Scalping Is Hard (Until You See This)

to excel as a short-term stock Trader you must learn how to scalp in this video Jeff Holden head of Trader development at SNB Reveals His scalping secrets in precise detail arming you with a major Edge over retail Traders profitable scalping is all in the details I'm Mike belury and we're one of the top proprietary trading firms located in New York City since 2005 and proud to have developed numer seven in even eight figure per year Traders watch take notes and learn from the head of Trader development at SNB so you can grow your trading account

the thing that I wanted to talk about ultimately was scalping right so scalping as Bella said I think when the market shifted in uh 2022 Bella and Steve were sitting there in every monthly meeting and Carlton can attest to this and any of the Traders can attest to this and they said hey guys you probably need to start learning to scalp like it looks like a scalpers Market it looks like that's a skill we need to pick up you know this is coming out of 2020 2021 when all of the money was made on three-day

swings or giant intraday moves or momentum trading and they saw this and it only took us about three or four months of them repeating the same thing over and over for the desk as a whole to realize we needed to get better at scalping we couldn't keep going on going through that draw down getting frustrated and missing out on the opportunities that we have so as we were talking about what I was actually going to speak about with scalping this New Concept emerged and it kind of plays into what Dr steam barer was talking about

previously where a trade is is just you know sort of the price action that's around it but there's a lot more that goes into every single trade and so we wanted to make this discussion a little more about what goes into every scalp even a scalp even a very simple trade starts with a general idea of you have to understand how to execute and the rules around execution but more importantly you want to understand the Catalyst the setup before you get into the trade so that's really what we're going to talk about today and I'll

try and be brief so as Bella said I'm fortunate enough to be in the position where I get to interview the people that we are looking to bring on the desk now at first I was very excited about this role um I thought it was going to be a lot of fun meet all these really excited people um you know talk to Traders all the time you know probably come up with something that was like really cool and and and meet people that are going to be the next big things and then as we went

through these interviews and as we kind of firmed up our desk a little bit more we started setting our standards and seeing what our standards are and one of the things that's really important to us is that every person that walks through our door or anybody that's in our community We Believe has the potential to be a seven or eight figure Trader we truly believe that everyone like Dr steam Barger said if you find the thing that you're very good at you build some skill around that you have the potential to be a seven or

eight figure Trader but let's put that in context how many seven or eight figure Traders do you know anybody two I mean you can't talk about Twitter because like everybody's a seven or eight figure trador on Twitter you know three anybody for four you know four anybody for five okay on our desk on our desk so the it's pretty unrealistic to think that everybody could be a seven or eight figure Trader if the biggest number that anybody knows here is five on our desk we have shark we have Swang we have Raph we have Dan

G we have Traders like Carlton right who's our risk manager and still can put up a big number because he's working in a team we have some of the Traders you met last night we have Max who's well on his way he's in his sevens and he's well on his way to being eight we have Molly who's in the back of the room we have Cam who's in the back of the room we could go on and on and on for the traders that are at 8 at seven or well on their way that makes

my job a little more difficult because it sets a very very high standard this picture comes up because we've made some interesting hires and we've had some traders that come in and immediately think or tell us that they know exactly how to get to that seven or eight figure Mark and one of my favorite stories was a Trader that was two weeks into being live and Carlton's already laughing about this but he was two weeks into being live and he really had cracked the code on trading I mean he knew exactly what he was going

to do and how he was going to get to that seven or eight figure Mark and all he needed to do was identify the two strongest stocks on the day and buy the opening print with 50% of his buying power and then identify the two weakest stocks on the day and short the opening print with 50% of his buying power and the strong one would go up and the weak one would go down and he would make tons and tons of money right Flawless strategy for about two weeks Carlton's morning routine would be at 9:00

he'd sit down 9:01 he would get up 9:02 he would walk over to that Trader's desk and tell him that he's done for the day that strategy didn't quite work for that Trader he's no longer with us but we got the opportunity to learn from him we got the opportunity to learn from everybody that's one thing that we do exceptionally well as a firm we learn but we get the opportunity to learn its scale we have 50 Traders on our desk we have 200 people here today we have a thousand people in our trading Community

we get to learn at scale that's a really challenging thing to do that's the importance of being a part of a community is if you're learning by yourself you're learning as one person if you're with two other people you're learning is three on the desk we're 50 as a community we're a thousand that's an unbelievable amount of scale to be able to learn and set new standards and put processes in place so when you see anything about SMB it is about teams it is about building but it's really about coming together creating new platforms for

us to pull ideas forward so anytime somebody doesn't make it anytime somebody comes in and we think they have the opportunity but they don't make it to us that's a big missed opportunity that's a missed opportunity for somebody to be a seven figure or an eight figure Trader that's a giant Miss how many of the traders in the room have been in a trade and you've seen it setting up right you entered the size that you wanted to enter it started to work in your favor and then you exited your position before you had a

real reason to sell raise your hand I see some people in the back that didn't raise their hand so either you're not a Trader or Steve Spencer raised his hand if you if you didn't raise your hand either you're the next seven or eight figure Trader that we didn't know about or you're probably not really trading that happens to everybody that's a missed opportunity now imagine that at scale over the course of someone's trading career we cannot miss on our desk we cannot bring someone in we cannot invest in people and miss the opportunity cost

for us as a firm is way way too high so when we run into that when we miss what do we do do we sit there and cry or say well you know what that person wasn't going to make it they weren't good anyway we're really good it's them it's not us no we get to work we study every person that makes it we study every person that doesn't but do like Dr steer said we spend way more time studying the people that have the noticeable successes early the standout successes early in their Trader development

and that's how we build a new platform that's how ultimately we get to share things with everybody in this community so when we were studying those successes when we were studying those Traders there were a couple things that absolutely stood out to us and one thing was really interesting because it wasn't in who they were they really could not be more different but when we looked at what they were trading and specifically how they were trading those things we started to identify these very very very specific p patterns and it was a little different than

even people that were in the same name the people that were really having success were trading things a little bit differently you could have the exact same name on you could be trading even the same general idea but they were doing something a little differently we built this platform internally that focused on opportunity selection what does opportunity selection mean to us it's kind of three parts catalyst is the first one Dr Ste barer kind of already talked about that right so catalyst is anything fundamental anything technical it's any real reason for the hedge fund players

that Dr steamer said we could pick off it's a reason for them to be in the stock right if the Stock's not really in play it probably doesn't have enough participants to really give us Edge we're competing against market makers we're competing against funds that we have no business competing about but when we go in and we have the right Catalyst we at least have a place that we can start number two was setup so we have Catalyst and setup setup for us it's any technical pattern I have to read this thing now a technical

pattern that describes what is happening in the price action that's a pretty vague definition right but when we break it down to the setups that we trade well as a desk there's essentially listed right here there are some variations but this is a big number of those setups that we trade well and again Catalyst setup well what do we do with that Catalyst and setup that's where we have a trade when you have the combination of catalyst and setup and trade you can take any of these trades and in some catalysts and some setups these

trades will not have Edge this is the problem that we've run into as we've paired quants with Traders is if you ask a Trader a Quant to to back test an idea that a Trader trades it's really tough to filter that out if you take a mean reversion short swing on a stock that's just breaking out what do you expect to have happen I mean I see some heads going like I wouldn't do that like that's exactly what it is is you want to take the combination of catalyst and setup into a very specific trade

but that means you have to know what that trade is to begin with you have to understand why that trade has Edge to begin with the Catalyst and the setup are just checks in the favor of the trade and they help us delineate the difference between A+ A and B and in your playbook if you're trading anything that's less than a b opportunity Carlton's probably going to be over at your desk pretty quickly telling you to stop trading because if you don't keep that threshold high enough your EV is not going in the right direction

at all so there we go we're Catalyst setup trade to give everybody a head start and to kind of mirror what we do on the desk what we've built with the scalp radar um if everybody's okay I'd like to Showcase this entire process it's one thing for us to sit there and say this is what you do it's something else entirely to actually walk you through this as if you guys were all interns on the desk and we were actually teaching you this so we're going to do it in about 10 minutes usually it takes

like an entire day but we're going to walk through it very very quickly so we're going to take the Spencer scalp which is not a scalp we've taught we've talked about probably in some meetings like in the 11: a.m. we'll talk about it um but we haven't actually taught it and and we'll be teaching it moving forward um real quick story about Steve and why it's called the Spencer scalp so I I got to sit next to Steve on the desk and there was one time that I was trading and it was like a a

intraday range that was built out on a really good Inplay stock that was breaking above a level and like I bought the the intraday breakout right and like I bought it and I thought instantly it was going to go that's what that's what happens on intraday breaks and it just sat there and like 10 minutes into that trade the thing was just popping around and I started to get that like shot clock in the back of my head like this is not going to work this is not going to like what is happening and Steve

just casually goes hey Jeff what are you trading and I mentioned it and I heard his fingers click to the the ticker and he looked at it and he goes oh interesting and I was like that doesn't give me any more information interesting is not helpful to me and he goes let me know in eight minutes and I was like that was oddly specific like eight minutes and so eight minutes later I was like hey Steve I'm still in this thing and he goes okay in a couple minutes I'll probably buy the breakout and I

was like thinking I've been on this emotional roller coaster wondering if this trade's going to work or not for 18 minutes and you're telling me in two minutes you're just going to buy it and I was like there's no way this works in my mind I'm like this this guy like come on really 2 minutes later it breaks out he buys it and I swear it was like he called Goldman Sachs and told him to start a buy program on the stock because it just went up and like it went up one measured move he

sold a quarter two measured moves he sold half three measured moves he sold the thing the entire thing and he just gets up didn't say anything at all just gets up and walks away and I was like this this was like a mic drop like what are you doing like this is unbelievable and then he did it again like later and finally after the third time I was like I have to learn what he sees and so he taught kind of the basic principles of this and then It ultimately became the Spencer scalp so the

core principle here is you're trading a stock in play You're trading a stock in play that breaks above an intraday level Steve's point was what's happening on a stock and play that gets a an intraday level it's not that it gets above a level it's the way that it moves up into the level and gets above it and you can see from the low that was put in all the way to the move above the level the sustained consistent buying pressure and Steve's point was very interesting which was how do funds stay involved in stock

say they have a ton to buy do they just buy it all in one one go no any buy program has this flux between passive and aggressive buying and he had observed over his trading career when he started he talked about he and another Trader would just sit after hours and look through charts look through charts for hours day over day week over week month over month and they would pick up on these little patterns that probably nobody else would see so he had observed that that kind of a little bit more aggressive buying would

turn into passive buying and if it held above that level for 20 minutes that means the shorts were likely to not get paid but then it also was likely that that by program was still there just passively buying and it would kick onto that active buying trade again so once the 20 minutes is held above that level you can then look for a breakout so you could take the initial trade if you wanted to but if it doesn't go don't freak out just sit there and you have your stop in place well what I loved

about this trade and why we adopted it is it starts with core principles so where would your stop be for this trade yes exactly right below the range right A lot of times we just do two cents below the range where would your entry be on this trade thank you yes as soon as you get a range break right you have your stop and your entry this is one thing a lot of Traders struggle with how are you calculating your share size no I mean you can do that but Bas on Range based on the

Range yes you can calculate your share size because you know where your stop is and you know where your entry is so even before the entry is triggered you can figure out exactly how many shares you should be buying so if you get an A version of this setup you're risking a risk if you get a B version you're risking B risk you know that in advance it slows down the entire process of making this trade because of Steve's observations you could also pick up on the expected moves so we talked about it one measured

move right me everybody know what a measured move is measure the low of the range to the high of the range added to the high of the range that's one measured move so you're not exiting anything until gets to one measured move and then you're exiting a quarter of your position two measured moves you're exiting half of your entire position and then you kind of keep that trailer on to see if it goes to three measured moves after your second you move your stop up to break even you can move it up even higher if

you really want to but the structure of this trade is what we've done with everything in scalping this set the tone for us to slow everything down how how many times you get in that trade and we talked about it earlier everybody raised your hand you got in and you sold way too early a lot of times you sell way too early because you don't have the appropriate structure you don't really know where you think it's going to go you're just kind of like oh man I hope it goes there but when you have the

right structure you can lean back on that you can slow everything down you have the right structure you have the right size and then we're going to talk about the combinations that give you the best probability so this this is an a version of this trade again we have A+ a b usually on our desk anything below a b you don't touch an a version of this trade has a catalyst that has to be fundamental we don't trade this trade as an A version on a technical breakout sorry you just don't there has to be

a fundamental Catalyst there has to be something that is going to change the news the expectations of earnings in the company the setups that Steve likes the most is the day two he loves it when you have a really good Catalyst on day1 and the stock kind of goes nowhere he talks about it between um above S1 and Below R1 or really what S1 and R S2 and R2 or something like that yeah S2 and R2 and then on day two it gets above that level holds that level that's even even better pattern that's why

he likes the day two the most you can also get a day one on a breakout breakout of a higher time frame range right and then the trade is what everybody just learned it's the Spencer sculp this is the B version of this trade they're very very similar right but we're opening ourselves to more opportunities we're just going to put less risk on in these opportunities than we would in an a trade so it can be a fundamental or a technical it could be that technical breakout and you can always just flip the trade so

when we say breakout it could also be a break down it's the same same thing but and execution is exactly the same as well uh the shorts tend to to to puke out a little faster though just so everybody knows um but we're adding you can take this trade on a trending day in the market Garrett's going to talk to you about identifying trending days this is a great trade on a trending day in the market you can also take this trade after a failed break out or in this case if you're going along a

failed breakdown so when something breaks below a level gets back above a level on an intraday basis or a higher time frame basis and then has this exact same pattern that's a b version of this trade it's the same trade you're just allocating completely different risk to it what was so interesting about when we went into this Catalyst setup trade combination and we started structuring our trades appropriately was that exactly what Dr steamer said of you have to identify who you are beating in the market we realize by structuring things from a catalst tread up

setup trade perspective we're actually just describing the way hedge funds and institutional funds were likely to behave so just by doing Catalyst setup trade we could identify the highest probability ways in which they would behave that give us an edge the thing that was so interesting for all the developing Traders was it opened up the doors to them saying yeah that's not really my trade because if the participants that were in the stock on that day weren't acting in that way we didn't have any Edge whatsoever and you need to be able to back away

from things that you don't have Edge in that's a just such an important part about being a Trader so through this platform we've identified a way to capitalize on the edges that are present a way to size appropriately and then most importantly we've identified a way to basically feel confident that you can just say no we do all this in the scalp radar we do all this in the scalp radar program um we built it for the incoming classes and then as Bella said like they liked it so we made some modifications and and it's

such a joy to be able to share that with everyone you know we think of SMB it's obviously the desk but it's really the community and we learn so much from everyone and we do think everyone on our desk is special we think everyone that's in this community is special everybody here today is very special and thank you very much I think we have time for one question before we uh take a little break Jeff when you looked at the chart where you're identifying the Buy pressure if you don't mind going back there and saying

identifying those pieces of the buying pressure yep so look at it off the low and I we probably should have put a higher time frame chart on there but look at it off the low right so what what think about the psycholog we talked about the psychology of Trapped um shorts earlier right if you're short this on the first five candles in this chart what are you thinking are you feeling pretty good or bad Justin actually does an amazing job of this in the bar by bar work if anybody's seen his videos like I learned

so much from watching his videos because of thinking about the way these are happening I am super guilty of looking at a chart and seeing like what happened and not thinking about how it happened and he's helped me slow down so much and thinking about how it happened so think about how this entire thing played out right it looked like for a minute that this stock was going to break down right what did it do it got above vwap which is that pinkish line and then more importantly it held what what's the blue line anyone

want to guess 9 EMA 9 EMA yeah 9 EMA I use the nine I think Justin uses the eight some other people use different ones but basically we're all within like one EMA of each other so I don't think it's really an exact science but look at the price action around that EMA what's happening it's riding the EMA yes it is not able to get below there so what's also not happening it's not extending away from there either right so it's just riding that em Ma so you have an aggressive enough program that it's there

right but something that's not chasing at that point and then what happens after that when it gets above it holds right so it stops going down and it's now holding above that level if you're short this based on that little tiny blowoff how good are you feeling after one minute you're probably feeling pretty good when at the first candle within that that box you're probably feeling pretty good right stock blew off it's going to turn lower what about minutes are you feeling as good what about 10 minutes are you feeling as good what's so beautiful

is right at that 10:30 Mark to 10:35 that's that last moment of Hope for the shorts right it like looks like it's going to break down and maybe they're going to get rewarded but then what happens that's where that change really starts so for all of us that focus on reading the tape which everybody on our desk you have to learn to read the tape because you'll identify that before the Breakout actually happens you'll identify that change on the tape you'll recognize what's happening within the pattern your risk reward changes your trade changes