Price Action Model Number 12: Scalping Model

Overview

• Focus on a 20 pips intraday trade model.
• Considered a "bread and butter" setup; frequent daily opportunities.
• Not meant for high R multiple trades.
• Suggested stop-loss around 20 pips; avoid extremely low stop losses.
• Utilize the five stages of trade plan development:
  • Preparation
  • Opportunity Discovery
  • Trade Planning
  • Trade Execution
  • Trade Management

Preparation

• Note medium and high impact market events.
• Consider current market structure and weekly profile.
• Determine IPTA data range of the last 20 trading days (excluding Sundays).
• Identify the highest high and lowest low in this range.
• Look for PD array in the weekly range bias direction.

Opportunity Discovery

• Seek 20 pip ranges on a 15-minute chart.
• Target buy-side liquidity (bullish flow) or sell-side liquidity (bearish flow).
• Use kill zones and fair value gaps with order blocks.

Trade Planning

• Look for convergence of manipulation and price opposite to trade bias.
• Short 15-minute premium fair value gaps with bearish order blocks.
• Buy 15-minute discount fair value gaps plus bullish order block setups.
• Order block formation outside kill zones; return must be inside kill zones.

Trade Execution

• Bearish Trades: Anticipate a 5-minute premium fair value gap with a bearish order block on a 15-minute retracement higher.
• Bullish Trades: Look for a 5-minute discount fair value gap plus bullish order block on a 15-minute retracement lower.
• Execute trades during London or New York open kill zones.

Short Trade Management

• Place sell limit orders for shorts, buy limit orders for longs.
• Set 20 pips as the objective per trade.
• Adjust stop loss as profits materialize:
  • Reduce by 10 pips when in profit by 10 pips.
  • Move to break-even when in profit by 15 pips.

Money Management

• Position size = account equity x R% / stop loss in pips.
• Example calculations with $10,000 equity and 1% risk:
  • Use micro lots or mini lots based on stop loss.
  • Adjust R% if initial trades result in losses.
  • After five consecutive wins, reduce R% to prevent large drawdowns.

Summary

• Model focuses on daily range expansion and intraday volatility.
• Suitable for both morning and afternoon sessions.
• Can be adapted for other markets such as index futures or bonds.
• Encourage backtesting and self-discovery of personal trading style and model adaptation.

Additional Remarks

• Model aims to encourage disciplined trading rather than a gambling mindset.
• Encouraged to practice in a demo setting before live trading.
• Emphasize the importance of preparation, risk management, and continual improvement.
• Acknowledge that while not everyone will become highly successful, consistent application of these concepts can significantly improve trading skills.