Volume Tutorial:
Intraday Scalping
We have had requests from some of our customers asking us
to explain how one can use our indicators for intraday scalping; therefore,
we have created this newsletter to answer many of the questions our users
have been asking us about intraday scalping, and
how our indicators can benefit intraday scalpers.
The first question some of our members may ask is, "What
is scalping?". Simply put, scalping is a procedure which one makes
a trade with a goal of only making a couple of points. Basically scalping
is profiting from rather small moves in the market.
The majority of intraday scalpers tend to be futures players,
as futures provide a liquid means of profiting from small moves in the
market. Options traders can also perform scalping, but the options price
does not always change as quickly as an index.
Below we have compiled a list of trades one could have made
on April 23rd. These trades were not actually performed, but they are an example
of how by following a set of rules for volume analysis and scalping one
can make a handsome profit.
Remember, you can use our other indicators to do intraday
scalping on many other indexes such as the NASDAQ 100, Dow Jones Industrials.
All of the above trades are either short trades (S1, S2,
etc..) or long trades (B1, B2, etc...). There are two points were we found
that, even though a trade could have been made, there was not enough information
to make one. These points are I1 and I2, which signify indeterminate points.
I1 was indeterminate because the index was trading fairly flat before the
volume surge occurred. Because of this it was difficult to analyze which direction
the index would move from that point. I2 was indeterminate because of a similar
reason; the index was moving, but the volume moving average
was fairly flat. This made it difficult to predict what the index would do
next.
Below is a list of the trades seen above in more detail:
|
Time |
Buy/
Sell |
Ctrcts |
Index
Value |
Theoretical
Futures |
Points Earned |
Profit/Loss |
| 10:01 |
S 1 |
3 |
1,111.20 |
1,118.10 |
|
|
|
10:08 |
B 1 |
3 |
1,109.20 |
1,116.10 |
+2 |
$300 |
| 10:28 |
B 2 |
3 |
1,106.10 |
1,113.00 |
|
|
|
10:32 |
S 2 |
3 |
1,108.10 |
1,115.00 |
+2 |
$300 |
| 10:55 |
S 3 |
2 |
1,110.20 |
1,117.10 |
|
|
|
11:04 |
B 3 |
2 |
1,108.20 |
1,115.10 |
+2 |
$200 |
| 11:17 |
S 4 |
2 |
1,109.20 |
1,116.10 |
|
|
|
11:24 |
B 4 |
2 |
1,107.20 |
1,114.10 |
+2 |
$200 |
| 12:44 |
B 5 |
3 |
1,105.50 |
1,112.40 |
|
|
|
13:28 |
S 5 |
3 |
1,107.50 |
1,114.40 |
+2 |
$300 |
| 13:35 |
S 6 |
3 |
1,108.60 |
1,115.50 |
|
|
|
14:11 |
B 6 |
3 |
1,106.60 |
1,113.50 |
+2 |
$300 |
| 15:35 |
B 7 |
2 |
1,101.00 |
1,107.90 |
|
|
|
15:55 |
S 7 |
2 |
1,099.00 |
1,105.90 |
-2 |
$200 |
|
Total Profit:
|
$1,400 |
Note: One earned point for
S&P 500 futures (for one contract) gives $50.
8 Important rules to follow when index
scalping with our volume indicators:
-
Do not open
a position until the volume moving average (VMA) surge has been confirmed.
Confirmation of a VMA surge is when it has leveled, or has begun to drop
again.
-
Keep up with
the current market trend. In an up-trending market, make more long trades,
and conversely, in a down-trending market, make more short trades.
-
Always place
a stop-loss order. We suggest a stop-loss of 1 or 2 points for index
scalping.
-
Move your stop-loss orders when in profitable territory. By this we mean by this, is that
when the index is moving in your favor and there is no sign it is
stopping its movement, move your stop-loss. When you do this you are guaranteed
your profit.
-
Don't make
any trades in the first 30-minutes of market hours, or the last 30-minutes.
This is because sometimes in these periods, the market can be difficult
to predict due to the fact that there is usually a lot of volume in these
periods.
-
Don't keep
your futures positions open overnight. This can be very dangerous, as
sometimes the market can open up or down several points and leave you with
a substantial loss.
-
To be more
conservative with your scalping, try to pay attention only to the larger
VMA surges.
-
Not every day
is good for scalping. The market tends to generate very good scalping
days the day after a large move in the market.
|
