Scalping the Mini Dow off the M1 Charts

This morning's trading video.

Excellent trading sir :-)

I was short biased coming into the open this morning. In general, it's perfectly fine to have a bias, so long as you take it in context and don't become too "committed" to your bias. Becoming over-committed to a bias leads to trading what you imagine v.s. what you see. My reasons for the bias short was due to the H1 chart - through the overnight, we had a gap fill and a rally up into 600s and very rarely does the market just continue like that into the open. Long story short, I was expecting some sellers to step in near the open.



On the open, we saw the market continue to attack the prior LOD at 575s from above.

Now when the market continually keeps coming back to a level, it usually is a sign it wants to break (contrary to popular belief that the more touches a level's had, it becomes stronger). This was evident with 574s this morning which I had marked off, and was fully expecting this level to break, which would be in line with my short bias.

But what often happens is, it will break but not until everyone has thrown in the towel. Also, very rarely does a level just break immediately off the open and go. Looking at this from a point by point basis:

1) Eager shorts line up in the market off the open. They see a level break, and think "ah, that's it", it's time to short.


2) So when the market clearly doesn't provide any immediate follow-through to the downside (note how the market just poked 1 point below the new lows and immediately rejected), suddenly those shorts are caught on the back foot. What should happen if a level is going to break? It should just flood to the downside. That didn't happen. Now I moved my profit target down for this trade, because we're now entering a situation where I'm expecting a lot of traders to get suckered in long, and what better place for traders to get suckered in long than after what looks like a nice green bullish engulfing bar forming. Could it have continued further? Of course. But I'm just playing the probabilities.


3) Once those longs have initiated, this happens.


At this point you can bet that longs have just realized they've become trapped, and their stops are piled up under that support level. And the market floods downwards. The only reason I didn't take this short was because the wick was too long, so I had no logical place to position my stop. The only time I can safely have a stop in the middle of a wick is if I'm confident that the market will just go at that exact moment, which I wasn't sure. So the only thing to do was just let it go and I had no interest in paying down further at that time.

Thanks!

nicely done .....

cool trading,cool music...

Dear Felixcattus,
Congrats for your trading style!!
Could you pls explain, how could you place your orders,stops,take profits so fast, and very narrow to the real market price?
Wich broker, and trading platform you use?
Thanks in advance!

Hey lacatrade, thanks for the kind words.

First I should have probably added this as a disclaimer (I used to do this but adding this to all my videos became tedious): All video clips on YouTube are sped up for brevity. For journaling purposes, they can become tedious to watch They are sped up 4x speed and as an aside, YouTube does have a feature under "settings" (the gear icon to the bottom right hand corner of the video) to slow down to .25 to view it in real-time as I view it each morning.

The platform I use is NinjaTrader which has an ATM (Automatic Trade Management) feature that automatically locks in profit at +2 (or whatever you want to set it at) once I reach 7 points in profit. It's basically moving to breakeven but enough to cover commission costs + a point. I have tried other platforms and I find that NinjaTrader is worlds ahead of any other platform for scalping, IMHO.

I trade the direct market (v.s. e.g. a spread bet broker, which is not available to me here in the U.S.). As a result, the spread is whatever is literally on the bid / ask, which with the YM, is usually a point, sometimes 2.

PM me for the broker I currently use.

hey cat do notice any patterns? like just before the open ... price is set up counter to what it will do ? thankx

In my experience, every morning is different - has a different DNA to it. Sometimes before the open it sets up as a trap (resulting in a counter move as you describe), but a lot of times it doesn't. That said I haven't done any formal analysis. There is another phenomenon that I haven't actively tracked but have a general awareness of: I find that often times the market tends to set up the same way consecutively for a few days in a row, and then break that pattern and move on to something else. Usually though by the time I've noticed each day seems to have been a repeat of the day before, the market has already broken out of that pattern.

In any case, the important thing that I keep on the back of my mind is to not become committed to a bias and no matter where you think the market will go, just trade what you see. This is obviously easier said than done but I can't count the number of times I've had a ridiculously sloppy day and realized afterward that I was clearly biased by something.

I did something a little different from my usual routine today. I was unavailable to trade this morning but today was FOMC day so I decided to trade the volatility of the news.

Doing this is obviously risky, and the market was definitely choppy - didn't get the clean moves I would have liked. A lot of traders stay out of the way during news, and in general I think that is a wise choice. But if you're patient, it can be done and I wanted to post this video to show that.

trade1 - long - riding the momentum higher, thought it would punch through the recent highs. - circa 1R loss

trade2 - short- slipped bad on this one, entered short on break below previous candle, anticipating move to the lower bound of the range. - circa 0.5R gain

trade3 - long - circled, actually expecting this move (thanks Jason) stops under the range taken out then long again. - circa 1.5R gain

overall approx 1R up

This morning's trading video and the last one for this month. Have a great and safe weekend, everyone! I won't be trading tomorrow.

Good trading and great that you are making notes on your thought process for each trade

A word about momentum and that first trade.

The important question to ask yourself (if you haven't already) is *why* you thought it would punch through the recent highs.

In order for me to get involved in a momentum play long, I would need to see something very critical, which is the fight back of the bears (flip that around for a bearish momentum move). Without this, I have no case to assume that momentum will continue and break that level. I don't know who's in control at that point.

That candle by the time it reached that area, was only about 20 seconds into its formation. Not enough time to see the battle play out and know that the bulls are truly in control.

thanks, will take all that on-board, very much appreciated.

However you entered long on the same candle and after only 3 secs, was this because you saw the long'ish wick of the previous 'bear fight' rather than momentum?

That is essentially it. Right off the open we saw a bearish move off resistance which seemed to have a lot of juice. Then shortly before that candle closed, buyers stepped in, showing the bears weren't fully in charge and no real momentum. But, I needed to see how the next candle was going to form before taking a trade. The moment I saw a flash of green to the upside, my case was made and it was time to go.

​
​great, many thanks for the explanation.

Happy Monday and February everyone. This morning's trading video, which was certainly a little rocky.



On my 3rd trade, the play was a reversal off the 100 round number after a nice momentum move. The trigger for this trade was the fact that it found some buying coming in, and then strongly rejected looking like it was going to barrel through the 100 level. When it rejected again off the 100s, at the moment, I could make a case that shorts were just suckered in, expecting continuation of the move to the downside.

The only problem with that trade was where my stop was. I don't make a habit of increasing my risk and certainly not for no reason. But sometimes, you have to put your stop in a logical place and where my stop was (at 105) was almost certain (in my mind) to be taken out. Your stop needs to go in a place where you would feel wrong about the trade. Since I had a logical target of 127s, which I was able to use to justify my risk because my reward was still over 1R.

During that trade, you could see sellers still trying to initiate into the break of 100s which is what I was concerned about. But the case for the trade was made and I felt strongly about it. Once those sellers couldn't break 100s, the path of least resistance...is up the wick. Why? Because all those sellers have already sold, so there shouldn't be any more sell orders left in that area, thus I had a logical reason to extend my target to 127s. And the market cleared through that wick pretty quickly afterwards.

great trading and great explanation Jason , many thanks for posting.

I'm currently traveling and traded from a laptop this morning from a friend's house. Here's a pic from after the dust settled.



I generally laugh when I hear stories about people trading from the beach, or from space or some other such b@#$@#t. Trade from your desk where you belong. I prefer having a large screen with multiple monitors but, it is nice to know that with this kind of strategy, it is possible to trade on a small screen if I need to.

But I need to maintain a professional mindset, always, no matter what. I wear headphones with a white-noise generator when I'm scalping. I can't have any distractions whatsoever.

I also trade with a WIRED keyboard and mouse at all times. The last thing I need is for my wireless mouse or keyboard to fail right in the middle of a trading session.