- Scalping is not easy.
You could make fast money quick,
but it could also be extremely risky
if you don't do it the right way.
(bright upbeat music)
Welcome back to another Humbled Trader video
where I've made hundreds of day-trading videos,
including step-by-step trading strategy tutorials
and pro tips.
A lot of you guys are still asking me
to teach a very specific trading strategy,
which is scalping.
I get it.
Who wouldn't wanna make some quick profits
in a couple of minutes and sometimes even a few seconds?
In this video, you are going to learn
the three key criteria for scalping,
the best indicators and chart setups,
and how to find the right stocks to scalp.
Once again, make sure you smash the like button
and subscribe to the channel,
especially if you want to learn more trading strategies
that actually work.
If you're relatively new to trading,
I really hope you pay 100% attention to this video,
because it's really going to help you out.
Let's go.
Let's start with my scalping criteria number one.
I would only scalp
if a stock is having a daily breakout or breakdown.
So looking at our chart here, ETNB,
this one is, you can see, gapping up to pre-market around $6
from prior day scales of $5.
Now if you look at a dating chart around the $6 mark,
this is why I call the intraday key level.
This is a huge breakout on the daily chart.
Looking at a chart, you don't have the prior resistance
around sixes until
the beginning of the year.
So this is a huge level.
This is essentially a breakout about 52 week highs.
The reason we wanna look for stocks are breaking out
of a daily key level.
Like this one is so we can have a lot of range
to the upside.
So we can see this thing once broken above a $6
resistance pre-market.
This thing ran all the way to $7 pre-market around here
and at the open the spike to 770s.
In order to get the range we want, we need a daily breakout.
Now this will be crucial whether you want to loan the stock
or short the stock because once you have that range that's
broken out, you can see you have a dollar gap to a downside.
Once I decided to short the stock,
and if you're looking to scalp,
you need range to make your money, right,
When you're scalping,
you wanna see stocks that making 50 cents move
a dollar move or more.
You're not gonna be in here trying to scalp
like 5 cents.
For me, I looked at how the stock is opening into the
770s area from the key level.
So that gives me around a dollar downside if
I were to short the stock.
So that's why I got in the stock short around 750-760s,
right at the open and look for the downsides towards do you
want breakdown towards $7 and 680s area.
So this big of a range is what we're looking for and you can
see after about 10, 15 minutes after the open,
my trade is closed,
I got what I looked for on the scalp side
and the trade is done.
The second must-have criteria when scalping stocks is
above average trading volume on the particular stock.
We talked about range earlier for the stock,
and while that is important,
you most of all you need the volume.
Without volume, you will not be able to
get in and out of a stock really quickly,
which is really essential if you are looking to scalp
and using the scalping strategy.
So back to the example we have here on ETMB,
you can see the stock on the daily today
trade around 35.9 million shares volume
and that's, that's above average.
You can see on the daily.
This on trades on average about like 1 million
at most on the high end
and usually trades about 500,000 shares.
So on any normal day you will not look to trade the stock at
all, not even just to scalp it.
So looking at the scanner for the stock pre-market,
you can see ETMB was the second gapper
on the day gapping up
to around 35% since prior days close.
And the volume on the day was 14 million pre-market.
And on the average daily is only trading about 300,000
as we can see right here.
So this is how you can really quickly find out if a stock is
trading above average volume and when it is,
it's usually going give you above average range on the stock
and that'll be perfect for scalping.
Another very crucial thing to mention about the volume is
that usually when you have above average volume,
you're gonna get normal spread,
meaning that the spreads at most,
you'll get on this example here,
you get a 1 cent or 2 cent spread.
The spread is the difference between a bid and the ask.
So if the spread is really thin,
that means you have less chances of getting slippage and
losing money when executing.
So looking at this other example here, NRBO,
you can see the spread is about 50 cents and
that's already really high,
but earlier it was actually around 70 cents to a dollar.
So if you are looking to scalp a stock,
this is the kind of stock you want to avoid.
Higher spreads, lower volume, and lower range.
So you definitely want to avoid it.
Now the third crucial criteria for scalping is that you
wanna make sure you're picking stocks that can give you
minimum of 1-2 or even greater risk/award.
So here's my true opinion about scalping strategy
and this is
one of the reasons I almost never talk about it on my
channel is because scalping strategies,
usually their risk/award is only 1:1
or sometimes even less.
So meaning you can be risking $1 to make $1 or $1 to make
70 cents. So that's the reason
I think in my opinion, don't hate me.
I think scalping is not a reliable strategy long-term.
I think it's one that's enough to get you around for you
know, a couple of small trades here,
but as a long-term you want to
develop your scalping strategies
into a bigger picture kind of trade.
So here's an example of a scalp short side I did on Oracle
and I didn't do that well on it because as you can see,
the risk/award is not that great.
I risked it about 70 cents to make a dollar,
which it's okay, but it's not exactly one to two.
Essentially you wanna look for entries
around key daily levels.
So if I was looking for the short on the stock,
which I did short around the
pre-market areas around 78-80s
and above it,
you have a small resistant around $79 here as you can see on
the daily. So that would be your short entry.
And ideally once you enter the stock short,
you wanna use the higher day as your risk.
So if I entered around the 78-90s area,
my risk is about 50, 60 cents off the higher day.
So I'm risking 60 cents.
Now we're looking at a downside for the stock.
Can the stock have a lot more downside than 60 cents?
Ideally I want to see a dollar, a $1.20 or more.
So if the entry's here, let's see the downside,
you have the after-hour small-level here around $78.
So that's 80 cents to a downside.
And then after that you have prior days'
closed area around $77.
So that means I could potentially make about
something do the math pretty quick.
You I could potentially make 80 cents or 1.80 cents.
So downside.
So that means I could potentially make 1:2 risk/reward.
So this is a trade for a scalp that makes sense.
Now that we cover the three key
criteria for scalping.
Now I'm gonna show you guys how to set up my chart and the
Highly, highly requested indicators for scalping.
So make sure to smash the like button
and make sure to share this video
with your friends who are also looking to get
into scalping strategies.
So in order to do the scalping strategies well,
you need to make sure you have
a very fast execution on your broker platform.
No, unfortunately your think or swim
is not gonna do it.
Your Robin Hood's not gonna cut it either.
They're not fast enough.
So what I use right here is CenterPoint Securities connected
to DAS Trader Pro as my platform.
So let me show you how I set up my charts.
I like to have my daily chart on the left side here.
This is a daily chart.
I have my volume and the daily candle and intra date.
I usually actually use around two minute charts,
sometimes five minutes to do the scalps for my stocks.
So this remember intra day chart
side by side with the daily charts,
just because of all the criteria we talked about earlier,
we need to use the daily key levels.
So that's why we wanna have it side by side
for you to spot it really quickly.
So besides the entry day chart windows,
I have my order entry montage window here.
So this is a level two for CenterPoint
level two, this is where you enter
your tickers here,
Oracle and level two.
And usually I have time in sales on the side,
but it's hitting in the window.
And one thing that's very notable about this broker platform
is that they have really extensive list of advanced routes.
So if you click the dropdown menu here,
you see a huge list here.
I actually use only about four of them.
They have a lot of advanced one for OTC stocks.
If you trade those, I don't trade OTC stocks,
but they have different ones for
adding to liquidity and removing them,
getting rebates from different exchanges.
So that's very, very useful.
You can check out the website with
a really extensive list
of all the routes, the descriptions,
and how much rebates you can get.
So this is what I use in terms of execution.
I just really quickly load the price
by clicking the level two bid and ask
and click sell or short and buy or cover.
When I'm doing these really quick scalps, again,
they load really quickly and that's essential
if you're looking to scalp.
And this year in 2022 it's being a
heaven for short sellers, especially
if you are scalping and a lot of these
low-float pump-and-dump stocks.
So you need a broker that can give you
all these locates in order to scalp
and do these short-selling strategies.
So a lot of times I have my locate window open
and how you get there is
go to trade
short locate.
That's how you co-op the short locate window.
So earlier, if you look at ETMB,
I believe that stock was actually easy to borrow,
so free to borrow.
So what you do here is enter the ticker,
enter the number of shares you're looking for.
Let's say I'm looking for a thousand shares
and just quickly inquire all,
and the stock is already short about,
that means it's free to borrow.
So it doesn't cost me anything to locate the stock.
So that's a really, really great benefit.
So looking at another example here,
this is a different stock that ran today,
AEHR went from $14 to $16.
So if I was looking at a stock,
I probably look for $17 short on a daily back to
retest of the daily resistance.
So if I wanna short the stock
and scalp it really quickly, I need to make sure that
I can go into the short locate window,
type in the ticker, how many shares I want,
and click and inquire. Oh,
and you can see it's gonna cost me $17 to locate
for a thousand shares on the stock.
So if you are scalping these quick volatility
on the stocks, just make sure
you have access to the easy-to borrow stocks
as well as the hard-to-borrow stocks.
If you're interested in CenterPoint securities,
they're actually running amazing offer right now,
giving away a lot of trading softwares and huge discounts.
So make sure to check out the promo link down below if
you're interested.
Thank you to CenterPoint insecurities for being a humbled
trader partner. Now moving on to the juicy part,
how to set up your indicators for scalping.
Looking at my platform here on the chart,
all I have is this purple line here and
that's VWAP and that's all I use.
I also pair that with a volume indicator at the bottom,
I use a volume average indicator.
I have the period of I think 13,
13 volume average indicator down here.
So what you do is I look at
how the volume is breaking out
above the average.
Down here in this black line here,
a volume is breaking out and consistently holding above the
average. That means the stock is more downside.
If I'm looking to short the stock,
which as the earlier example you recall,
I was shorting the stock.
So that's how I use the VWAP indicator.
I use the breakdown as the price target and I use a retest.
You can see all these little retest
around the VWAP area of 680s.
I use those as my additional entry points.
If you wanna learn more in-depth about how I use VWAP,
the indicator for all of my trading strategies,
not just scalping,
then you can check out this video over there.
I explain how I use VWAP indicator in detail.
Next we're gonna talk about how to find the right kind of
stocks to scalp.
We talked about earlier with our three criteria,
we're looking for stocks that's breaking out of key level,
trading above average daily volume and also can give you
above average risk/reward greater than 1:1 or 1:2
So how exactly do you look for them?
And this is where a technical scanner really comes into
play. So what I use, and I've been using them for many,
many years now, is trade idea scanner.
So if I show you really quick here,
this is what my trade idea scanner looks like.
I have my pre-market gainers.
So if you scan for stocks that's,
you know, gapping up,
usually they're gaping up above the key levels or you know
the gap downs over here on this gap down scanner,
it's showing stocks, it's gaping down below the key level.
So that's a really quick way for me to scan through all the
stocks that could be potentially good to trade.
And it also shows you the volume on the day pre-market.
So volume today compared to the daily average volume over
here in this column.
So I can really quickly compare side-by-side how the volume
today compares to the average volume and see whether the
stock is trading above the average.
And this tool trade idea scanner is one of the many tools
included in the CenterPoint promotion for free.
So make sure to take advantage and
check out the link down below.
I used to pay thousands of dollars per year for these tools.
Now I get them for free.
If you're interested in CenterPoint Securities,
you can check out my link below for 50% off on commissions
and short locates, including trade ideas
and many other tools for free for 60 days
Comment down below if you've been using
scalping strategies and
if any of the tips in this video helped you out.
If you want to see more,
make sure to let me know down below.
If you wanna learn more of my trading strategies beyond just
scalping, but looking for the bigger picture trades,
then make sure to check out the Humble Trader community down
below. Thank you so much for watching us always.
I'm the humble trader and I will see you guys next time.
(upbeat music)