If you have followed and understood all the "Trading with Market Statistics" threads, from the very basic
VWAP trades in
Part III, and the
SD trades in
PartV to the more advanced trade types involving breakouts in
Part VII and counter trend trades in
Part VIII, then you are ready to apply your new found knowledge to the fast and furious world of scalping
Scalp trading has many definitions depending on whose doing the scalping. The usual definition is trading for ticks rather than points. But this is a purely heuristic definition. My definition is more quantitative and is based on when I start my volume distribution computation as follows:
a)If I start my volume distribution computations at the opening bell and continue until the closing bell, then that's a normal non-scalping trading day
b)If I start my volume distribution at any time after the opening bell, and watch it for short periods of time, then I'm scalping.
You know what a) means from the previous eight threads. What does b) mean?
Until now, I have talked about the volume distribution when it starts from the opening bell, and runs until the closing bell, that is regular trading hours.
However, there is no reason why you could not start the volume distribution computation at any other time during the day, let it run for say 15 minutes or so, trade off of it, and then restart it again. That's what b) means, and that's what I call scalping.
By doing this you are essentially looking at the market statistic over a short time frame and asking the same questions with the same responses as given in the last eight threads. The net result will be, you will be taking many more trades and trading smaller standard deviations. This is what is meant by "trading for ticks rather than points".
Scalping requires entries, exits, scale ins, scale outs, reversals and closes with one mouse click, otherwise you will miss the opportunity. To do this, you have to use a DOM (Depth of Market) or something equivalent as part of your trading platform.
Watch the video and see how I do scalp trades using the DOM.
ER2ScalpTrades
Addendum: I was going to present a thread on the use of Hold Up Prices (HUP) which I've mentioned many times in these threads. I've decided not to do it now because it's quite complicated and I haven't yet found a simple way to present it. So I am going to delay that presentation until another time.