Ultra-short term trading – I like to call it “Scalping”- can be fun and exciting for a brief period of time. I say brief period of time because it requires intense concentration and attention to market movements at the fastest pace. It is riskier because the trades are made on movements that are of usually of small amplitude – meaning that the potential for profit is rather small.

If you take a trade with a small potential then your risk must also be small. It is usually not possible to get risk below two ticks – and three ticks are not easy to achieve. Here’s why; it cost one tick- because of the spread – to get into a trade. If the next change in price is against your position it will cost you two ticks to exit. Waiting for another tick to see if the market moves your way will put you down three ticks if it moves against your position.

Obviously, even for scalping with a itch trigger finger, you need minimum price oscillations of five ticks to have a 50% chance of winning. We have said many times, that a 50% change of winning is a losing proposition over time – if for no other reason; you must pay commissions on all trades – even losers.

If your odds are only 50% you probably should just go to Vegas – enjoy odds that are almost as good – and enjoy the glitzy glamour.

TBL provides the trader with valuable insight into whether a trade should be attempted – or not. The unique SRVs that we employ in our system provide excellent clues to the potential amplitude we can expect in future price oscillations –for any time frame.

Short term trading – including scalping – is all about price oscillations – and we know of no better way to predict future price oscillations than that provided by our SRVs.

Trade the TBL way and be the “Scalper” – and not the “Scalpee”.

 

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