Trading & scalping techniques
by John Hill
Scalping techniques for off-floor traders abound. Here I'll present some that I've found worthy over
many years of trading. I do not claim many original thoughts in this. I gratefully appreciate the work of
many pioneers in technical analysis too numerous to mention. What I have done is contribute some
creativity and reduce theoretical aspects to particle application. To understand these techniques, one of
the first terms you'll need to know is pivot point. A pivot point is the highest/lowest point reached in a
swing prior to the penetration of the low/high of the top day (Figure 1). A swing is the movement from
one pivot point to the next.
The first scalping technique is the parallel movement method (Figure 2). This method can be used during
a sustained advance or decline to exploit normal retracements . The basic idea is that movement CD
should equal AB. The most profitable trades are ones where the position is taken in the first 25% of the
move from point C.
Here are the rules:
Use this when trading with the trend and don't attempt to catch the small counter moves. You want the
full swings. This technique may require several entry attempts, particularly if the correction is complex.
Also, be aware that a commodity often will fluctuate 25% of a projected movement during a day and still
not change directions.