As we approach year end and look to the year ahead, it never hurts to refresh on your personal trading rules, process and lessons learned. Went back to my personal scalping rules to do exactly that. My losers almost always resulted from breaking one or more of my own rules and process. While there are of course many things technically you can use and should pay attention to, price and volume are my bedrocks. Next for me is EMAs (or SMAs) and occasionally take a peek at Bollinger, MACD, RSI, SAR, etc., etc.
However, without rules and discipline it is hard to succeed. Here are mine for scalping and maybe this gives some on here some ideas.....
1. Mentally probably #1 and the hardest to accept if you like winning. Cut your trade as soon as the trade goes against you technically. Its a cheap price for an option contract ($0.65) vs. being 10%, 15% or more % down and hope it comes back. No need to hope the price action and chart will tell you anyway. Ripster I think said he averages 1/3, 1/3, 1/3 between lose, scratch and win. The key is the losers must be smaller than the winners. Cutting is key.
2. Scale out. Take you money. Dan refers to it as take on way up or down. Others as scale out. Don't wait for max profits. As an example, if I buy 6 contracts I scale them 1 or 2 at a time on way up or down between resistance levels usually when approaching. The math works out in your favor. It is also OK to fully exit a trade profitably if premium or the momentum has shifted, then buy back in at a lower entry with reversal as long as the overall TA is intact.
3. Leave a runner....or two. Its ok to leave runners but make sure to cut it at break even or above.
4. Don't watch the profit $ or % constantly. Focus on the levels as they will determine profit and loss.
5. Technically probably #1. Know your SR (support/resistance) levels. Begin with daily, then add hourly then if you want add 10 or 15 minute levels. I use colors for each time. One for daily, one for hourly and one for 10 minute. Helps me not to think intraday and just execute which level I am approaching.
6. Big one that has helped me gain more winners due to entry and exit. Intraday add trend lines diagonally. Keep updating the as things change. If the price action breaks the up or down trend the vast majority of the time its heading to an SR level.
7. Volume. Volume is key. High volume and you have movement one way or another. Pay attention to what volume steps in and when (SR levels). Stagnation/sideways for too long and IMO risk. When sideways may be best to just exit and reenter when direction takes shape.
8. Trust your levels not your emotions. Like a pilot let the instruments tell you what's happening.
9. Enter after confirmation or 2nd candle calls or puts. No need to time the best entry or exit. Often find myself exiting trades because I was impatient.
10. Focus on knowing something intimately. SPY, Qs, SPX or whatever and know it well. Don't try and trade all things early on. Know it like your children.
11. VIX. Pay attention to it. Rising and chances are your trade will be impacted. Falling the same.
12. Macros. Pay attention to them. Just because one is ripping doesn't mean the other will.
Whatever your personal set of rules are, a tip I applied was making 10 trades following the discipline and grading myself. If you can't have a winning hand with 10 trades you likely won't with 20 or 100. Adjust and apply.
Trade wisely!
Wealth gained hastily will dwindle. but whoever gathers little by little will increase it.
Proverbs 13:11
