Single Market Scalper Mastery

Graybox Trading

Mar 19

What’s required to master single market scalping? A lot: a whole lot. Before you start, you should know it is the most difficult form of trading to master and requires the development of specialized skills. While not sharing any specific tricks, I will explain what you must develop below.

First, you must have the ability to read tape at an elite level. Scalpers must be able to read markets on a moment-by-moment basis, in addition to being able to find setups or trades. Of course, very few traders will be able to learn to read markets well-enough to meet this first requirement. Unfortunately, this basic prerequisite that excludes most traders is still only a relatively small part of the puzzle. Many losing traders have mastered this one skill but lack the development of the other core skills.

Second, the ability to read tape is generally not enough edge in itself. Plus, tape readers are very prone to finding too many phantom trades that do not really materialize. So, you need to develop ways of filtering and ranking opportunity through chart analysis and programmed setups.

Third, you must have a superb understanding of how to trade different volatility regimes. The type of entry techniques, stops, and targets that make money in one regime will be different in another regime. This makes it really tough and is even why traders who develop consistency may eventually fail when markets change.

Fourth, you must develop highly refined and appropriate execution strategies. Yes, a part is knowing when or why to use market or limit orders but it goes beyond that. You may need programmed entries or specialized tools to compete most effectively. The appropriate execution strategy can be a big part of the edge and this is not something that is known or taught by most. And, of course, the appropriate execution strategy can change depending on the market environment: it means that this must be developed, refined, and adjusted based on market conditions.

Fifth, you must have a plan that is mathematically and not emotionally based. Let me give an example, let us imagine you want to scalp the ES and your average risk per trade is 10 ticks or $125. And, you expect to take on average around 4 to 12 trades per day. Now let us imagine you start with a $5,000 account and you want to keep risk to a reasonable 3% per day. Well, you can already see the math doesn’t work because your risk only allows taking 1 trade per day! Now, trading 1 e-micro, it works out because you take the $150/12.5 = 12 trades.

Sixth, your plan must be flexible enough to adapt to changing market conditions. The type of specialized skills that a scalper develops in one market regime may not be appropriate for a new regime. This is another tough aspect. While it might be appropriate to make 12 to 30 trades per day in the current environment, a few months from now– the number of opportunities might only be a couple per day.

Seventh, scalping requires a higher discipline then other methods and so you must be disciplined and more over have, in place, risk controls of structured nature. This means broker risk controls, money management, shut downs, etc.

Scalping would be very limiting if pursued in isolation. And, that is why I do not pursue scalping in isolation. When one can structure any kind of trade one desires, scalping can be both rewarding and liberating. In fact, in my own trading, I have several “ongoing track” or “projects” that I am working on and scalping is just one of them. Because, I know I can fail at scalping and still find opportunity in the markets.

About the Author

The author is passionate about markets. He has developed top ranked futures strategies. His core focus is (1) applying machine learning and developing systematic strategies, and (2) solving the toughest problems of discretionary trading by applying quantitative tools, machine learning, and performance discipline. You can contact the author at