a base basic understanding of how to day trade now some of you may have read my book how to day trade the plain truth I think I've got a copy of that right here I've got my book but there's a ton of other books you could read I've also got a ton of videos right here on YouTube of how to day trade for beginners starting from zero so check out those episodes now if you want to check out my classes at Warrior trading that's a fulllength deep dive comprehensive Curriculum by all means happy for you to check that out as well but number one you need to understand the basics of how to day trade number two two you need to know how to use stock scanners number three you need to know how to read level two and the time in sales being a master of reading the tape will be a very important skill to learn if you want to scalp trade number four you need to be able to follow the rules having the discipline to follow the rules no doubt critical to long-term success having the discipline and the emotional intelligence to know when to walk away that's perhaps even more important this is a book I'd encourage thinking bets by Annie Duke make smart decisions learn when to walk away she's got another book that she wrote called tra uh sorry called quit the power of Knowing When to Walk Away both of these books are a must read for an aspiring Trader and certainly for a scalp Trader you've got to develop the acquired intuition to make quick decisions it doesn't happen overnight the best time to learn to start trading was 5 years ago the next best time is now because the sooner you can begin to accumulate that intuition that experience the better you'll get at knowing when to buy and when to sell and number seven I can't say it enough having the discipline to cut your losses quickly this is so critical to your long-term success as a Trader and specifically if you're thinking about scalp trading now I want to keep this episode relatively quick and and not go beyond an hour I want to be comprehensive but mindful of time so those those you guys that want to keep learning I encourage you to try a two-e trial with me over at Warrior trading you can watch over my shoulder as I'm trading the markets you don't have to do this by yourself you can learn a lot right here on YouTube watching these free classes W going through my watch list and everything else in fact zpp was on my watch list yesterday I put it on my watch list yesterday I said I was watching zpp for continuation and some people would have traded it and some might not have understood the right places to get in and out so being a ble to tune in for the live broadcast gives you that classroom experience where I'm right there side by side with you giving you my realtime commentary I have I had a bunch more live trading examples I was hoping to go through but um I don't have time for those today so we're going to save those uh for another day all of these are part of my full length curriculum so you're welcome to check that out and if you haven't already downloaded the PDF make sure you check that out there's a PDF that has um it's a download with a bunch of different things things in it's got my small account strategy guide It's got my micro pullback PDF so check that out and I thank you guys as always for tuning in I hope you hit that thumbs up I hope you're already subscribed to the channel and I'll remind you as always that hey trading is risky my results aren't typical so manage your risk take it slow practice in a simulator before you put real money on the line and I'll see you for the next episode real soon