Knowing When To Scalp
- Posted by TheArmoTrader
- on January 24th, 2012
I love using relative strength and weaknes. But I don’t use it only intraday, I use it on longer time frames as well. During my trading, I am mainly using 1, 2 and 5 minute charts. However I also pull up the 15 minute and Daily to get a sense of what the stock is doing longer term.
Today, $DE came up on my NR7/tight consolidation Trade-Ideas Scan. I saw a seller at $87.50. I immediately shorted .49s and added a full position when I saw it was having problems. I covered my risk real quick into the drop and let the rest do the work.
However, I knew this trade was NOT going to be a ‘trade 2 hold’. It was going to be a scalp and I was going to take profits at 87.00 (basic psychological support). And that is exactly what I did. I took the position off at 87.00. Why did I scalp this and not leave a runner on? Because by looking at the daily chart, you saw this stock was strong, and thus no panic selling was going to come in. Nobody is trapped long that needs to get out. And that is exactly why I took the scalp.
Looking at the chart now, $DE had a great retrace to VWAP which would’ve given you the chance to add the short back on. But since I stop trading 30 minutes before noon to get ready for class, I missed that trade.
And yes, this trade is not anything to “write home about”, but on a day with limited opportunities in terms of ‘In-plays’, it makes the effort of getting out of bed at 5AM worthwhile (and i’m not talking about the money, I’m talking about the opportunity to make a good trade).
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Jerry "TheArmoTrader" Khachoyan is currently an active trader, investor, market commentator, and Finance-Twitter participant. He started being involved with financial markets in September of 2008. He concentrates on using technical analysis and an understanding of macro to determine his trades and investments. He graduated UCLA with a degree in Political Science in 2013. The stock market to him is one of the greatest inventions by man.
- Has Coal Bottomed?
- Running Into Resistance Once Again
- Are Higher Rates Really Good For Financials?
- Japanese Equities Are Looking Bearish
- Is Apple About To Turn Higher?
- Damn Gold, Back At It Again!
- Have Negative Interest Rates Hurt Stocks?
- Hanging On By A Thread
- It Pays To Wait
- When A Failed Recovery Is All Right
- Is The US Dollar Setting Up For Another Big Run?
- There’s One Commodity Surviving The Recent Slaughter
- Oil Is In a Bear Market & It’s Looking Like It Will Stay There
- You Probably Shouldn’t Freak About The Weakness In Manufacturing
- Gold Is Still Looking Like Death