most traders spend their time analyzing technical or fundamental analysis and though these are very useful they don't determine long-term consistent success long-term consistent success consists of three steps unfortunately most traders are interested only in picking the right spots on the chart to enter it limits the number of trades and without implementing the proper money management and trading psychology the long term consistent success is going to be hard to achieve you can have the best strategy in the world but if you don't handle losing trades properly if you don't size your positions properly in that case
you become highly vulnerable when the market goes just few points against you it's important to understand for trader that in trading business losing trades are part of trading you're going to experience losing trades as a developing trader especially you're going to experience a bunch of losing trades and it would behoove you not putting unrealistic expectations to achieving high win percentage 90 95 plus win percentage is extremely rare and only happens the best of the best traders and even then you're most likely not going to be able to make the exact trading results everybody's mental makeup
is different everybody comes from a different background everybody's trading journey is completely different and you cannot mimic others traders results everything starts with one single losing trade because if you're not able to handle losing trades properly if you don't fold the rules of your strategy and your money management system doesn't matter how successful the strategy is if you don't follow the plan for that reason you need to find a way to find losing trades acceptable by making proper position sizing a lot of times trader experience multiple losing trades in a row and they think themselves
that they need to make it up so much to get even break even that they might as well just keep going keep digging i might as well blow my account and start over and this happens often traders a lot of times blow their account like this because they don't have predetermined set of losing trades when they're stopped trading for the day and they live to trade another day don't blow your heart and capital on a one single day this is a common boom and by cycle when traders make seven days consistent profit small little profits
and they give it all back in one single bad day then they make weak consistent profits and they give it back on one single day boom and bus cycles nothing to do with the strategy accuracy even traders they blame the system it has nothing to do with the system nothing to do with the market market is not against you you didn't handle losing trades properly you probably got tilted and it resulted in blowing the account number one way you're going to protect yourself is you're going to select the proper amount of capital you're willing to
lose the risk capital is the amount of money that you would be comfortable losing and if loss would not greatly affect your current financial situation a lot of traders find a fancy strategy on youtube and they instantly picture themselves creating a lot of money they don't even take into consideration the possibility of blowing the account your starting capital should be only a small part of your net worth that means you should not be borrowing money from your family you should not be withdrawing the savings accounts it's not the money you pay to rent with and
that's the money you repair your car or buy groceries it's only the money you saved up on the side that you don't care about if lost before you go live first you need to prove your profitability on sim you cannot go live unless you've proven you can create a consistent money for a few months on the simulator you don't have to do it for years but you for a few months at least you need to prove you can do it consistently a lot of traders they jump in too quickly thinking that they're ready they're blowing
their hard earned money and it would be better off if you just waited a little bit more been a little bit patient and then saving the capital once you're ready to trade live what should be the starting capital for a scalper of s p 500m in futures i would recommend twenty five hundred three thousand dollars you're going to have enough funds for 2025 trades some traders recommend starting with 10 000 and it would be great if you can acquire that amount of money to start with you're going to be risking only one percent per trade
but this is enough money for you to have enough funds for 20 25 trades you cannot start with 1 000 account even though margin is 500 you're going to take few losing trades you're going to be approaching the 500 dollar margin call and they're going to affect you psychologically and you're not going to be able to make money you're going not going to be able to recognize the proper opportunities in the market you need to have room after you're losing trades you need to be comfortable and psychologically stable if you're going to blow your 3
000 account what makes you think that you're not going to blow a 10 000 account if you can't make money within 30 trades and you're going to blow your 3 000 account that is for sure obvious that you're going to blow 10 000 accounts save your money if you can't make money with account like this go back on simulator prove your profitability there after a few months come back and try live common rule in trading is that you should be risking one or two percent of the capital per trade and this is the ideal scenario
you can risk a little bit more but you just have to make sure that the total dollars at risk are within your comfort zone you cannot be risking 20 or 30 of your capital per trade would you be okay with losing 60 of your beginning balance on just three losing trades you wouldn't and yet a lot of beginner traders approach trading like this i started like this i started with little over a thousand dollars i thought it was nothing i'm okay with losing this i thought i was going to make few winning trades right off
the get-go so i have a little bit of a cushion what ended up happening i had a two losing trades my first trades life were two losing trades and i instantly realized how close i am to the margin required i easily realized how low uh amount of trades i can take before i can close my account and that of course affected me psychologically and if you are worried about losing money that will affect your trading and you will lose money you have to trade so small the one single losing trade is completely insignificant trading is
not about trade by trade basis it's about series of trade you have to risk small you cannot get shaken by one losing trade if you feel any sort of jitters after you lose one trade that means you're trading too much or you're too much emotionally invested every trader should limit the number of trades per day they take and limit the number of losses per day if you take two losing trades in a row take a break take on 15 minutes clear your head get back if you take a third losing trade close it for the
day it's not worth it keep pushing it because a lot of times you will close it come back next day market is going to be easy it's give you easy setups you're going to be in the zone you're going to make all the money back and then some and you would be saying to yourself wow i could have blown my account so easily had i just waited one single day that happens a lot it's never worth keep digging the whole i know that a lot of traders they have a few losing trades and they think
to themselves that it takes so long to make the money back that they might just well boil the account and start over again no with proper money management system we're going to talk about if you have good risk to reward ratio you're going to make the money back easily you need to limit the number of trades per day you take as well you cannot be too greedy it's about finding the balance if you have two or three winning trades in a row i recommend calling a quit for the day and on a high note if
you have three pre-winning trades in a row and you take one losing trade you're probably going to take take even more trade because you picture yourself with a 3-0 winning date and you take one losing trade so you want to make a little bit more money and if another trade is a losing trade again you're getting close to break even you're getting now completely frustrated had you just start with 3-0 that would have been much better every single time you place an order in the market you're exposing yourself to risk if you are 2 or
3-0 for the day don't push the luck no more of course if the day is extremely easy trend day or you can read the price action correctly of your of course if you're advanced trader you can take a little bit more trades but most traders are better off if they just don't be too greedy and take their money and start trading next day always set the stop loss stop loss protects you against yourself by putting stop loss in the market that tells you about yourself that you're accepting the possibility that the trade may lose by
every single trade place in the markets there is a possibility that this trade may lose and for that reason you need to accept the risk and put the stop loss in place stop loss should always go one tick below the signal bar and you should never move the stop loss if you keep moving the stop loss what does that tell about you that means that you're refusing to admit you're wrong you're afraid of losing the money and taking the hit now you want to give it a little bit more room for pullback so you can
ride it out and the market goes in your direction that never works you will blow your account like this that's a horrible money management system you're going to need 10 more trades to make make it up on one single stupid losing trade always set the stop loss order never move the stop loss order and let the trade play out if you have a losing trade you'll learn from it and you start it from it traders should place their stop loss one take above or below the signal bar they're entering the reason because is using the
price action structure that helps you protect the stop if the market reverses on you your stop loss gets taken out and you made the back call you're going to make it back on the next trade you cannot move the stop loss you cannot tweak it and put it in the middle of the bar because there's going to be a noise there's going to be a pullback and you may get stopped out prematurely even though the trend ended up working so on the paper you lost money but when it comes to strategy accuracy your strategy produce
a winning trade bad money management system is going to make you lose money even though the strategy accuracy is working on your side you always put the stop loss one tick above or below the single bar what to do if stop loss is way too big and you're uncomfortably risking that amount of money scale down a number of contracts do a number you are uncomfortable with risking or you can use limit orders energy close and further back into a bar this is the advantage of the minorities you can decrease your stop loss or you can
also increase the possibility of your target profit being hit if you trade regular es take the setup on microammonies in worst case scenario you can skip the trade but if you skip the trade always mark the setup always picture yourself taking the entry you want to get the experience you want to picture yourself taking those setups according to the strategy always mark the setup and act accordingly as if you would have taken that trade when can traders exit their positions early beginner traders should never exit early from their positions beginner traders should always let the
position run if it's a losing trade learn from it because you don't have enough experience to recognize that the market context is changing and a lot of times beginners they exit their positions and the trade ended up working and they're making their learning process even longer that way never exit the position early if you're being a trader advanced traders can exit early when it's a congestion or consolidation period if you enter about this bullish bar this is your entry you put your stop loss one tick below because you don't want to move your stop loss
you can get started on the noise after one hour of market not giving you clear direction this is a chance for a trader to pack his back take the money at break even and not risk anything because if market cannot make a clear decision where it's one to go within one hour that tells you that anything can happen in the market it can break out at either direction and your first intention your first analysis was a little bit off money management for scalping trader scalp trading is about taking multiple trades per day for a brief
period of time swing trader can make money on 50 win percentage because he cuts his losses quickly and he lets his profits run as a scalp trader you're quickly in and out of the market with small profit and you don't care about the direction afterwards there's a huge advantage that you don't have to predict the market consistently you can be just right for your small tiny position and you're out of the market with your profit what is the minimum scalp size in stock should be 10 cents in es should be one point and forex should
be 10 pips however your goal is to always have one-to-one risk to reward ratio a lot of times in scalping this is hard to do a lot of times you risk two to get one but if you risk two to get one or three to get one you're going to have insanely high win percentage which is going to put a lot of pressure on a trader the goal of a scalp trader is to find the perfect balance between being quickly in and out of the market and not leaving a lot of money on the table
you cannot afford to take microscopes you're going to get kicked on the commission's you're going to have one losing trades that will wipe out 10 winning trades institutions can afford to sculpt one or two ticks regular retail trader most likely cannot why do i scalp for two two and a half points in yes starting out i used to sculpt for one point because this is the most commonly recommended target profit but i ended up having days like this i had three winning trades i took four ticks on one sold 12 ticks winner i took one
losing trade it was slightly larger than the average 8 to 10 ticks let's say 12 ticks and i ended up being break even even losing money because of the commissions so i was being 75 right for that day so the strategy is clearly working but i'm not making any money if anything i can't even lose money on the commissions and that put immense amount of pressure on me because if you have this happen what will that do to you if that you will be forced to take the next trade you will jump the gun because
you want to make the money back if one losing trade can wipe out your three winning trades you will be forced to take the next trades quickly because you want to make the money back that you already made and it will force you to take developing trades trades that are not even there also this will make you fear losing trades tremendously as a trader you have to accept the losing trades it is inevitable trading has an element of randomness patterns repeat consistently but not on a trade by trade basis and if you're afraid of losing
money that means that you're going to skip the setups and you're going to only take the setups you think they are the best but if you're afraid of losing money you will end up losing money so the pressure is immense so for that reason when i adjusted my target profit to approximately reach to one to one to risk raw ratio i knew that if i have a one losing trade it means completely nothing i can make the money back and then some on just one single winning trade and that put me in a zone tremendously
i don't even think about losing a trade losing trade just part of trading it's completely fine with this also if i had i used to backtest it and i figured out if i follow my strategy perfectly if i take the high probability setups at the key entry point the ease 95 plus at least easily work for 8 to 10 ticks and as the scalper your job is to find the balance between being quickly in and out of the market and not leaving money on the table so i didn't want to leave money on the table
also you increase the chance of catching a runner because a lot of times if you hit one point target profit the market will pull back take your runner out and then continue in its direction but if you make your target profit a little bit larger you will ride out the pullback your runner is still alive when traders are afraid of right off the bat going for eight ticks great transitioning phase is starting for six tick target profit because if you're used to sculpting for one point and right now you find yourself sitting in a trade
for a long period of time a lot of traders they can't handle that they want to exit the trade quickly they want to take the profit quickly and this is why a lot of traders don't like really increasing their target profits because they're too anxious they want to take the profits now they want to sculpt quickly and the longer they wait in the market they feel like the odds are higher there will not make the profit this works short term but long term on consistent basis you're better off having a one-to-one risk to reward than
going for four ticks of course if you have high enough band percentage you're a great trader you can easily go for one point it all depends what suits your mentality the best but most beginner traders are going to struggle to keep consistently 75 but with proper money management and the proper risk to reward ratio you can make consistent money with six stick or eight tick target profit and if you trades other market than smp 500 many futures how do you identify the proper target profit well you can use atr indicator or you calculate the average
stop loss in the markets and you will try to make the risk to raw ratio close to being one to one here's a recent trade that i took second entry short of two key entry points buy only went for sixty target profits because i wanted to have enough room to these lows so price broke lower filamentary limit order instantly pushed in my direction and i made quick easy six ticks well this is a perfect scenario isn't it well it's not this is very short-sighted because what ended up happening had i gone initially for my eight
ticks i would not have been filled on the one single bar like this on a six sticks i would have to write this out i would have to endure the discomfort but what would have ended up happening i would have made the eight tick target profit right here and my runner would have survived because this is the initial entry and you put your one swing contract your runner at the break even position you guys can see the breakeven position wasn't hit so i ended up leaving 11 and a half points on the table and this
is what i mean scalping for small profit sounds good very shortened but in the long term if you go for eight to ten ticks and you incorporate the runners your runners have much higher chance of surviving with the eight tick target profit because you will not get stopped out on the initial noise course it all it is subjective and it all comes down to your mental makeup if you can make money consistently one point it obviously suits your personality you're great and handling this great stick to this this is just my opinion what helped me
as a developing trader you want to start with one single contract and after you've proven you can consistently create profits you can start adding on more and more eventually you can divide your positions into twos two thirds of the contract size is going to be your main portion your skull portion and one third is going to be your runner you're going to maximize the profits the most because as a scalper you're mostly interested in short term profits you're not predicting the market what's going to do in hours for now you're just interested in quick easy
profit but what can happen your entry can produce a substantial move in the markets and you don't want to leave money on the table and for that reason you're going to leave one position open you're going to scale out so you can capitalize on the potential profits we're going to finish off with comparison between stop and limit orders and why i only use limit orders stop orders will allow you to never miss an entry and this is a great great advantage because on limit orders as a trader you need to wait for price to tick
one tick above or below your setup you need to wait for the tick for the trigger because the market may reverse and the entry may not have ever triggered so you always need to wait for the trigger then you need to wait for price to come back and fill your limit order and of course it can happen the market will rally in the direction and it will leave you behind that can happen it suits my mentality the best that i'm okay with missing an entry what i like doing more because limit orders will allow you
to decrease the risk the further back you place the rim in order the smaller your stop loss is if the stop loss is smaller i'm losing much more money and thus i'm able to completely remain focused and take more trades in the future also there's a better probability that the scalp will be reached because your target profit is lower and lower and even though i go for 8 tick target profit 8 to 10 ticks if i use limit orders it's still very mediocre or very minimal move in the market so i can easily reach the
target profit and higher chance of catching a runner because the further back you place the rim in order the higher chance there is that you will not get stopped out on the noise but you will miss a lot of entries this was my personality the best i don't like using stop orders because i'm increasing my risk there can be even a slippage on a stop order if there is enough momentum in the market you can have one or two tick slippage even though it happens extremely extremely rarely in the yes so i'm gonna see you
guys the next one take care buddy
