E-Mini Trading: Let’s Revisit the Scalping Style of Trading

There are many ways to trade the e-mini market, those styles range from short-term scalpers to swing traders to individuals using e-mini contracts to hedge against an existing position they already own. For me, scalping falls into the category of short-term scalping. My average trade is under one half hour, and even that would be a long trade. I try to take 5 to 8 trades a day, which is a bit less than most short-term scalpers, but I am interested in quality high probability setups and my e-mini scalping trading.

There are a variety of oscillators and indicators some e-mini traders use to initiate setups in their trading methodology. For me, the indicator based form of trading has some inherent problems that may hinder a trader’s potential success. Some of these problems are:

• All oscillators and indicators are based upon a specified historical timeframe; this means that all oscillators and indicators lag the market.

• Since indicator-based trading lags the market, it is not unusual to notice on tier 2 quotes that the small trader is often times late to the party; he or she enters trades toward the end of a market move.

• Oscillators and indicators become useless in consolidation channel trading, as the time. under consideration includes very tight price action, so smaller moves are exaggerated on many of the current style indicators.

This is not to say that there are not some great uses for oscillators and indicators in any e-mini trader’s arsenal. I personally use to momentum oscillators in my trading. But for me, the real-time action is on the chart and there are a variety of real-time indicators that hold up well in chart-based trading. Some of those indicators that give immediate feedback based on real time pricing include:

• Bollinger bands
• Keltner channels
• Support and Resistance
• Limited use of moving averages to determine where current price action is relative to the mean.
• Volume, both up and down volume

I use a wide variety of chart-based indicators, especially volume, in conjunction with some of the above-named indicators to determine my e-mini setups. When I am reading a price chart, I know that I am getting real-time feedback and I need only learn to interpret that feedback to execute profitable e-mini trades. I can’t say that this particular method is my own invention, no, I had a reasonably famous mentor who was absolutely mad about scalping, even though he was a senior trader and his job required him to swing trade. In short, though, there are relatively simple methods to interpret real-time data on a trading chart, and my experience is that real-time data yield superior results when compared with data that is lagging in nature.

In summary, I have admitted that I am a devoted scalper, and tend to hold trades for a very short period of time. Since I believe that many scalpers over trade, I tried to hold my number of e-mini trades to 5-8 high probability trades a day. And finally, I have pointed out some problems with oscillator and indicator-based trading; they lag the market and tend to get traders into trades late.

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