this is purely educational, and not investment advice. get professional advice before investing.
there is nothing more predictable than reversals of the broad trend. take iwm for example. small caps are extremely sensitive to large volume market moves. small caps obey a general ruleset that ties their values and fundamentals to that of larger names and other indices as well as the dollar index.
this doesnt mean small stocks move with the large names that are a much safer passive buy. the david and goliath relationship between businesses of varying internal and market values is nuanced, and unique in the world. the different ways companies keep cash on hand and their comparative debt ratios are like a slip fault. tremors begin in a given epicenter, usually a specific sector or subset of an index or sector, and they radiate out through closely to more distantly related groupings while the broader equities market as well as other asset classes absorb the impact.
depending on how the smaller names are related to those prices, whether its a commodity or corporate bond, currency pair, what have you, the impact can be more or less volatile. impact, be it positive, negative or having a calming/sideways movement, can determine direction and magnitude of a trend (sometimes directly or inversely proportional to the affected grouping) in confirmational bias to the existing trend, or indicate reversal.
it is these reversals that make a scalpers job so easy. avoiding the large part of a move, and only funding a trade during periods of reversal seems like giving up the fort. in reality, this castle keep so to speak adds a consistency and implied judgement to the soundness of a prospect. speculation is essentially eliminated, as the stock is so overextended in its involvement with whatever makes the move as to be an impossibility for the trend to continue.
paying close to the direction of each arrow during a reversal in small caps, youll notice that nothing is pointing down. this is not because you shouldnt short IWM. this is just indicating how your stop loss always trends up, as profit can only realistically be kept in one direction. as the trend changes, and candles either begin to break lows or highs, the pattern of a higher low or lower low every candle on the next timeframe up will begin to break. one can make only long or short trades in either bull or bear case this way and still profit reliably. every small arrow can be a short or long, and this means the movement is far easier to forecast.
entry and exit is determined purely by strict adherence to determined directionality and support or resistance levels. use a computer aided tool for this. dont rely on your own judgements or calculations. stay rigidly latched to your levels so as to trade like a robot would. you can add some padding to precise levels, but it shouldnt exceed a proportional amount to the movement that is changing. always trade on closure below or above certain reversal levels on a larger timeframe indicating a break in the trend and quickly average in as each new candle on a smaller timeframe confirms the break of trend. both directions are valid, so keep tight stop losses to lock in profit. this will mean orders need to happen rapidly. take your time, and pay close attention to things like bid/ask and levels in the order book, but rapidly return to being able to make your next move as opposed to something distracting like news or another chart. order most cost basis at the beginning and average smaller amounts as trends reverse. the fastest part of the trade in oversold bounces/overbought retracements is also the point where the most profit can be lost, so you dont want to take a bigger bite as velocity increases. dont follow the trend after it changes. the point of scalping is that moves are more predictable in smaller sizes. you are capitalizing on the volatility of an asset, not the trend of the movement itself. you will need to use much of your available cash to do this; upwards of 78%. the next move after a reversal can always be a fakeout to second reversal. i have pointed out some fakeouts with larger arrows.
as your junior most assets reach a value that of your sr most assets cost basis, exit the trade. wait patiently for another trend reversal, and take smaller general direction trades in between with a looser stop loss that you can be more relaxed with.
rsi is going to be in the low 20s monday. where do you think this could go?
there is nothing more predictable than reversals of the broad trend. take iwm for example. small caps are extremely sensitive to large volume market moves. small caps obey a general ruleset that ties their values and fundamentals to that of larger names and other indices as well as the dollar index.
this doesnt mean small stocks move with the large names that are a much safer passive buy. the david and goliath relationship between businesses of varying internal and market values is nuanced, and unique in the world. the different ways companies keep cash on hand and their comparative debt ratios are like a slip fault. tremors begin in a given epicenter, usually a specific sector or subset of an index or sector, and they radiate out through closely to more distantly related groupings while the broader equities market as well as other asset classes absorb the impact.
depending on how the smaller names are related to those prices, whether its a commodity or corporate bond, currency pair, what have you, the impact can be more or less volatile. impact, be it positive, negative or having a calming/sideways movement, can determine direction and magnitude of a trend (sometimes directly or inversely proportional to the affected grouping) in confirmational bias to the existing trend, or indicate reversal.
it is these reversals that make a scalpers job so easy. avoiding the large part of a move, and only funding a trade during periods of reversal seems like giving up the fort. in reality, this castle keep so to speak adds a consistency and implied judgement to the soundness of a prospect. speculation is essentially eliminated, as the stock is so overextended in its involvement with whatever makes the move as to be an impossibility for the trend to continue.
paying close to the direction of each arrow during a reversal in small caps, youll notice that nothing is pointing down. this is not because you shouldnt short IWM. this is just indicating how your stop loss always trends up, as profit can only realistically be kept in one direction. as the trend changes, and candles either begin to break lows or highs, the pattern of a higher low or lower low every candle on the next timeframe up will begin to break. one can make only long or short trades in either bull or bear case this way and still profit reliably. every small arrow can be a short or long, and this means the movement is far easier to forecast.
entry and exit is determined purely by strict adherence to determined directionality and support or resistance levels. use a computer aided tool for this. dont rely on your own judgements or calculations. stay rigidly latched to your levels so as to trade like a robot would. you can add some padding to precise levels, but it shouldnt exceed a proportional amount to the movement that is changing. always trade on closure below or above certain reversal levels on a larger timeframe indicating a break in the trend and quickly average in as each new candle on a smaller timeframe confirms the break of trend. both directions are valid, so keep tight stop losses to lock in profit. this will mean orders need to happen rapidly. take your time, and pay close attention to things like bid/ask and levels in the order book, but rapidly return to being able to make your next move as opposed to something distracting like news or another chart. order most cost basis at the beginning and average smaller amounts as trends reverse. the fastest part of the trade in oversold bounces/overbought retracements is also the point where the most profit can be lost, so you dont want to take a bigger bite as velocity increases. dont follow the trend after it changes. the point of scalping is that moves are more predictable in smaller sizes. you are capitalizing on the volatility of an asset, not the trend of the movement itself. you will need to use much of your available cash to do this; upwards of 78%. the next move after a reversal can always be a fakeout to second reversal. i have pointed out some fakeouts with larger arrows.
as your junior most assets reach a value that of your sr most assets cost basis, exit the trade. wait patiently for another trend reversal, and take smaller general direction trades in between with a looser stop loss that you can be more relaxed with.
rsi is going to be in the low 20s monday. where do you think this could go?