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I am not a scalper by nature. I prefer the longer "meatier" type trades. Good scalping can surely supplement your trading. I have found a scalping method which I have come to have success with. I call it the "IRB scalp play". An intra-range bar is any bar in any given time frame that lies within the range of the price bar which precedes it. So for example, if I'm looking at a daily chart, and today's high and low was 53 and 50, and yesterday's high and low was 54 and 49, I would have an intra-range bar today. I learned about intra-range bars from a successful trader who mainly uses them on daily charts. The play is such that you go long once price penetrates the high of the intra-range bar, or go short if price penetrates the low of the intra-range bar. If you look at daily charts and study them in detail, this is a very reliable method. This got me thinking. "Gee, I really don't like to hold stocks overnight, why can't this method work on my intra-day charts?" So I began studying this using my 3 minute charts and found that it is highly reliable on them as well. The set-up is the same. Locate an intra-range bar, then go long once the high of the intra-range bar is taken out. I place my stop under the low of the IRB. This can be used to go short as well, however, I don't, since they can go fast, and you have to chase too much to get short due to the uptick rule, causing too much slippage, which is not conducive to scalping. So, I only go long when using this method. When you locate one of these, and its high is taken out, you can't dilly dally around. You have to get on it right away. Many times you will be going against the trend on these, ie: the intra-day moving averages are sloping down. When I see an IRB form, and its against the trend, I like to see it extended somewhat from the moving averages, so it has room to run up. If I see it form right against the down sloping moving average, I will be suspect, and may not enter it. I am also leary of this play in the first half hour of trading, since things are usually moving very fast. If you get into one during this time period,especially if the moving averages are sloping down, you really got to be on your toes. If your stop is hit, you might not be able to get out as fast as you would like......so be careful during this time. Many times you will see these form at the end of a bull flag. This is probably your safest entry, especially if the bull flag has pulled into an area of support such as a fibonacci support level, upsloping moving average support, prior price support, or a combination of any of the above. The best way to show what I'm talking about is to look at some examples I have pulled from the charts. |