Futures Scalping Guidelines

Futures Scalping Guidelines


Steps to prepare

1) 95% of all trades will be the S and P 500 E-minie futures contract

2) Load up a current contract futures chart using 5 minute and 1 minute candle sticks and a 2 tick renko chart (optional)

3) Prepare your order entry window to be able to execute reasonably fast trades

4) Have multiple horizontal lines ready to move into place on your screen

5) Around 9:00 EST before the market opens, find the chat room link posted in the private chat and get the screen share of my screen

.Day Trade Setup Screen

Trade Plan Screen

7) Premarket prep is now complete.

8) movee teh lines into the location the systems arrows point to and wait for trade confirmation ( specific rules of trades are posted to memebers)



Trading methods

In the morning information some trading ideas for the day will be shared. Normally there will be a long trade and a short trade. Additionally there will be some concepts of what could happen each day. After market open we will evaluate what the market is indicating to us and what picture it is painting. After the direction is established, and also what type of day we are having each trader can find there way into the market to take advantage of one of the two or three ideas.

When the market opens the mathematical market evaluation will begine and the indicator will be come active on my screen (this you will see via the screenshare).  As time passes the indicator will present up ponting green arrows and red pointing down arrows.  The green are long setups, and the red are short setups.


Deeper examination of the trading ideas

There are three types of market opens, and each one can have a couple final results, 1) open driving market, 2) opening attempted driving market (test drive), 3) choppy range bound market. Each type of open has a different trading entry point that will be clear on how to use. Each day each trade setup will have a entry area and a target area. And some days more than one setup can be active and a couple trades can be taken. Trades can happen in two ways one way is when the market matches up with the pre-market concepts the trader can find their way into the market. The other is to follow in the screenshare and find out when the Algoritium is taking the position. Both methods have advantages and disadvantages, however neither is right or wrong.

Every trader will have a different acceptable loss that they or their account can handle. This is ok, and each trade should be executed with a very small amount of risk to the downside.

Futures Leverage

Futures are a highly geared product and can result in substantial losses and substantial gains. They are not to be taken lightly and need to be treated with a great deal of respect. Our method of trading is very simple. We do not hold any contracts over night and we do not hang onto any losers past our predetermined stop out. No contract will be purchased or sold without a very defined exit plan. Every trade has to have one entrance and two exits before being added to the portfolio. Two exits are, one for profit taking and one for a stop loss or reverse in the event of being wrong. I heard this once and it has always stuck in my mind, “A trader does not get smarter after entering a trade”.

My rules about News

I, myself, do not like to take new trades right at economic scheduled news events and will wait for the event to pass by a few minutes and trade the settled down reaction. News can cause markets to get too fast for most platforms to keep up with all the information, and can cause very large random swings in the price, or a big slippage in price from where your you think the trade triggered .

In General

Very rapid back and forth action (often known as red green picket fence) is called a choppy market and can be a very hard market to trade.  It stimulates many strong emotions. A trader needs to step aside during this time or stop looking at profit and loss and trade the original stop and target areas and just let things play out. There are plenty of trading opportunities to scalp during most days and sometimes we have to let a few get away from us to prevent excessive bad trades in a row. The real key to this is to not get caught up in the hysteria but follow the flow of the market and keep the negative numbers small. As in any trading we are not going to be profitable every day. The days we are profitable we need to maximize the profit, and the days we are not profitable it is best to slow down, or stop altogether. When I say slow down the intent is to regroup and look for the market to find a clearer direction which will also give you a much cleaner market entry picture. Generally when the market is in a Green/Red back and forth area right near a trigger point , I find it best to step aside and wait for the box the market is creating to cleanly clear the area before starting to trade again

Profit Taking second method

One of the hardest things in trading is getting the correct method of getting out of a profitable trade. The two challenges are: 1) to get out and not leave money on the table, and 2) to not give back too much trying to get what you left on the table the last time. When profits are showing on the trade, my favorite method to take profits is to watch the market and if the direction remains clear, trade right to target. When that looks impossible then trade out of a position when the chart is stopped at a minor support or resistance area and starts making higher highs and higher lows or the opposite depending on what direction your trade is.  In addition I always take my trades in multiple contracts that can be divided by 2.  The reason I do this is when the trade reaches 2 points profit I close half the trade.  As soon as half is closed the trade can no longer lose money, so the emotions of watching the trade value spike up and down is removed completely, because I now have nothing to lose.

All instructions above that talk one direction the same rules apply to the trade going the other direction. Reverse all instructions to work with the trade moving the other way.