Missed A Trade? Think Again… A Scalper Perspective

Even if you don’t want to be a scalper, they do have unique perspectives that can help with longer term day trading…

Many traders spend a lot of time watching the market move down so they can buy it. Then as it moves up they are looking for a selling opportunity. In effect, trying to catch the tops and bottoms of moves. Other traders are looking for a pullback. Sometimes there never is one.  But do you ever think about all the trades that occur as the market is in a leg or swing down?

Scalping

Image 1 – Scalper Paradise, Position Day Traders Hell…

In the above chart, for most of the time the market was going down and there were people selling it all the way down. Not at the high, not in a pullback, just smack bang in the middle of the move. After all, it wouldn’t keep going down if they didn’t!

A lot of traders simply don’t see opportunities in the middle of a move because they focus on charts. The charts don’t define mid-move opportunities very well. In fact, they don’t even show turns that well until they are over. A scalper on the other hand will be quite happy to make money all the way down.

A Scalper Only Zone?

There’s a lot of prop traders adding to their positions in a move down like this, scaling into a larger position as price moves down. That’s how many traders get their biggest pay days. Not by being right from one entry point but from adding to their position as they are proven right. On the other hand, most retail traders will either take a reversal/pullback trade or sit on their hands because they feel they missed the opportunity by missing the extreme. Partly that’s because they feel their stop has to be the other side of the turning point and partly because they don’t see any entry point in the midst of a move.

Scalping Eurex

Image 2 – Mid Leg Opportunity (note – click on the image for full size)

Here we have the Eurex markets FGBM – Bobl, FGBL – Bund, FESX – Eurostoxx, FDAX – The Dax. As a rule of thumb, when Bobl & Bund are going up, the Dax and Eurostoxx will be going down. We have the Bund moving up overall and the Stoxx moving down overall. Both are taking a breather but not what you’d call a pullback. I’d actually have preferred to use an example where the Stoxx wasn’t backticking much at all. Trouble is, when you prep for an article like this, you don’t have much choice about what the market throws at you. This was the opportunity that presented itself.

We have a pause in the action which may or may not also include the market ticking back. The thing is -although I wanted to trade the Eurostoxx short, it’s not really the action in the Eurostoxx I am mostly interested in. It’s everything else that is going on. The pause in the Eurostoxx is just a part of the story…

Mid Leg Scalper Style Entry

FESX Scalper

Image 3 – The Scalper Style ‘Middle of Nowhere’ Entry

Left to right, we can see the Bobl is trading into the offer – on a thick market like this, that’s about as good as it ticking up. When you look at a really thick correlated or inversely correlated market, it doesn’t really have to be moving but if it is trading heavily on one side, then that’s as good as a thinner market actually moving in that direction.

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Jigsaw Trading
After suffering a 30% drawdown at the hands of “independent financial advisors”, Peter started trading in the early 2000’s, figuring there was no point in paying people to lose money for him. By 2005, Peter was day trading NASDAQ stocks and later discovered the value order flow. He struggled with the way order flow data was presented so designed tools that organized Order Flow information more rationally and Jigsaw Trading was born. Those tools are now the #1 ranked software on Investimonials.com.
Today Peter spends his time trading and helping other traders through the Jigsaw community, articles and free one on one sessions.
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Jigsaw Trading

Jigsaw Trading

After suffering a 30% drawdown at the hands of “independent financial advisors”, Peter started trading in the early 2000’s, figuring there was no point in paying people to lose money for him. By 2005, Peter was day trading NASDAQ stocks and later discovered the value order flow. He struggled with the way order flow data was presented so designed tools that organized Order Flow information more rationally and Jigsaw Trading was born. Those tools are now the #1 ranked software on Investimonials.com. Today Peter spends his time trading and helping other traders through the Jigsaw community, articles and free one on one sessions.

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