V.7.2 (50-52): Trading & scalping techniques by John Hill

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.

Parallel movement

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:

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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.