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Intraday Scalping is trading with the goal of only making a couple of points within a single trading session. Intraday scalping became very popular among futures traders when a couple of points on an index can provide a great return on index emini. For example, one point on the S&P 500 index (SPX) is equivalent to $50 on the S&P 500 emini futures, one point on the Russell 2000 index (RUT) is equivalent to $100 on the Russell 2000 emini futures, and one point on the Dow Jones Industrial index is equivalent to $5 on the emini Dow futures, etc. Considering that the S&P 500 index easily fluctuates within a 10-point range (1%) during a single session, applying intraday scalping to the S&P 500 with the purpose of emini trading provides the ability to make around $500 within a single session on one emini futures contracts, $5,000 on 10 emini contracts, and so on.

When it comes to trading emini index futures, we believe that index charts are more suitable for emini trading then emini charts. For example, SP emini tracks the S&P 500 index and, if the technical indicators that are applied to the index point to a trend reversal, the SP emini would rather follow the index trend, even if the same technical indicators, when applied to emini, pointed in an opposite direction.

Index and emini price have the same trend pattern and price-based technical indicators applied to emini and index would generate similar signals. In the case of volume-based technical indicators, you can have different signals because index volume covers the volume of all stocks that are in the index basket, whereas emini volume covers only emini. In addition, the volume of emini depends on the time remaining to expiration and this affects volume-based indicators, as well.

In intraday scalping, developing a stop-loss trading strategy is one of the most important factors. Intraday traders do not really rely on exit signals generated by indicators. A futures trader, who intends to profit from several points only, cannot afford to have a position opened when he/she losses several points. This becomes extremely important with lagging indicators (most price technical studies are lagging), in particular, when, during the indicator's lag, an index's price can dramatically change its trend and an exit signal could be generated when it's already too late (too big a loss).

The trailing stop has proved itself to be one the most successful strategies in intraday scalping. The trailing stop level depends on your personal risk tolerance and can vary from trader to trader. However, it could be recommended that you adjust your trailing stop to the volatility. The most common way to measure volatility with the purpose of defining a stop-loss is to use the ATR (Average True Range) or Bollinger Bandwidth technical indicator

Below is an example of using SBV Histogram in intraday trading. The SBV Histogram is a volume-based momentum technical indicator. Even if it is a leading technical indicator (predicts reversal price movements) it is still recommended that you use a trailing stop when using this indicator for intraday scalping.

Chart 1: Russell 2000 intraday scalping based on signals generated by SBV Histogram.
1-day view (1 bar = 1 min); SBV Histogram bar period = 20, Signal Line bar period = 14

On the Russell 2000 index chart above, you can see a simple trading system applied to the SBV Histogram. The SBV Histogram is similar to the MACD and the principles of trading the SBV Histogram are the same. As a rule, SBV Histogram buy/sell signals are generated on crossovers of the SBV Histogram and the zero (center) line - when the SBV Oscillator crosses its signal line. An example of the trading system that is displayed on the Russell 200 chart above and that uses the SBV Histogram in combination with trailing stop can be summarized in 3 simple rules:

1. Once the SBV Histogram has advanced above the zero level (after having been below that level), we will enter a long position;
2.  Once the SBV Histogram has fallen below a zero level (after having been above that level), we will enter a short position;
3.  Trailing Stop Rule - Close a long trade when the price drop down 0.3 points and close a short trade if the price moves up 0.3 points.

You can see a complete example (of the Russell 2000 chart above) of intraday scalping with detailed trades for the entire day at the "Russell 2000" article. On the day on which the example was created, this 3-rule simple trading system generated 12 points of profit on the Russell 2000 index. As was mentioned earlier, 1 point on the Russell 2000 index is equivalent to $100 on the Russell 2000 emini futures, which brings $1,200 to 12 points on only one emini contract in a single trading session.

Remember, you can use our indicators to do intraday scalping not only on the Russell 2000 index, but also on many other indexes, such as the S&P 500, NASDAQ 100, and Dow Jones Industrials, etc.

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