0:00 25% of the way back up. Look what happens. Boom. So, look. 20. If you go after 25% of the way back up, you're right. Nine times out of every 10 tries, now you're super profitable as a trader. So, where do you think a scalper wants to live his life to grab a quick pop in the markets? You're going after 25% of this is 100% all the way back up. So, if your stop had the ability to come all the way back up, that's one time out of 10 or two times out of 10 or halfway six
0:50 times out of 10. But 25% you're going to get that nine times out of 10 tries. And we utilize this tactic all day long every single day. 50% 25% 50% 25% and I want you to do that as well. Welcome to another presentation. Of course, as mentioned, my name is Oliver. What I'd like to share with you today is a very interesting topic. It's the topic of scalping. Now, the definition of scalping has basically changed over the years. What scalping used to be very much in vogue back in the early 1990s to mid90s is completely different from what I'm going to call scalping today. And I'll explain this as we develop more throughout the presentation. But
1:36 scalping is a form of short-term trading. So, listen, there are several forms of trading, right? There's investing or what I call wealth trading. Wealth trading and investing. Same thing. Wealth trading. Then there's core trading. That's not quite as long as investing, not quite as long as wealth trading. Core trading several months down the line. Okay. Then there's what I would call swing trading. Swing trading is actually is a style of trading that I helped coin ear in the early 1990s. Right? So the term swing trading came from an interview of mine back in the early 1990s and it caught on and people began to call this shorter term style of market play swing trading. Okay. Then
2:23 there's day trading. Now day trading or short-term oriented micro trading is really divided into two parts, right? So the two parts of day trading are is actually day trading and then scalping is a subset of day trading. So scalping is very very micro. If day trading is micro, scalping is the little brother of day trading. It's even smaller than the day trading space. And that's what I want to talk to you about today because a lot of traders, professional traders actually make their living in the scalping world. And there's a tremendous number of professional traders, guys. A
3:09 tremendous number, not a tremendous number of people in the industry that don't understand the differences between a trade and a scalp or a day trade in the scout. and you're going to know the difference and how to do each one by the end of this presentation. Okay. All right, guys. Let's talk about the tools we need to do scalping properly. Okay, let's talk about this. First thing we need, we need a two-minute chart. Yes, a two-minute chart. You can alternatively use a five-minute chart, but I prefer that you use a two-minute chart for this. Okay, two minute, five minute, your choice. But I lean more a little bit toward the two-minut chart. Let's take a look at a two-minute chart. This is Microsoft's twominut history looks
3:55 like for up until midday. So, this is a two-minute chart of Microsoft where every single bar represents two minutes of trading. Obviously, the red bars represent the two-minut periods that were down. All right? So, it started higher, ended lower, and the green bars represent two-minute periods where the stock ended, started lower, ended higher. Simple. The next thing we need, we need to overlay a 20 period simple moving average. Now, I have been trading for a very long time, studying markets for a very long time, and I will tell you that I have experimented with all types of moving averages. And in my experience, the sexier varieties of moving averages have no real distinct advantage over the simple. Now, if you
4:40 want to go to, you know, the 20 period exponential, the 20 period weighted, knock yourself out. It's not that different anyway, right? Moving averages are areas. They're not specific little skinny lines as your trading platforms would have you believe. But I use simple and I use those simple moving averages on the closing prices of the bars. Okay. Um here's a two-minute chart of Baba. I am overlaying a 20 period moving average on the chart. This is averaging the last 20 closing bars. So now guys, just so you know, and I know many of you know this, what a moving average does is help you to iron out the wrinkles in a stock's trend. So in the old days, they they actually used to call moving averages trend lines because their
5:26 purpose is to really keep you focused on the prevailing trend. So if that 20 per moving average is declining, it doesn't matter if there's a green bar or two in the midst of the stock's performance. the trend overall is down. It doesn't matter if there's a green bar here. See these green bars? That the overall trend of the moving average keeps you honest. Keeps you honest in your overall assessment. I don't care if there's green. That trend is down. The green is not going to affect me. The green is not going to trick me. As long as that 20 period moving average is down, I'm thinking down. I'm thinking
6:14 negative. You understand? So that's the purpose of a 20 period moving average. Here it here's the 20 per moving average started to rise, right? So it says I don't care right now if there's some red here. The overall prevailing trend is up. So that's the overall purpose of moving averages to keep you honest in your assessment of what the overall prevailing trend is. Is it a perfect indicator? No. There's no such thing as a perfect indicator. But as a general guide to trend analysis, you can't beat moving averages. And the 20 period moving average in my opinion is amongst the most important. There are two really key moving averages. The next thing we need, we need to overlay a 200 period simple moving average. So, whenever you're using moving averages, guys, you
7:00 want to always have a short one and a long one. You should never really look at just a one moving average chart. You need a longer term view, the 200, and you need a shorterterm view, the 20 period moving average. And that's what we have here. Moving averages are best utilized in ter in the form of a buddy system. You understand? A buddy system. So short, long, 20, 200 or 13 200 or 820. We use a variety of them, but 20 and 200 are the basic two. And I would say I would go as far as saying you don't really have a viable chart that you're looking at unless you have these two moving averages on the chart. So
7:45 let's take a look at the 20 period moving average on BABA overlaid. So now we have a two-minute chart, each bar representing two minutes of trading. and you've got a 20 period moving average overlaid and you've got a 200 period moving average overlaid. And these two moving averages are operating in a buddy like system. So whenever your stock, your 20 and your 200 are spaced apart, you are looking for a reversal. Okay? And this can happen on the downside as well. You can have the stock way down here, separated from the 20, separated from the 200, and you'd be looking for a reversal back to the upside. But notice how Baba opens separated from its 20. And the 20 itself
8:34 is separated from the 200, leaving behind what we call a dual space reversal event. My traders would be taught to actually go bet to the downside on a play like this, but they would first have to see green get eliminated by red. And so here's the last green bar. Red eliminates green. They would short here betting on the downside, stop above the green, protect themselves above the green, and benefit all the way back to the 20 period moving average where now the stock guys is closing the gap between itself and the 20 period moving average.
9:20 Clo gap closed. Done. Trade over. But that's actually a different topic. We're going to talk about scalping. We got a two-minute chart. We got a 20 period moving average on the two-minute chart. We got a 200 period moving average on that chart. Now, we need a strong move. What do I mean by a strong move? I have to demonstrate this for you. Let's do it red. So, a strong move down. Boom. In this strong move, guys, if you're going to play against this strong move, what do I mean by play against this strong move? What I mean is that if you're going to look to buy somewhere after this decline, buy, if you're looking to buy, your odds are not
10:07 very great because of the power of the down move to the left. So, think about this, guys. Think about this. This move to the downside is very powerful. All right? This move to the downside is powerful. So it means that any up move that you make, right? Any up move after this is going to have to fight what's to the left of it, which is red. All right. So now some moves will actually make it all the way back to the beginning of the drop, the decline. But how many out of 10 tries will the bounce after a strong drop? How
10:55 many times will a move come all the way back? I'm going to tell you one time out of 10 will go all the way back to the top of the move. This is very important to understand. Then we're going to go to chart so I can show you this. Right? So strong drop rally all the way back recuperating the decline 100% one out of 10. Let's say 75. Let's do this 75. So this is the 100% level, right? 75% instead of 100% how many? Two out of 10. Let's do it like this. So
11:41 100% all the way back you're going to get one out of 10. All right, one out of 10. So one out of 10 goes 100%. 75% two out of 10. Now check this out. Something interesting happens here at 50%. Now your numbers go big. At 50% your numbers go six out of 10. Wow. So, six times out of every 10 tries, the bounce back up after a decline will retrace 50% of the decline. So, now you're a profitable trader if you control your downside. Just going for
12:26 50%. Wow. You're not a profitable trader going for 75% of the way back up. You're not a profitable trader going 100% of the way back up. You're a profitable trader if you control the downside. You're a profitable trader at 50% only going for 50% retracement. A stock drops, buy it, 50% back up out six times out of every 10. But check this out. This is the most interesting. This is the most interesting traders, right? So now let's go to 33%. No, let's go to 25%. Now 25%, right? 25% of the way back up. Look what happens.
13:12 Boom. So, look, 20, if you go after 25% of the way back up, you're right. Nine times out of every 10 tries, now you're super profitable as a trader. So, where do you think a scalper wants to live his life? Where do you think he wants to dedicate himself to? 100% going after the one out of 10, going after the 75%, going after 50. No, he lives in that 25% move back up. 25% move back up. 25% move
13:59 back up. 25% move back up. Boom. Boom. Boom. Boom. Boom, boom, boom. Nine times out of every 10, you're going to get that 25% move back up. And so that's what scalping is. It is sacrificing, right, the possibility of a 100, which is going to come every now and then if you're lucky. Living in that world where I get this time, Ted, I just got to control that one time that it doesn't work. Nine times out of every 10, nine times out of 10, this is scalping. Same thing on the downside. Same concept on the downside. But let's go to charts now. My trading platform here. Right. So, what I need to do, guys, I need to put I I told you I need to put the 20 period. We're going to put a 20 period simple moving average on there. I'm
14:44 going to make that blue. Let's make that blue. Do it right in front of your faces. All right. 20 period moving average on Microsoft right there. Right. Then I'm going to put the 200 period moving average on there. Let's do that. It doesn't. It's not really relevant to us today, but let's just do it anyway. All right, we'll do that. I'm going to put that 200 on there. Keep that red. Boom. Okay, good. Now, look, I want you to know, remember that? Remember what I told you, right, about space? That was a different talk that I did on my concept with space. But I just want to bring your attention to that real fast, right? Like look at how look at Microsoft opens where it opens in relationship to the 20
15:30 and how 20 is separated from the 200. So you see that that th those layers of space right that space dual layers of space space one and space two. And whenever we get these dual layers of space, we bet the other way because the market doesn't like space. It narrows space. So now, see, there's no space. So once there's no see, we started off with space. Now we go to no space. Look at all three items. Look at your stock. Look at your 20 period moving average. And look at your 200. There's zero space now. Now we go back the other way. But that's a different topic. We're talking about scalping. Now, I want you to take
16:16 a look at this drop. This is one fluid drop. It's interrupted by a a a certain number of green bars, but the fluid move to the downside is down. If you want to try to buy the bottom of that, you can't expect more. If you want high accuracy, you can't expect more than remember those levels, right? 25%. If you want your accuracy, so scalping is a counter trend approach to grab a quick pop in the markets. You're going after 25% of this is 100% all the way back up. So, if your stop had the ability to come all
17:04 the way back up, that's one time out of 10 or two times out of 10 or halfway six times out of 10, but 25% you're going to get that nine times out of 10 tries. And so the scalper goes against that flow, but just for 25% out and can literally make his entire living on a scalp. All scalpers do is look for a drop. All right, a sharp drop. Boom. So boom. Look at the bounce. You see? Not all the way up here. You're not going to get that. That's the sucker's play. Bounce. Drop back. Now look, drop, bounce, 25%. Look
17:51 at this. Look at the next one. Look at the next one. Let me show you. All right, drop. Here's one fluid drop, bounce. There's your 25%. You're not getting 100%. You're not getting 75%. You're not getting half. Boom. Now, here's something really interesting. When you get a drop that goes way past the 50% level, now this is way past, not 100, but it gets really high past 50%. The next drop usually will not be a new low down here. This drop will turn and that's when you trade. You don't scalp this bottom here.
18:38 You see the scalp play if you want is there. The trade is here where you want to hold on to that one longer than the scalp. This is going to go further than 25%. This is going to likely go bigger than 50% of the way back up. You understand? So, let me demonstrate this again. This is important to understand. Drop 25% new low but drop 65 70% no new low and this becomes a trade not a scalp. Okay, very different. You got to know what's a trade and you got to know what's a scalp opportunity. And knowing the difference between these plays does increase your accuracy, guys.
19:23 Does increase your accuracy. So look, we drop. Boom. That does not get past that 50% level of this drop, right? It doesn't. So, we're going to new lows. Now, look, drop. Here's now an up movement. Up move up. That up movement does not get past 50%. We're going to new lows. But wait a minute. Check out this last one. Check out this last one. Look at this drop. Now, take this drop. split it in half. It goes way past the 50% level. You see, we break through the 50% level. Right
20:08 now, this drop does not make a new low. Now, we want to think about a trade. All right. We want to buy green when it takes out red. We want to buy green red. We want to buy green. Boom. very different. So, here's a scenario, guys. Here's a scenario that I need you to understand. When you have declines, right, you got to watch how they bounce, right? Because if they bounce marginally, that's a new law scenario. But if your drop bounces way past 50%, this down here becomes a potential buy
20:55 opportunity for a trade. Now, this is your scalp trade for a quick 25% if you if you want to try that or this becomes your real longerterm trade intraday longer than a scalp more than 25% when your rallies break significantly past that 50% level. And so you need to keep these percentages in mind. I can show you this on another chart. Check this out. Let's go to I don't know, Baba. You've got separation, separation, separation. We're betting this way. But check this out, guys. This is amazing. We drop. Look at the bounce.
21:44 Not this is the halfway mark, right? Here's your halfway mark. Here's your 25% mark. Boom. New lows. Now, check this out, though. This is interesting. Now, let's take this drop. Now, let's split that in half. You go past the 50% level. So, now there's no new low. This green taking out red can be a quick buy if you like. So I I I just want you to be able to understand the probabilities are very important traders. After a drop, all right, if it's a sharp drop,
22:29 there can be a buy opportunity there, but you can't expect more than 25% if you want to be consistent and accurate. If that bounce is less than 50%, odds are huge that the next decline goes to a new low. If that rally goes further than 50% by a lot, then that pullback sets up a nice trading opportunity for you. And we utilize this tactic all day long, every single day. 50% 25% 50% 25%. And I want you to do that as
