What Trading Smaller Timeframes Can Do For You

With regard to my recent comments on scalping, the last few weeks have been a
virtual bonanza for short-term sharp-shooters as recent rhythms have provided a
tremendous amount of high-probability, low-risk ES trades for 1-3 points. Since
I’ve received an increasing amount of mail lately asking more about scalping,
and yes, I frequently scalp my Mini account on a three minute (or less) basis,
I’ll try to touch on those issues over time. 

To preface the topic, however, suffice it to say that it is the vast minority
that have the required personality to do it successfully over time, and I often
discourage it, simply because such a style requires a tremendous amount of
extended focus and cat-like order-entry reflexes, not to mention a strong
win/loss ratio and highly efficient size management that must be honed over the
years.

So why do I do it?  First, and as I’ve mentioned in recent columns, I enjoy
diversifying my trading among various timeframes, trading daily, 13-minute and
1-minute accounts. I find that balances risk extremely well.  Second, I enjoy
being able to make many mistakes during the day and still ending the majority of
the days profitable. Screw up? No problem, scratch the dang thing and clear the
head. In fact I had my biggest bonehead move of the year yesterday as I
inadvertently typed in 10 (yes, that’s ten) times my normal size and had
to immediately exit it for a 0.50 to 0.75 loss. And on size, that’s a chunk. Yet
I was able to spend the last few hours in a “back to work” mode that exactly
offset the screw-up and the day ended positive. Third, it suits my personality
and I enjoy the challenge.