Hi Mike-

Just wanted you to know that you made a huge impact on my trading this afternoon. I listened to your video  “The Playbook”. Your statement — “I am too old to be doing scalping” –hit me over the head like a sledgehammer.

WHAT????????  So-I was thinking..if Bella is too old for scalping, then so am I.   (Darn! I’ve been telling myself to quit scalping but I am sometimes bad at listening to me! )  Hearing your words was like hearing a wake-up call from the “universal power”.

So I sat on my hands,then practiced yoga breathing, and waited and waited and waited —- until that exquisite nasdaq e-mini setup at 12:51pm EST. Instead of bracketing my trade for a skimpy 3-4 tick target,  I let it run and exited a few ticks before the intermediate top @ 13:01pm.  I had my eye on that target because it was a previous pivot point high.

Sometimes, one needs to pay attention to  “a respected voice of reason” to JUSTIFY a change in behavior.  Your statement was the  justification for me to stop scalping.  Thank you for being that “voice of reason” for me today.

@MikeBellafiore

In this post we will address the pro’s and con’s of scalping, what is needed to successfully scalp, and who should and shouldn’t consider scalping.

Pros of Scalping

• You do not get caught in reversals.  Stocks that trend in one direction and then head in another.  $TSLA seems to reverse on me often.
• Your win rate, percentage of successful trades, will be higher.  A good scalper might have a win rate of 80 percent on all trades.
• Trader does not need to know much about the stock.  Some scalpers scuff at the need to know the fundamentals of a stock.  What was that news in $AAPL? not required.
• Breeds very consistent traders who may see few-zero losing trading days.  One trader we trained to scalp, Z$, was positive everyday for over a year.
• Requires very little trading capital.  This is very efficient way to trade.  Holding $NFLX overnight is expensive.
• Can be a very profitably strategy- seven-figure traders.

Cons of Scalping

• Trade precision is required.  You may have to enter to the penny on the right entry price.
• Subject to responding to too much noise in the markets.  Every tick may manifest a trade decision.
• Commissions can add up.  Scalpers can trade as much as 300-500k shares a day on average.
• Trading for crumbs and not the “real money”.  Forex Guy wrote, “Swing trading allows you to catch the ’meat’ of the move by generally holding a position that can last anywhere from a few days to a few weeks, sometimes months. Much better than day traders and scalpers who spend hours in front of the screen to pick up breadcrumbs.”
• As Trader Amy notes above, scalping can be exhausting.  I remember trading in my 20’s utilizing a scalping strategy and being so tired on Friday’s that I would almost pass out from concentration exhaustion after the close.

Keys to Successful Scalping

• Reading the Tape skills
• Screen time
• Great connectivity to markets
• Psychology to be wrong and move on
• Quick thinking
• Lightning fast execution skills
• 1m and Tick charts
• Numerous routes to execute your orders
• Patience to wait for edge
• Sniper’s mentality to strike and move on.
• In the video below, I discuss the fast-thinking required to be an excellent scalper and active trader with a funny anecdote from our desk.

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