Analyzing Scalp Trades
Scalping is not going well for me. I need to take a closer look at winners and losers for this month and find out what is in common with them. Things im looking at
1. Was the trade located at the intended HTF level?
2. Had the HTF level already been broken and held?
3. Had the HTF level already been broken and failed to hold?
4. Volume Cues?
5. Failure before the move?
6. Consolidation? Or Straight move to new low or high?
7. SPY With me or Not?
8. LOD HOD?
9. Into LOD or HOD or other HTF level?
10. 1st 30min or later?
11. Would it have worked as an LT?
12. Did I not stop out correctly?
13. If I used new -.5R stop out, would it have saved me money?
14. If I cut at -.5R would I have lost a winner?
15. Was it never negative?
16. If trade was up +.5R, would I save money by cutting b/e or just after?
17. Did I stop out, then it turned into a winner?
18. Did the trade reach +1R?
19. Was it never positive?
(Something happened to my blogpost here. Somehow a chunk of these variables got deleted after I had done the tallying. I was left with 12 variables listed above, but had 20 tallied down below. So I had 8 variables I had to remember what they were and I can remember all but 1. Luckily that 1 only accounted for 22% of winners but 38% of losers. It was not the most significant or major finding so thats good, but it does still suck a little.)
A lot to look out for for each trade but thats fine. I need to find out whats going on, what I need to improve, add, or drop.
I took 119 Scalps this month. 43 Winners. 76 Losers.
Avg Win $64, Avg Loss -$38
Only 68% Compliant
Avg MAE -.6R
Avg MAE on Winners -.09R
Avg MFE on Losers +.5R
Going to keep a tally going of all these as I go through them.
WINNERS
1. \\\\\\\\\\\\\\\\\\\\ - 20
2. \\\\\\\\\\\\ - 12
3. \\\\\\\ - 7
4. \\\\\\\\\\\\\\\\\\\\\\\\\\\\\ - 29
5. \\\\\\\\\\\\\\\\\\\\\\\\\\\\ - 28
6. \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ - 32
7. \\\\\\\\\\\\\\\\\\\\\\\\\ - 25
8. \\\\\\\\\\\\\\\\\\\\\ - 21
9. \\\\\\\\\ - 9
10. \\\\\\\\\\\\\\ - 14
11. \\\\\\\\\\\\\\\\\\\ - 19
12. \\ - 2
13.
14. \\ - 2
15. \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ - 31
16. \\\ - 3
17. \ - 1
18. \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ - 35
19.
LOSERS
1. \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ - 31
2. \\\\\\\\\\\\\\ - 14
3. \\\\\\\\\\\\\\\\\\\\\\\\\\ - 26
4. \\\\\\\\\\\\\\\\\\\\\\\\\\ - 26
5. \\\\\\\\\\\\\\\\\\\\\\\\\\\ - 27
6. \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ - 52
7. \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ - 44
8. \\\\\\\\\\\\\\\\\\\\\\\\\\\\ - 28
9. \\\\\\\\\\\\\\\\\\\\\\\\\ - 25
10. \\\\\\\\\ - 9
11. \\\\\\\\\\\\\\\\\\\\\ - 21
12. \\\\\\\\\\\\\\\\\ - 17
13. \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ - 51
14. \\\\\ - 5
15.
16. \\\\\\\\\\\\\\\\\\\\\\\\\\\\\ - 29
17. \\\\\\\\\\ - 10
18. \\\\\\\\\\ - 10
19. \\\\\\\\\\\\\\\\\\\\\\\\\\ - 26
Chasing clearly an issue with losers. Its not one I tagged when looking through all these but a pretty usual suspect on some losers.
Another note I didnt keep track of but saw a lot of was knowing who is in control before the scalp. This is usually decided by a failed move one direction then take the scalp on a new pivot break the other way, but in some other cases it was decided by clearly holding the HTF level after a few attempts either to get above/below it or consolidating around it, making a new pivot high, pulling back retesting HTF level and then seeing it hold it. Time is the key word. Time spent around a level. More traders involved, higher chance of a move after a break.
Another thing to note is adding. When a trade doesnt go right away, pullsback to ~-.5R or some more, then makes another new recent high, can be a fantastic spot to get even bigger. Price pulls back to a new spot to put my stop loss, usually -.5R so my original risk is cut in half. Trade is still not on the wrong side, I can double up, increase my risk with the new stop level. Nothing wrong adding to trades that show signs its working.
AMZN is hard to scalp. It is rarely point A to point B. Theres a lot of wiggle room in the moves it makes. I had some good ideas on it at good locations but when I follow my rules with it, I get out before it makes its move. Im thinking I need to make a special scalp case with AMZN and give it a wider stop to start, still keeping in mind the -.5R rule. Same for GOOG.
Another thing is some scalps I plan for shorts, when they fail that short and reclaim that HTF level, I then see longs and get some wins frm that failure. So when I tag that as the HTF failed to hold, thats not necessarily a bad thing depending on the trade and context.
Need to be better with tagging my trades. A Tape Add is a scalp but I do not want to label it as one. Ive got my scalp starter I tag with the x under scalp and then if I get a tape add I tag x under tape and add.
I get pissed and I get sloppy and times like now is when that hurts me. Improper record keeping hurts the review process to know whats what for future improvement.
Trades at the bell/5min are only acceptable if theres been clear pmkt action holding above/below HTF level.
Low volume stocks, are useless to scalp in the way I am trying to do them. It does not work.
There are 0 positive reasons to tape add to scalps that have gone any more than a few ticks negative.
Towards the end of the month I got obsessed with trying to scalp everything on FANG names, regardless of HTF levels or not. Settled for less on a lot of trades here.
ALRIGHT time to go over the tally's. I want to look at it in percentage terms.
Winners
1. 47% of scalps were at the intended HTF level or very very close to.
2. 28% the HTF level had already been broken and held. These were better wins on average.
3. 16 % the HTF level had already been broke and failed to hold. Now this one gets a little tricky because some of my better scalps actually came from an initial planned short, that failed that HTF level breakdown, which I then took for a long successfully. So 16% doesnt necessarily mean that I should avoid trades where it has failed, but keep in mind slight edge goes to where it has, and held.
4. 67% had volume cues.
5. 65% had a failed move the opposite direction before the break.
6. 74% came from consolidation NOT straight from another pivot to the break of HTF level.
7. 58% had SPY on same side as me helping.
8. 49% were at LOD or HOD.
9. 21% were into another form of S/R. This is good to note because now I can avoid any scalp that is into something besides nothing.
10. 33% were during the 1st 30minutes of the day.
11. 44% worked as an LT.
12. Only 2 I didnt hit out correctly.
13.
14. Only 2 winners I wouldve lost If I had cut it at -.5R.
15. 72% were never negative.
16. 7% I wouldve saved some more cash cutting it faster if it was up a bit, then came back to b/e.
17. 1 Trade I hit out for a small win that turned into a bigger one.
18. 81% hit +1R.
19.
Losers
1. 41% were taken at HTF level or very close to.
2. 18% the HTF level had been broken already and held.
3. 34 the HTF level had been broken and failed to hold.
4. 34% had volume cues.
5. 36% there was some kind of failure before the move.
6. 68% had some kind of consolidation before the move.
7. 58% had SPY on same side as me.
8. 37% were at LOD or HOD.
9. 33% were into another form of S/R.
10. 12% were in 1st 30 minutes.
11. 28% would have worked as an LT.
12. 22% I didnt stop out correctly.
13. 76% I would have saved money if I cut at -.5R
14. 7% If I cut at -.5R I would have lost a winner
15.
16. 38% If i cut near b/e after being up +.5R I would have saved money.
17. 13% I stopped out then it turned into a winner.
18. 13% reached +1R.
19. 34% were never positive
Takeaways.
- We have to play the odds. Nothing is 100% but we have to play the numbers edge.
- Some of my best scalps happen in the 1st 30 minutes. I took 28 scalps in the 1st 30 minutes and the WR is 50% with avg win of 75$. And an avg loss of 50$ (theres compliance issues that make this number bigger than it should be). So there is more edge for my better scalp plays early in the day. Much larger +R wins.
-There does not seem to be an edge for me depending if the HTF level has been untouched, in play and held, or in play and failed. What DOES matter is that there is not anything for of S/R (other HTF level, pmkt hi/lo, other intraday pivot level) just after the scalp entry location. Triangles do not make a difference with that. I suppose 1 thing to note with losers is that they are less likely to lose if the level has broken and held, but it did not make a huge difference with winners. These kinds of trades are where it makes more sense to take a scalp and an LT in one entry.
- A third of my losers had volume/failure cues, and two thirds of my winners had volume/failure cues. Both had just about equal consolidation %. So they key thing here is that two thirds of my losers DIDNT have volume or failure cues and they of course add to edge.
-SPY makes no difference.
-Only half my wins were from LOD or HOD. Nothing too noticable here. Just a bit more than a 3rd of losers were at HOD or LOD. I see nothing notable with this.
-Dont take scalps into more nearby pivot highs or lows. The best are taken at the point where there is some distance between the breakout level, and the next. TSLA for ex, doesnt make sense to take a scalp long at 700 when theres another pivot high at 700.80 then 700.90 and 701.20 then 704. Take it at 701.20
-LT trades and scalps dont actually mix to well here. This is really interesting to me because I have been taking scalps and LT alongside each other for quite some time now. If the breakout level is broken the stock is 'confirmed' (I hate that word) to be trending or know whos in control or whatever. 44% of my scalp wins would have been good LT wins as well and thats really nothing special. I think im going to have to dig more into this in a different analysis later. I have had a hunch for sometime now that I should be waiting to take my LT trades on pullbacks rather than breakouts, and leave scalping to the breakouts only.
Now for the fun risk management part
-Of 119 scalp trades only 7 trades I would have lost a winner on if I cut at -.5R
-76% of losses I would have saved more money if I cut at -.5R
-72% of wins never went negative
-Only 10 losers of 76 I hit out, then became winners.
I have had such a hard time detaching from this idea I need to give these trades space to work or a little give room. Ive been so worried about those 10 trades trying to become winners that I have been unable to truly change my idea of risk around my scalps because of them. I have to play the numbers game. If I lose 13 wins of 100 so what. At least If I manage risk the way my stats tell me to do so then my winners can be dramatically bigger than my losers and would vastly make up for those 13 I gave up. Have to think of your trading in terms of the next 20 trades, not just this 1.
What does the BEST scalp trade look like?
-Volume cues
-Failed push/break rejected back my direction
-At the HTF level
-1st 30 minutes of the day
-Consolidation and tight range just nearby breakout level
-No other S/R after breakout
And thats it nothing else. I do not need to be taking any other scalps from here on out that do not have these exact characteristics (except 30min).
What does the BEST scalp trade look like, AFTER the entry?
-Never negative
The end. Its time for rule changes.
Risk will now be decided by the stock itself no longer candles. Every stock is different so which I have to give it some wiggle room, it is not much at all. My previous idea was to cut trades at -.5R based on a 1min candle hi or low. That -.5R is now my new -1R.
With all these trades I have to base my risk on worst case scenario. And now my worst case is something even tighter and smaller.
With names like TSLA itll probably be around a point. With AMZN itll be a couple points. With other names itll be a few pennies.
I am thinking about making it just half of the previous candle but I dont feel like thats right either. It feels conditional now. If it goes a couple ticks against me thats still ok, but anymore than that I should be getting out. My goal for risk isnt to be getting out at -.5R now, now its to correctly anticipate the price considering the stock and volatility that would mean I need to gtfo.
There still has to be consistency here, with 1min candles it was easy to see the price, 50$ of risk, then find your size. Now its not that easy. I still want to be risking 50$ on these scalps but if I cant anticipate the point I am risking that 50$ off of, I dont want to be taking a 100$ loss, then a 70$ loss, then an 80$ loss, then a 25$ loss.
I dont think this one has an exact answer. This is a feel for risk. Im going to be judging it on spread, and the last few ticks it had before the entry. The flow of the stock. How fast and how far did it come to get here? Or how slow? There is no longer a single specific price that I am working around, unless there actually is one on the tape. This will be very interesting to trade around in the coming month. Ill revisit this and make a new post about it at the end of may if theres anything really noticable about it.
Now we covered risk before the trade, now after the trade.
After the trade I expect it to go and never return, what if it goes a little, then comes back a little, then goes and comes back. What do I do. Well after reviewing these trades and getting the numbers, if almost 40% of my losers I wouldve saved money after seeing it up +.5R and cutting it near b/e if it came back, why not do that.
Again I feel like theres not a specific answer for this one again, its more about the flow. If I am up 1R on the trade, It does not need to turn into a loser that is for sure. Take the tiny win and let it be.
I think the breakout level will be the major determinate here. If it only goes a bit in my favor but comes back to the level, if its good, itll hold. If it doesnt hold I should get out.
And this is the good thing about doing all this analysis, if its going to be a good winner, I dont even need to worry about all of this. Just get out, dont lose money.
BOTTOM LINE
-No more scalping low volume stocks. Rating of 2 or less.
-Only take scalps that display the best characteristics.
-Volume cues
-Failed push/break rejected back my direction
-At the HTF level
-Consolidation and tight range just nearby breakout level
-No other S/R after breakout
RISK
-50$ based off of flow of stock, spread, volatility. No more than a few ticks against me after the entry.
-If trade is up .5R or a few ticks, if breakout level does not hold, exit.
-If trade is up 1R or several ticks just above breakeven becomes exit.
TAKING PROFIT
-Still going to base this off of 1min candle high and low breaks. I am changing my risk based off of flow, but leaving profit taking to candles. It has worked for me and I dont see any reason to change that yet. Maybe at some point next month if I do this again I can look back and maybe change it to something like, 'read tape after 1mincandle lo/hi break to decide to take profit or not.'
FINAL THOUGHTS
Confidence was low towards the end of this month. Was a real rough time. As always doing good review work brings it right back up and im already pumped for tomorrow to get back into it and do the correct work.
There was an interview with Bella I listened to a while back and the interviewer said something like,
"Do your traders usually go for 3:1 RR or 4:1?"
and he said
"Try 100:1"
And I think this is what he means.
1. Was the trade located at the intended HTF level?
2. Had the HTF level already been broken and held?
3. Had the HTF level already been broken and failed to hold?
4. Volume Cues?
5. Failure before the move?
6. Consolidation? Or Straight move to new low or high?
7. SPY With me or Not?
8. LOD HOD?
9. Into LOD or HOD or other HTF level?
10. 1st 30min or later?
11. Would it have worked as an LT?
12. Did I not stop out correctly?
13. If I used new -.5R stop out, would it have saved me money?
14. If I cut at -.5R would I have lost a winner?
15. Was it never negative?
16. If trade was up +.5R, would I save money by cutting b/e or just after?
17. Did I stop out, then it turned into a winner?
18. Did the trade reach +1R?
19. Was it never positive?
(Something happened to my blogpost here. Somehow a chunk of these variables got deleted after I had done the tallying. I was left with 12 variables listed above, but had 20 tallied down below. So I had 8 variables I had to remember what they were and I can remember all but 1. Luckily that 1 only accounted for 22% of winners but 38% of losers. It was not the most significant or major finding so thats good, but it does still suck a little.)
A lot to look out for for each trade but thats fine. I need to find out whats going on, what I need to improve, add, or drop.
I took 119 Scalps this month. 43 Winners. 76 Losers.
Avg Win $64, Avg Loss -$38
Only 68% Compliant
Avg MAE -.6R
Avg MAE on Winners -.09R
Avg MFE on Losers +.5R
Going to keep a tally going of all these as I go through them.
WINNERS
1. \\\\\\\\\\\\\\\\\\\\ - 20
2. \\\\\\\\\\\\ - 12
3. \\\\\\\ - 7
4. \\\\\\\\\\\\\\\\\\\\\\\\\\\\\ - 29
5. \\\\\\\\\\\\\\\\\\\\\\\\\\\\ - 28
6. \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ - 32
7. \\\\\\\\\\\\\\\\\\\\\\\\\ - 25
8. \\\\\\\\\\\\\\\\\\\\\ - 21
9. \\\\\\\\\ - 9
10. \\\\\\\\\\\\\\ - 14
11. \\\\\\\\\\\\\\\\\\\ - 19
12. \\ - 2
13.
14. \\ - 2
15. \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ - 31
16. \\\ - 3
17. \ - 1
18. \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ - 35
19.
LOSERS
1. \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ - 31
2. \\\\\\\\\\\\\\ - 14
3. \\\\\\\\\\\\\\\\\\\\\\\\\\ - 26
4. \\\\\\\\\\\\\\\\\\\\\\\\\\ - 26
5. \\\\\\\\\\\\\\\\\\\\\\\\\\\ - 27
6. \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ - 52
7. \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ - 44
8. \\\\\\\\\\\\\\\\\\\\\\\\\\\\ - 28
9. \\\\\\\\\\\\\\\\\\\\\\\\\ - 25
10. \\\\\\\\\ - 9
11. \\\\\\\\\\\\\\\\\\\\\ - 21
12. \\\\\\\\\\\\\\\\\ - 17
13. \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ - 51
14. \\\\\ - 5
15.
16. \\\\\\\\\\\\\\\\\\\\\\\\\\\\\ - 29
17. \\\\\\\\\\ - 10
18. \\\\\\\\\\ - 10
19. \\\\\\\\\\\\\\\\\\\\\\\\\\ - 26
Chasing clearly an issue with losers. Its not one I tagged when looking through all these but a pretty usual suspect on some losers.
Another note I didnt keep track of but saw a lot of was knowing who is in control before the scalp. This is usually decided by a failed move one direction then take the scalp on a new pivot break the other way, but in some other cases it was decided by clearly holding the HTF level after a few attempts either to get above/below it or consolidating around it, making a new pivot high, pulling back retesting HTF level and then seeing it hold it. Time is the key word. Time spent around a level. More traders involved, higher chance of a move after a break.
Another thing to note is adding. When a trade doesnt go right away, pullsback to ~-.5R or some more, then makes another new recent high, can be a fantastic spot to get even bigger. Price pulls back to a new spot to put my stop loss, usually -.5R so my original risk is cut in half. Trade is still not on the wrong side, I can double up, increase my risk with the new stop level. Nothing wrong adding to trades that show signs its working.
AMZN is hard to scalp. It is rarely point A to point B. Theres a lot of wiggle room in the moves it makes. I had some good ideas on it at good locations but when I follow my rules with it, I get out before it makes its move. Im thinking I need to make a special scalp case with AMZN and give it a wider stop to start, still keeping in mind the -.5R rule. Same for GOOG.
Another thing is some scalps I plan for shorts, when they fail that short and reclaim that HTF level, I then see longs and get some wins frm that failure. So when I tag that as the HTF failed to hold, thats not necessarily a bad thing depending on the trade and context.
Need to be better with tagging my trades. A Tape Add is a scalp but I do not want to label it as one. Ive got my scalp starter I tag with the x under scalp and then if I get a tape add I tag x under tape and add.
I get pissed and I get sloppy and times like now is when that hurts me. Improper record keeping hurts the review process to know whats what for future improvement.
Trades at the bell/5min are only acceptable if theres been clear pmkt action holding above/below HTF level.
Low volume stocks, are useless to scalp in the way I am trying to do them. It does not work.
There are 0 positive reasons to tape add to scalps that have gone any more than a few ticks negative.
Towards the end of the month I got obsessed with trying to scalp everything on FANG names, regardless of HTF levels or not. Settled for less on a lot of trades here.
ALRIGHT time to go over the tally's. I want to look at it in percentage terms.
Winners
1. 47% of scalps were at the intended HTF level or very very close to.
2. 28% the HTF level had already been broken and held. These were better wins on average.
3. 16 % the HTF level had already been broke and failed to hold. Now this one gets a little tricky because some of my better scalps actually came from an initial planned short, that failed that HTF level breakdown, which I then took for a long successfully. So 16% doesnt necessarily mean that I should avoid trades where it has failed, but keep in mind slight edge goes to where it has, and held.
4. 67% had volume cues.
5. 65% had a failed move the opposite direction before the break.
6. 74% came from consolidation NOT straight from another pivot to the break of HTF level.
7. 58% had SPY on same side as me helping.
8. 49% were at LOD or HOD.
9. 21% were into another form of S/R. This is good to note because now I can avoid any scalp that is into something besides nothing.
10. 33% were during the 1st 30minutes of the day.
11. 44% worked as an LT.
12. Only 2 I didnt hit out correctly.
13.
14. Only 2 winners I wouldve lost If I had cut it at -.5R.
15. 72% were never negative.
16. 7% I wouldve saved some more cash cutting it faster if it was up a bit, then came back to b/e.
17. 1 Trade I hit out for a small win that turned into a bigger one.
18. 81% hit +1R.
19.
Losers
1. 41% were taken at HTF level or very close to.
2. 18% the HTF level had been broken already and held.
3. 34 the HTF level had been broken and failed to hold.
4. 34% had volume cues.
5. 36% there was some kind of failure before the move.
6. 68% had some kind of consolidation before the move.
7. 58% had SPY on same side as me.
8. 37% were at LOD or HOD.
9. 33% were into another form of S/R.
10. 12% were in 1st 30 minutes.
11. 28% would have worked as an LT.
12. 22% I didnt stop out correctly.
13. 76% I would have saved money if I cut at -.5R
14. 7% If I cut at -.5R I would have lost a winner
15.
16. 38% If i cut near b/e after being up +.5R I would have saved money.
17. 13% I stopped out then it turned into a winner.
18. 13% reached +1R.
19. 34% were never positive
Takeaways.
- We have to play the odds. Nothing is 100% but we have to play the numbers edge.
- Some of my best scalps happen in the 1st 30 minutes. I took 28 scalps in the 1st 30 minutes and the WR is 50% with avg win of 75$. And an avg loss of 50$ (theres compliance issues that make this number bigger than it should be). So there is more edge for my better scalp plays early in the day. Much larger +R wins.
-There does not seem to be an edge for me depending if the HTF level has been untouched, in play and held, or in play and failed. What DOES matter is that there is not anything for of S/R (other HTF level, pmkt hi/lo, other intraday pivot level) just after the scalp entry location. Triangles do not make a difference with that. I suppose 1 thing to note with losers is that they are less likely to lose if the level has broken and held, but it did not make a huge difference with winners. These kinds of trades are where it makes more sense to take a scalp and an LT in one entry.
- A third of my losers had volume/failure cues, and two thirds of my winners had volume/failure cues. Both had just about equal consolidation %. So they key thing here is that two thirds of my losers DIDNT have volume or failure cues and they of course add to edge.
-SPY makes no difference.
-Only half my wins were from LOD or HOD. Nothing too noticable here. Just a bit more than a 3rd of losers were at HOD or LOD. I see nothing notable with this.
-Dont take scalps into more nearby pivot highs or lows. The best are taken at the point where there is some distance between the breakout level, and the next. TSLA for ex, doesnt make sense to take a scalp long at 700 when theres another pivot high at 700.80 then 700.90 and 701.20 then 704. Take it at 701.20
-LT trades and scalps dont actually mix to well here. This is really interesting to me because I have been taking scalps and LT alongside each other for quite some time now. If the breakout level is broken the stock is 'confirmed' (I hate that word) to be trending or know whos in control or whatever. 44% of my scalp wins would have been good LT wins as well and thats really nothing special. I think im going to have to dig more into this in a different analysis later. I have had a hunch for sometime now that I should be waiting to take my LT trades on pullbacks rather than breakouts, and leave scalping to the breakouts only.
Now for the fun risk management part
-Of 119 scalp trades only 7 trades I would have lost a winner on if I cut at -.5R
-76% of losses I would have saved more money if I cut at -.5R
-72% of wins never went negative
-Only 10 losers of 76 I hit out, then became winners.
I have had such a hard time detaching from this idea I need to give these trades space to work or a little give room. Ive been so worried about those 10 trades trying to become winners that I have been unable to truly change my idea of risk around my scalps because of them. I have to play the numbers game. If I lose 13 wins of 100 so what. At least If I manage risk the way my stats tell me to do so then my winners can be dramatically bigger than my losers and would vastly make up for those 13 I gave up. Have to think of your trading in terms of the next 20 trades, not just this 1.
What does the BEST scalp trade look like?
-Volume cues
-Failed push/break rejected back my direction
-At the HTF level
-1st 30 minutes of the day
-Consolidation and tight range just nearby breakout level
-No other S/R after breakout
And thats it nothing else. I do not need to be taking any other scalps from here on out that do not have these exact characteristics (except 30min).
What does the BEST scalp trade look like, AFTER the entry?
-Never negative
The end. Its time for rule changes.
Risk will now be decided by the stock itself no longer candles. Every stock is different so which I have to give it some wiggle room, it is not much at all. My previous idea was to cut trades at -.5R based on a 1min candle hi or low. That -.5R is now my new -1R.
With all these trades I have to base my risk on worst case scenario. And now my worst case is something even tighter and smaller.
With names like TSLA itll probably be around a point. With AMZN itll be a couple points. With other names itll be a few pennies.
I am thinking about making it just half of the previous candle but I dont feel like thats right either. It feels conditional now. If it goes a couple ticks against me thats still ok, but anymore than that I should be getting out. My goal for risk isnt to be getting out at -.5R now, now its to correctly anticipate the price considering the stock and volatility that would mean I need to gtfo.
There still has to be consistency here, with 1min candles it was easy to see the price, 50$ of risk, then find your size. Now its not that easy. I still want to be risking 50$ on these scalps but if I cant anticipate the point I am risking that 50$ off of, I dont want to be taking a 100$ loss, then a 70$ loss, then an 80$ loss, then a 25$ loss.
I dont think this one has an exact answer. This is a feel for risk. Im going to be judging it on spread, and the last few ticks it had before the entry. The flow of the stock. How fast and how far did it come to get here? Or how slow? There is no longer a single specific price that I am working around, unless there actually is one on the tape. This will be very interesting to trade around in the coming month. Ill revisit this and make a new post about it at the end of may if theres anything really noticable about it.
Now we covered risk before the trade, now after the trade.
After the trade I expect it to go and never return, what if it goes a little, then comes back a little, then goes and comes back. What do I do. Well after reviewing these trades and getting the numbers, if almost 40% of my losers I wouldve saved money after seeing it up +.5R and cutting it near b/e if it came back, why not do that.
Again I feel like theres not a specific answer for this one again, its more about the flow. If I am up 1R on the trade, It does not need to turn into a loser that is for sure. Take the tiny win and let it be.
I think the breakout level will be the major determinate here. If it only goes a bit in my favor but comes back to the level, if its good, itll hold. If it doesnt hold I should get out.
And this is the good thing about doing all this analysis, if its going to be a good winner, I dont even need to worry about all of this. Just get out, dont lose money.
BOTTOM LINE
-No more scalping low volume stocks. Rating of 2 or less.
-Only take scalps that display the best characteristics.
-Volume cues
-Failed push/break rejected back my direction
-At the HTF level
-Consolidation and tight range just nearby breakout level
-No other S/R after breakout
RISK
-50$ based off of flow of stock, spread, volatility. No more than a few ticks against me after the entry.
-If trade is up .5R or a few ticks, if breakout level does not hold, exit.
-If trade is up 1R or several ticks just above breakeven becomes exit.
TAKING PROFIT
-Still going to base this off of 1min candle high and low breaks. I am changing my risk based off of flow, but leaving profit taking to candles. It has worked for me and I dont see any reason to change that yet. Maybe at some point next month if I do this again I can look back and maybe change it to something like, 'read tape after 1mincandle lo/hi break to decide to take profit or not.'
FINAL THOUGHTS
Confidence was low towards the end of this month. Was a real rough time. As always doing good review work brings it right back up and im already pumped for tomorrow to get back into it and do the correct work.
There was an interview with Bella I listened to a while back and the interviewer said something like,
"Do your traders usually go for 3:1 RR or 4:1?"
and he said
"Try 100:1"
And I think this is what he means.
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