Newbie question

[jwcleary 0]

Hi all, I've been in SIM for a month or so and following Andrew & Brian in the chatroom every morning. Just a bit confused with one thing:

How would you define a scalp? Is a scalp part of a standard "tradebook play"? Or is it something independent or regular tradebook patterns like ABCD/ORB etc?

Thanks a lot.

Edited February 25, 2021 by jwcleary

[VladMD 21]

Hi there,

 

I'll try to make this as simple as I can for you. Scalping isn't quite a strategy out of a playbook but rather a style of trading. Although people approach scalping in many different ways, this style of trading has one defining characteristic that that everyone can agree upon: speed of execution. You're in and out of the trade very quickly and you capitalize on strong brief moves (seconds to minutes) using large share sizes.

There's no "regular" pattern for scalps as with ABCDs. You need to make your own rules about where to enter, stops, exits, targets and so on, according to what suits you. But please be aware that this style of trading is very dangerous and it can quickly wipe your account clean if you're not careful. Treat it with the highest level of caution until you've gained some experience.

 

Hope this helps 🙂

Vlad

 

 

[Adam Lewis 64]

Scalping requires momentum. You're looking for a price moving quickly up or down, and you're trying to catch a small part of that quick move. If you're scalping at the open you'll be able to take advantage of the high volume and volatility. If you're looking for a pattern to follow and a way to define an entry, you can look at things like 3-bar plays on the 1 minute chart where a stock rises strongly on volume, rests a moment on the second bar, and then you enter on the first 1 minute candle to make a new high looking for a quick scalp, in and out. Pros of this strategy are very quick wins if done properly with trades resolving often in seconds than minutes. The problem with scalping strategies is risk management - it's very difficult to keep right management tight and define a clear loss. Given the momentum in the price action, even a stop when hit is likely to lead to slippage. So, yes it can be done but the best scalpers I see (Andrew and his ORBs for example) benefit from years of experience and practice.