Scalping Index Futures

Scalping the Dow and the Dax

Prerequisites:

Complete focus and concentration – a car can drive into your front room and you will not hear it.
Complete ruthlessness, abandon all hope and expectations.
Stay in a positive, relaxed and clear frame of mind.
Take full responsibility, and move on, always move on… while remaining still.
Good charts with the following indicators plotted:

BB SD 1 and BB SD 2 14 period.
10 ema
Stochastics – standard settings
MACD – standard
ATR(7)
Volume

The Method:

The method is simple and clear, stay aware of the medium term trend on the 5 min chart, but do not assume that the trend will continue forever.

We trade off the 1 min charts and here is how it works, there are 2 potential entries, but only 1 type of exit:

Breakouts – take a trade the instant the previous 1 min candle is broken (long or short), as this is a breakout trade, if you are not in profit by the time your order has been executed, exit immediately. Don’t beat about the bush, if it doesn’t work and you pay 2-3 ticks, you are relaxed and happy as Larry, and you can try again.
Continuation – Once the 1 min candle pierced the BB SD 2 and assuming you hadn’t entered already, which you should have, wait for a retrace back to BB SD1 and enter, this time as a potential trend has started or is continuing, we set the SL below/above the 10 ema – (max SL is 2 1 min ATR(7)).

Exiting a trade:

We concurrently watch the price and the 1 minute chart, the instant the price slows down you get out. The reason for this is that you can always re enter at the next breakout. Mostly you can get 1 – 3 times the ATR(7), and sometimes you get a runner. However, even in a 200 point run, you can make 50 trades or more and you can often get more than the 200 point move, if you are focused etc.

Possible hazards:

You get filled at the top/bottom – solution – get out immediately
Price shoots in opposite direction big time, solution – get out immediately
Loss of concentration that clouds your judgement – solution – be honest with yourself, stay aware and if you notice it stop trading till refreshed. You can only stay focused for a while and the you need to re energize. – Meditation works best for me.
Getting cocky – when you’ve had a string of successes, best to take some time off, don’t let your ego control you, ha.

Finally, whereas your ultimate expectation is to profit from your activity, don’t expect to win every one, and let those that do not win be expenses and not big losses. Note, that if you are saying to yourself “I’ll set a big SL, as I know this will go my way”, KNOW – you are out of the zone and about to lose your pants, so get out and go for a walk. Mostly, this is a highly active way of trading and can only be sustained for a while, so take breaks, drink water and above all enjoy it.

Here is a link to a good read which demonstrates the appropriate state of mind, and this method is one thing only ‘State of mind’.

http://www.amazon.com/Zen-Art-Archery-Eugen-Herrigel/dp/0375705090