ES Emini Trading: The Scalping Style

One of the toughest occupations to define is that of a trader.  There are countless variations on methods for trading the ES Emini contract.  Most forms of trading differ in the length of time the trader holds a given contract.  Of course, all traders attempt to accomplish the same goal: profit by moves in the market.  It is simply the manner in which traders quantify moves in the market the delineates them from each other.

Before I continue much further, I should state that I am a dedicated scalper.  I never hold contracts overnight, and my average trade seldom lasts more than twenty minutes.  I am looking to snatch small 2-3 point moves in the market and cash in on them.  Generally speaking, I am unconcerned about the fundamentals of the market and concentrate solely on trading the chart in front of me, with little consideration for what the market is going to do tomorrow, next week or next year.  My time frame in trading is strictly "now."

Scalp trading is about making many small gains throughout the day and never about trying to hit a "home run" on a trade.  Scalpers also rely heavily upon technical indicators and thus, most scalpers are experienced traders.  Scalp traders risks are minimal and are an effective use of trading capital since this method of trading usually generates more winning trades than traditional day trading.  Scalpers generally run very tight stops and limits and are extremely risk averse.  I would also point out that beginning traders can make use of scalping techniques.  I point novice traders in the direction of scalping because of the lower risks involved with this style of trading.  Still, even Scalping takes a high level of self discipline to be successful.

One component of scalping that is often overlooked is the high degree of concentration that is required to scalp effectively.  The chance to make sizable gains sometimes comes rapidly and the trader has to be prepared to exit his trade when the correct opportunity rises...because you may only get once chance to make the winning trade in a given trading sequence.

The technical indicators most scalpers use vary widely from trader to trader, and are generally not shared with others.  It is sort of like having a great fishing spot and not wanting to share it with an army of fisherman who would fish it out quickly.  Generally speaking though, scalpers use momentum indicators set to very short time periods.  The CCI, MACD, Stochastic indicator and RSI are all common oscillators the scalper utilizes in various capacities.  Of course, support and resistance are among the most important tools the scalper uses, along with pivot points and theoretical support and resistance calculated from the pivot point.

It takes some practice, but scalping can be as profitable as any trading method, and there are a lot less headaches.  You don't lose any sleep on overnight trades because you never have a trade overnight.  It is my style of choice.