{"id":39629,"date":"2015-05-31T04:30:06","date_gmt":"2015-05-31T11:30:06","guid":{"rendered":"https:\/\/brookstradingcourse.com\/?p=39629"},"modified":"2021-05-26T06:32:58","modified_gmt":"2021-05-26T13:32:58","slug":"scalping-strategy-for-1-or-2-point-scalps","status":"publish","type":"post","link":"https:\/\/www.brookstradingcourse.com\/pt-br\/ask-al\/scalping-strategy-for-1-or-2-point-scalps\/","title":{"rendered":"Ask Al: Scalping strategy for 1 or 2 points"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\">BPA trading room Q&amp;A: May 13, 2015 &amp; May 25, 2011<\/h2>\n\n\n\n<p>Today&#8217;s Ask Al features two audio extracts on the topic of scalping. The first is taken from earlier this month where Al talks about the losing strategy of trading a 1 point profit target and 1 point stop strategy. The second audio is from the 2011 webinar vault! Here Al talked about what he looks for when going for 1 or 2 point scalps.<\/p>\n\n\n\n<p>For convenience, both of the audio files are presented together below. Please scroll down for the transcripts and Al&#8217;s &#8216;funny little man holding a bag of money&#8217;! Enjoy.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Scalping and risking 1 point is a losing strategy (May 13, 2015)<\/h3>\n\n\n\n<p class=\"content-box-green\">Please comment on why 1 point scalping with stops, with a strict 1 point profit targets and stop losses may be a losing strategy over time.<br><em>Audio duration: 2min 09sec<\/em><\/p>\n\n\n\n<figure class=\"wp-block-audio\"><audio controls src=\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2015\/05\/150513-ask-al-10-scalp-and-risk-1-point-strategy.mp3\"><\/audio><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\">What Al looks for when scalping 1 or 2 points (May 25, 2011)<\/h3>\n\n\n\n<p class=\"content-box-green\">From what I gather, four-point trades tend to be reversal setups, final flags, double tops, etc., and scalps for one point are a lot of different quick trades like selling the 17 or 30 highs for one point. Can you go over the key characteristics you look for in deciding to go for a two-point scalp versus a one-point scalp? Also, what is your stop loss in the two-point scalp?<br><em>Audio duration: 6min 58sec \u2014 Scroll down for images<\/em><\/p>\n\n\n\n<figure class=\"wp-block-audio\"><audio controls src=\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2015\/05\/110525-ask-al-10-what-to-look-for-one-point-vs-2-point-scalp.mp3\"><\/audio><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">Audio transcript #1 \u2014 May 13, 2015<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">Scalping and risking 1 point \u2014 A losing strategy<\/h3>\n\n\n\n<p>It really depends on what you\u2019re doing. On a day like this, there are probably 20 stop-entry scalps for one point, but there were probably a whole bunch of other one-point stop-entry scalps that were losers. And to make money over time, scalping for one point, risking one point \u2014 if you do the math, if you\u2019re just risking one point, you have to be right probably 60 percent of the time. However, if you\u2019re only risking one point for a one-point scalp, then it\u2019s hard to win 60 percent of the time because very often you\u2019ll get an entry \u2014 let\u2019s say a buy \u2014 and it pulls back but does not go below the low of the bar. It pulls back more than four ticks, so a lot of the trades will not go beyond the signal bar, but they\u2019ll fall &#8212; they\u2019ll come back four or five or six ticks.<\/p>\n\n\n\n<p>So the math is really hard. I know it\u2019s very appealing to try to minimize risk. When traders start out, their first thought is, \u201cOh, my gosh, I work so hard to get enough money to open an account. I really don\u2019t want to blow this chance. This is my one big chance.\u201d And the safest way, the most logical way for me to do this is to reduce my risk, so I have to use a very, very tight stop. However, when traders focus so much on one of the three variables, they don\u2019t focus adequately on the others, and if a trader starting out is really concerned about risk, that means he\u2019s probably not paying enough attention to probability, and that\u2019s where traders lose money.<\/p>\n\n\n\n<p>So they don\u2019t realize just how important <a href=\"https:\/\/www.brookstradingcourse.com\/how-to-trade-manual\/traders-equation\/\" target=\"_blank\" rel=\"noopener noreferrer\">probability<\/a> is, and most of the setups that you have during the day are 40 to 60 percent setups, and if you start going for one point scalp with a one point profit target, you have to be really good at picking all the 60 percent setups and avoiding the 55 percent setups and the 52 percent setups. And it\u2019s just hard to do. Your margin for error is so small. Scalping for one point using a one-point stop, and just doing it with stop entries \u2014 you have to be perfect; you have to be really perfect, and I think that is unreasonable to expect from a person who\u2019s starting out.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Audio transcript #2 \u2014 May 25, 2011<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">What Al looks for when scalping 1 or 2 points<\/h3>\n\n\n\n<p>I understand how you can conclude that based upon what I\u2019m saying, and I talk a lot about that in the new books. Although it\u2019s more often the case than not, it\u2019s not always the case. [Also, what is your stop loss and two point scalp?]<\/p>\n\n\n\n<p>Okay, let me deal with the easiest part first. In general, if the bars are around average size for a two-point scalp or a one-point scalp, I\u2019ll use a two-point stop. In general, I prefer to take trades that I think are good for two points, and those are my main focus during the day. Some of them I think are going to be good for four points, and usually I\u2019ll get out about half at two points and then half at four points. Sometimes, I\u2019ll get out a quarter at one point, a half at two points, and then a quarter at four points.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"alignleft\"><a href=\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2015\/05\/110525-ask-al-10-what-to-look-for-one-point-vs-2-point-scalp.png\" target=\"blank\" rel=\"noopener noreferrer\"><img loading=\"lazy\" decoding=\"async\" width=\"300\" height=\"235\" src=\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2015\/05\/110525-ask-al-10-what-to-look-for-one-point-vs-2-point-scalp-300x235.png\" alt=\"ask-al-10-what-to-look-for-one-point-vs-2 point-scalp\" class=\"wp-image-39659\" title=\"\" srcset=\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2015\/05\/110525-ask-al-10-what-to-look-for-one-point-vs-2-point-scalp-300x235.png 300w, https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2015\/05\/110525-ask-al-10-what-to-look-for-one-point-vs-2-point-scalp-600x471.png 600w, https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2015\/05\/110525-ask-al-10-what-to-look-for-one-point-vs-2-point-scalp.png 831w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/figure><\/div>\n\n\n\n<p>Now, on the two-point scalp, I look for key swings. Could have tried to short below 5 for two points, but I was really looking to buy, so I thought the buy was a high probability buy, so I ended up buying below 10. I could have bought above 11. That would have been okay as well.<\/p>\n\n\n\n<p>28, I think, was a reasonable short possibly for two points. The market could get down to the 18 low, but I was concerned that it may stall at the 24 low. 56, I thought was a great set up for two points. They turned it down at nine ticks, and when I saw the smallish entry bar at 67, the weak follow-through on 57, the weak follow-through on 58, 59, and then 10. 60 hitting my limit order several times and not filling, I quickly moved my limit order to one tick lower.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Four point trades<\/h3>\n\n\n\n<p>Let me go back to your first question. From what I gather, four-point trades tend to be reversal set-ups. That\u2019s true; they tend to be reversal set-ups because you make four points or more, usually, you have to be at an extreme, which usually means the reversal. The point I was making earlier in the day that the spike up from 11 to 15 was so strong that it should go for a measured move up. If a trader bought the 14 close or even the 15 close, they probably had a 60 percent chance of making as many points as they had to risk.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"alignleft\"><a href=\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2015\/05\/110525-ask-al-10-what-to-look-for-one-point-vs-2-point-scalp-mm.png\" target=\"blank\" rel=\"noopener noreferrer\"><img loading=\"lazy\" decoding=\"async\" width=\"300\" height=\"232\" src=\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2015\/05\/110525-ask-al-10-what-to-look-for-one-point-vs-2-point-scalp-mm-300x232.png\" alt=\"Ask Al #10 ES Chart Measured Move Up after Spike\" class=\"wp-image-39660\" title=\"\" srcset=\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2015\/05\/110525-ask-al-10-what-to-look-for-one-point-vs-2-point-scalp-mm-300x232.png 300w, https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2015\/05\/110525-ask-al-10-what-to-look-for-one-point-vs-2-point-scalp-mm-600x463.png 600w, https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2015\/05\/110525-ask-al-10-what-to-look-for-one-point-vs-2-point-scalp-mm.png 835w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/figure><\/div>\n\n\n\n<p>So let\u2019s look at the 15 close. So if a trader bought the 15 close, they were risking about five points or so, maybe more than five points \u2014 five-and-a-half points. I think there\u2019s a 60 percent chance that they\u2019ll make five points before their breakeven stop is hit. I have an entire section on the mathematics of trading in the new books, and I talk a lot about it. But anyway, that\u2019s an example of if you\u2019re a swing trader, you could be buying a breakout and have a good chance of making four points while risking four points, or making five points by risking five points.<\/p>\n\n\n\n<p>In general, though, what you\u2019re saying is correct. Most of the time when you\u2019re expecting four points, you\u2019re buying some kind of <a href=\"https:\/\/www.brookstradingcourse.com\/how-to-trade-manual\/trend-reversals\/\" target=\"_blank\" rel=\"noopener noreferrer\">reversal<\/a>. You want to argue that 11 is a reversal up rather than a bull flag, I think you can argue that. I did not short 70 because I thought it was a low probability for four points. I thought it was a relatively low probability for two points. I thought after the failed Low 2, the market would try to have a second push out. So I was looking to buy, but then we started to channel down and it never gave me a buy set-up.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"alignright\"><img loading=\"lazy\" decoding=\"async\" width=\"287\" height=\"300\" src=\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2015\/05\/als-funny-little-man-shaking-bag-of-money-287x300.jpg\" alt=\"als-funny-little-man-shaking-bag-of-money\" class=\"wp-image-39644\" title=\"\" srcset=\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2015\/05\/als-funny-little-man-shaking-bag-of-money-287x300.jpg 287w, https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2015\/05\/als-funny-little-man-shaking-bag-of-money.jpg 300w\" sizes=\"auto, (max-width: 287px) 100vw, 287px\" \/><\/figure><\/div>\n\n\n\n<p>In general, there are at least five decent trades a day that are good for two points. On an average day, there is usually a couple trades good for four points, and usually scalps \u2014 stop-entry scalps, usually at least 10, and limit-entry scalps, usually at least at 15 or so. In general, I take the scalps when they\u2019re obvious. It\u2019s like somebody\u2019s handing out a bag of money saying, \u201cTake this,\u201d and I don\u2019t want to say, \u201cNo, I\u2019m looking for a two-point trade and I don\u2019t want to get distracted.\u201d&nbsp;&nbsp; A lot of times, I\u2019ll just grab those little bags of money and put them in my pocket.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">The basis of Al&#8217;s trading<\/h3>\n\n\n\n<p>What I look for all day long is trades that are good for two points and have a 60 percent probability. My risk is two points, my reward is two points, my probability is 60 percent. That is the basis of all my trading. And a lot of them are good enough for four-points, so sometimes you\u2019ll hear me say, \u201cOkay, I\u2019m out at half or I\u2019m out at three-quarters and I\u2019m gonna let the remaining half or quarter go for four points.\u201d That is what I mainly do all day long, but there are so many one-point scalps, I end up taking a lot of them and I can make a whole bunch of points on those one-point scalps. But that is not my focus; that is just that funny little man holding out a bag of money and offering it to me and I\u2019m taking it. But I\u2019m not out looking for those. I\u2019m out looking for the two-point trades and the four-point trades.<\/p>\n\n\n\n<p>In general, I want to buy above bull bars, like I want to buy above 11. I want to\u2014if the trend is up, or I want to buy above 19 or I want to buy above 25, or above 56, or above 66. In general, if there\u2019s clearly a strong trend, like there was from 1 to 28, I\u2019ll only short below a really strong bear bar, like below 28. That would be okay.<\/p>\n\n\n\n<p>Yes, the most profit potential takes place on reversal trades, but most of the reversal trades also have a lower probability. Like, I didn\u2019t think of 70 as a high probability trade under the circumstances, but there\u2019s a very big reward available even though it was probably a 30 percent chance of being reached. But it still pencils out, I\u2019m sure, to be a decent swing short.<\/p>\n\n\n\n<p>I thought it was higher probability that we would have two legs up, so I prefer to wait for the two legs up. My set-up never came, so I never took the trade that I was looking for \u2014 it never happened. And that\u2019s okay, I look for high-probability trades because if I\u2019m going for two points \u2014 risking two points, I have to have at least a 60 percent chance of success to even break even. So I\u2019m always looking for high-probability trades.<\/p>\n\n\n\n<p>Yes, most of the swings are low probability, 40 to 50 percent if you\u2019re going to make four points. And I talk about this fairly regularly: that if you\u2019re taking low, lower-probability trades, you pretty much have to take every one because if you cherry-pick, you\u2019ll tend to pick all the bad ones and not pick the one good one that you need to make the strategy worthwhile. And then as an alternative, you can stick to higher probability trades and you don\u2019t have to pick every one for the strategy to be profitable because everyone by itself has a profitable, mathematical expectation to it. You can just take those.<\/p>\n\n\n\n<p>As far as taking the one-point scalps, the problem is knowing that the trade has a 70 to 80 percent probability of success. And that\u2019s very hard to determine. And once you see a trade that you think has a 70 or 80 percent chance of success, it probably is a two-point set-up so you shouldn\u2019t be scalping one point anyway. You should be going for two points.<\/p>\n\n\n\n<p><em>Al Brooks<\/em><\/p>\n\n\n\n<p><a title=\"Al Brooks' trading room\" href=\"https:\/\/www.brookstradingcourse.com\/online-day-trading-room\/\">Information on Al&#8217;s Online day trading room<\/a><\/p>\n\n\n\n<hr class=\"wp-block-separator\"\/>\n","protected":false},"excerpt":{"rendered":"<p>BPA trading room Q&amp;A: May 13, 2015 &amp; May 25, 2011 Today&#8217;s Ask Al features two audio extracts on the topic of scalping. The first is taken from earlier this month where Al talks about the losing strategy of trading a 1 point profit target and 1 point stop strategy. The second audio is from [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":45328,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"shadow","_genesis_layout":"","footnotes":""},"categories":[159],"tags":[290,127],"class_list":{"0":"post-39629","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-ask-al","8":"tag-scalp-trading","9":"tag-scalping","10":"entry","11":"override","12":"shadow"},"featured_image_src":"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2015\/11\/funny-little-man-holding-bag-of-money-lhs-e1446998539806.jpg","author_info":{"display_name":"BTC Admin","author_link":"https:\/\/www.brookstradingcourse.com\/pt-br\/author\/richardhk\/"},"_links":{"self":[{"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/posts\/39629","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/comments?post=39629"}],"version-history":[{"count":0,"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/posts\/39629\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/media\/45328"}],"wp:attachment":[{"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/media?parent=39629"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/categories?post=39629"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.brookstradingcourse.com\/pt-br\/wp-json\/wp\/v2\/tags?post=39629"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}