Scalping Strategy Overview

Summary

The meeting detailed a straightforward, three-step scalping strategy that has been extensively backtested and shown to be consistently profitable when executed with discipline.
The strategy involves marking two key levels at market open, identifying one of three specific trade entries, and applying a simple risk management framework.
Results from multiple recent days and an 18-trade backtest were reviewed, showing a 66% win rate and robust profitability.
Discussion also addressed common psychological challenges traders face and directed attendees to additional resources on execution and consistency.

(None were explicitly assigned in the transcript.)

At 9:30 a.m. EST (market open), on the 5-minute chart, mark the high and low of the first candle.
These two levels define the trading range for the session; accurate marking is critical for success.

After marking the levels, switch to the 1-minute chart to look for entry opportunities.
Three entry setups:
1. Break: A third consecutive candle closes outside the marked range, forming a fair value gap (gap between candle wicks), signaling strong market momentum.
2. Trap: After a close outside the range (with or without a fair value gap), wait for a retest into the original range, then enter when the price closes back outside the range.
3. Reversal: If the market attempts a breakout but quickly forms a fair value gap back into the original range, indicating a failed move, enter in the opposite direction (often leads to a strong reversal).

Always use a fixed 2:1 risk-to-reward ratio for all trades.
Stop Loss placement:
- For Break and Trap: Set at the low (for long trades) or high (for short trades) of the first candle that closed outside the range.
- For Reversal: Set at the low/high of the first candle in the fair value gap sequence.
Take Profit: Set at twice the risk amount from entry; do not over-complicate exits.
Emphasize letting the strategy handle decision-making for consistency and mechanical execution.

Three consecutive daily examples (August 4-6) demonstrated swift and significant profits, using one NASDAQ contract per trade.
In an 18-trade backtest over nearly a full trading month:
- $7,800 profit, $1,200 maximum drawdown.
- 66% win rate (12 wins out of 18 trades).
- Low risk of large losses; suitable for prop firm accounts.

The main challenge for traders is not the setup, but disciplined and fearless execution, especially after past failures.
Additional resources were shared for overcoming hesitation and developing confidence in sticking to a single trading strategy.

No changes to the core three-step strategy — The simplicity and consistency of the approach are maintained; attendees are encouraged to execute the setup exactly as taught.