In recent weeks we have seen a lot of volatility in the markets. I guess I should point out that it is not uncommon to see volatility at any price level. Volatility is part of the environment in which we work. Knowing that the market is volatile, I would assume that most traders want to enter trades as soon as possible, once the trade setup is confirmed. Also, I suspect that most traders are looking to get out before the market pulls back and cuts into their profits or moves fast enough for the trade to go into negative territory. These ideas just make sense.
So why does the trading world insist on e-mini scalping with tools that delay price action by several bars?
I am the first to admit that lagging indicators may have a place in swing trading as longer timeframes are involved and larger market moves are sought. Swing trading and e-mini scalping are polar opposites when it comes to technical trading. Swing trading requires patience and discipline, where scalping is like hitting a fastball at 90 mph. There is simply no time to carefully consider what might be the proper course of action to enter an e-mini trade. Both styles of trading require a lot of experience and technical trading, but the decision process is much quicker when scalping is considered. You make decisions in seconds, not minutes.
Okay, okay… I’ll get out of the gallery, but let’s talk about the tools you need to make proper scalping decisions.
This brings me to the crux of my dilemma as someone who is an e-mini reseller most of the time. I often have a swing trade going if the market is trending, but that’s the exception, not the rule. When I’m busting, I use tools that can tell me about potential trades in real time. I don’t want to know what has already happened; I can see that on the graph. I want to know what is going on right now and only real-time indicators can provide me with that information along with a great deal of chart reading experience. I don’t use a whole battery of indicators to make my decisions, but the things I find useful are:
Order Flow Software
Better volume indicator
volume ladder software
volume profile
Rollback to middleware
Darvas boxes or any dynamic support and resistance software
Chart reading skills, which are the most important component of e-mini scalping
Real-time trading is not a phenomenon I dreamed of. I was taught the skill at a variety of institutions. Trying to scalp with lagging indicators will put you far behind on your entries and exits. Since most new traders tend to start out as electronic scalpers, I strongly believe that they should learn to trade in real time. They should not be taught to trade on lagging indicators. Do you want evidence to substantiate my point? Take a look at the failure rate of new traders; it’s astronomical and I blame a lot on the archaic methodology that is standard practice in most business education programs.
You don’t start a sprint 20 feet behind the other competitors, but trading far behind the price action is equivalent to saddled up with starting far behind your competition. Look at real time trading, there are more than a few books and individuals who defend my point of view on this topic.
