All right everyone. Hey, welcome, Thank you guys for tuning in here! So this is a live broadcast and we're going to be talking about Scalp trading. Scalp Trading for beginners. This is a beginner day trading strategy, but it's not just for beginners.

Anyone can scalp trade whether you're a beginner, intermediate, or an advanced trader. During this free class that I'm streaming here on Youtube, I'm going to break down for you scalp trading as a strategy: how I find stocks to trade, where I get in, where I get out the criteria for a scalp trade, and I'm going to show you a bunch of live examples. So those of you guys tuning in live, thank you for being here today! Super excited to be teaching for you guys! Um, appreciate you hitting the thumbs up and being tuned in to the channel. You're welcome to subscribe if you'd like that way.

You get the notification whenever I go live. but um, you know you, you do that when you're ready. so let's see. Um, since everyone's here, I'm going to give you my disclaimer before we get started, which is a reminder in case you didn't already know that trading is risky.

Most beginner traders lose money, so I encourage you not to trade money that you can't afford to lose. Take it slow and I'm gonna give you let's see whiteboard here. So reminder trading is risky All right. And now let's go ahead.

I'm going to run my intro and then we're going to jump right into the class. So okay, so here we go: scalp trading for beginners and I'm gonna keep my whiteboard handy here because I may need it a couple more times before the end of this class. So I'm gonna go full screen And by the way, you can see, uh, today I have already taken a number of trades, so uh, it's about one o'clock in the afternoon. I'm not going to be trading.

Well, who knows. maybe I'll trade during this workshop. If we end up seeing a really good example, I'll take some trades, but I probably won't be trading during this, uh, live event. I'm gonna be focusing just on teaching you scalp trading, but uh, vero, Uh, Veru The biggest winner today.

Just in terms of stock selection, this is what this one's going to be. a good example of the right type of stock to be trading and why scalps could have been good opportunities on this particular stock. All right, So let's go ahead and jump in here first. So let's start high level.

What the heck is scalp trading? Um, you know you're probably aware you may have heard of scalping before. Um, and there's a couple different types of scalping. Uh, there's the the kind where you lose the top of your head. Now that's the worst kind.

Um, then there's the kind you might have heard of where someone buys some tickets for a concert and then sells them out front of the concert hall to people going in. A scalper, right? You may have heard that. and typically what they've done is they've bought it and then they're reselling it for just slightly a higher price. And now sometimes they price gouge and that's not great.

But the scalping by itself is, um, totally legal and you're allowed to do it both with concert tickets and you could do it. Um, on the trading side, and so on the trading side. Scalping is when you buy a stock and sell it very quickly. So essentially it's a quick entry and a quick exit.

You're trying to buy it for one price and sell it a few minutes later, maybe a few seconds later for a little bit more than you paid for it. So scalp trading is a day trading strategy of taking trades around key technical levels, key technical areas, And I'm going to show you actual chart examples of this. But you know, for right now, let's try to keep it high level. Some of you guys are driving while you're listening to this.

Some of you guys are, you know, walking around the house and you just got this on the headphones. So I'm going to try to keep it high level, explain it in a way that you can picture it, and then we'll get into the details a little bit further into the video. Those of you guys just getting tuned in right now? please do me a favor and hit the thumbs up. Um, I wanted to do something special for this uh video which is for every person that hits the thumbs up.

I'm going to donate a dollar to a local charity and at the end of this broadcast, we'll see how many thumbs up we've gotten. If we've gotten a thousand thumbs up, I'll donate a thousand bucks. If we've gotten three thousand thumbs up, I'll donate Three thousand dollars. I will also donate two dollars for every time you share this video.

The only thing I want you to do is type in the chat feed that you liked it and you shared it All right. So if you like it and you share it, not only will I donate uh, two dollars for every share and a dollar for every thumbs up for one person today and I'm gonna randomly choose at the end of this video, the end of the broadcast, I'm going to give you a free membership at Warrior Trading. All right, So that'll be for people that have liked and shared comment below that you've liked and shared. All right.

So um, so day trading is a strategy of taking trades around key technical areas where you expect to see a surge in volume taking small percentage gains, but with bigger share size. Scalp traders are typically more active trading in and out of a stock many times throughout the day. Now, a scalp trade should work instantly if the scalper has a good read on the level two and the tape. That's just the time in sales and is correct about the importance of that technical level.

Where they're trading, the trade should work instantly. Scalp traders will often have a one-to-one or even a negative profit loss ratio. Now, this is a little bit of the drawback, and where it can be a little tricky for beginners, the one-to-one profit loss ratio means your average winners and average losers are the same. So, and this has always been the case with me in my trading.

My average winners are about 1300, average losers are about 13 1400. It's about a one-to-one ratio, but you can be profitable with a one-to-one ratio as long as your accuracy is higher than 50, right? That's just that. I mean, that's basic math right there. If you make a dollar on average and you lose a dollar on average, if you're right half the time, you're break even.

But if you're right 75 of the time, you're profitable. So a scalper typically will have a higher percentage of success, higher percentage of accuracy, and you know what that's attributed to is attributed to taking profits quickly. Now, what's kind of interesting here. Um, is that.

uh, you can actually in a way adjust your accuracy based on the way you trade. So for instance, if you get in and you take profits really quickly, your accuracy is naturally going to be higher because it's not super hard to predict when something is going to go up 5 cents or maybe 10 cents. Now, if you get in and you don't take any profit until it goes up 50 cents, you may have trades where you were initially right and then they turn around and you end up being wrong and you end up losing money. So as a scalp trader, anytime you're right by at least 5 or 10 cents, it's going to be a winner.

And that's what keeps your average so high. However, scalpers scalp traders rarely produce home run trades because we're focused on small base hits, consistent small base hits, and so sometimes it can feel a little bit frustrating because you might see a stock go up significantly as we saw with Veru from 8 all the way to 12 and you got in. You got out, You got back in, you got back out, you got back in, you got back out and you feel like man, if I had just held my initial position, I would have actually made so much more money. And so there is a time and place for both being a scalp trader and also going for a trend trade or a longer hold time.

Sometimes it could be hard to do both if you are trading in just one account because you know you have to make a decision. Is this going to be a position that I just take quick profit on or am I going to hold it for the bigger move? So you know if you're a beginner trader, you may be more inclined to just take those those quick gains as you have them All right? So uh, let's see. let me go back to full screen on this. Um, and oh, I have what is scalping here And the other um definition of scalping, which some of you may be aware of is on the broker dealer side.

So broker dealers are not allowed to scalp trade. Scalp trading On the broker dealer definition is when a broker buys a position right before they execute the position for a client. like if they have a client that calls them and says hey, buy 50 000 shares of Apple if they go and they buy 50 000 or 10 000 shares, then they place the 50 000 share customer order and then take the profit. That's a scalp trade.

You're not allowed to do that as a broker dealer. so that's a form of scalping that is not allowed. But for regular traders who are not broker dealers, scalping is, um, is totally okay. Uh, and scalp trades are typically.

I mean, they're short. They can be one to two minutes long, sometimes longer, sometimes shorter. They could be as short as one second, but they could be a little bit longer as well. So here are some tips for scalp trading: Trade the hot stocks each day.

Based on the watch list that you create, these stocks must have a few things in common. They must have high relative volume because that accommodates your ability to get quick entries and quick exits. High relative volume typically means the liquidity is going to be better. It's above average volume, so people are talking about it.

You want to be trading the most obvious stock. If you're trying to employ a scalp trading strategy on a stock that has very low relative volume, you're you're going to get in and nothing's going to happen right? Stocks that have high relative volume. Those are the stocks that at key technical levels will see big moves, sometimes up or sometimes down depending on of course which direction it's going. but that's where you're going to get that.

quick resolution and that's what you're looking for. So essentially and I'll jump over to my whiteboard here. So what we're looking for on a scalp trade and I'll move this back as well. Let's see.

so we're going to look for. Let's say we have a pattern and we're going to do it as a line chart here. So let's say we have an Abcd pattern or a bit of a flat top. So we have this very clear level of resistance right around here.

So a scalp trade would be trying to anticipate the break through this level with an entry just under it or just as it breaks. and then as it surges through, what would we expect Volume bar will be high volume. Through this area, we might have seen high volume on the move up. high volume and then it moves down a little bit.

the volume bars and then it comes back up again as it comes up for that second attempt. Then the volume comes down a little bit and what we want to try to predict is the volume spike that's going to occur as the stock breaks through this critical level. That is a technical level that's an apex point, and oftentimes these correspond with, uh, psychological areas of support or resistance. So this could be like six dollars even.

Or maybe it's 650. you know, 650 half dollar. That's very common. So in this case, your entry is as it's coming up right here.

You might be buying right as it breaks this level. maybe. You see there's a seller for ten. Fifteen thousand shares.

At six. Six dollars, Six fifty. Whatever the price is, you see it starting to go from ten, then it goes to nine, then it goes to eight, then it goes to seven and it goes to six. And you punch that order because you see on the time and sales, you can see on the tape how it's clearly moving up and then you jump in right there for the break through that level, you're long at the ask.

You look for a quick extension high volume bar and take a little profit off the table. Now if you're a more aggressive trader, you may turn that scalp into a bit of a more aggressive trade where you add as soon as it goes higher Sometimes What we also see which is very common, we'll see a break of this level a retest so it breaks it, re-tests and if it holds support, that's along on the first pullback for a move higher. So there's two possible trades here. You can have one trade that's actually on the break of that technical level and then a second trade on the retest as it's proving it's holding.

And as a scalp trader, what's important is that you're taking profit. so you're long and you take profit in this squeeze here. That way, if it comes back and flushes down, you've got a green trade. You've taken profit off the table, and that's what a lot of traders won't do.

They'll be in a trade. They'll have 15 20 cents a profit. They don't take any of it off the table and what ends up happening, it ends up turning into from a winning trade to losing trade. And that's why it's so important to book those profits now.

Uh, yogandra. To answer the question between scalping and trading, they're they're one and the same. Scalping is just a subset strategy for day traders. A scalper who's a day trader could be scalping momentum.

They could be scalping reversals. You know it's It's more of an entry exit strategy and a position management strategy that falls within day trading. So let's see. and I'm going to get my drawing tool.

Where's my drawing tool here? Um, there's my laser pointer. All right. So a couple more tips for scalping. We want to be focusing on the leading gappers and gainers each day.

Those are the stocks that have the highest relative volume that are moving the fastest. and we're going to trade smaller moves 10 15 cents with larger size, maybe a thousand to 10 000 shares may be higher. And this is where as a scalper you do carry a little bit more risk, because essentially what you're doing is you're trying to profit on a relatively small move in the stock. And the only way you can profit on a relatively small move in the stock is if you take a bigger position, right? So you know.

Let's just do the math here for a second. If you go along with 100 shares, 100 shares times 10 cents, how much does that equal? you're up 10 bucks, 10 dollars. But then you do that same trade with a thousand shares times ten cents and you're up a hundred bucks. You take that same trade with ten thousand shares.

and now ten cents equals a thousand bucks. Now, as a beginner trader, you're probably not going to feel comfortable managing risk with a 10 000 share position, But the way I've always traded in a small account is by trying to target 10, uh, 1 000 shares and 10 cents a share. which is about 10 which is about 100 bucks. That's kind of been my goal whenever I trade in a small account to focus on a stock where I could afford a thousand shares.

So if you have a a three thousand dollar account, you could buy 1 000 shares times a three dollar stock. That equals three thousand dollars. in the trade, it goes up 10 cents. You're up 100 bucks, right? It goes up.

That's 10 cents. It goes up 20 cents. You're up 200 bucks. It goes up 30 cents.

You've got 300 bucks. That right, There is 10 growth on your account in one day. And that's not even talking about using leverage. that would just be using cash.

Now, some stocks might go up more and you could always get back in and keep actively trading them as they move higher. And that's something that I do. But as a beginner trader, one of the things that's so important is to focus on one and done get green and then shut it down. Don't keep trading.

So another tip for scalp trading is to buy at breakout points where you would look for an instant move after the entry. One of the challenges with buying stocks during consolidation is that the volume is lighter and so during this consolidation you've got the stock consolidating in a narrow range. The volume is lighter and if you accumulate a large position and it breaks out of the consolidation, to the downside it's going to, you're going to see a big spike of selling volume because it's obviously breaking down. There's not going to be a lot of buying volume and it's going to be hard for you to unwind a big position without taking a significant loss.

And so what I'm more inclined to do is to buy as it's breaking to the upside of that consolidation, which therefore is a breakout trade you're buying for the break through the highs. Now, one of the challenges here is false breakouts and we'll talk about that a little bit more as we get into this Um class. and I'll share with you at the end of this broadcast when I um, when I share with you, uh, who we're giving a free membership to which will be at the end of this broadcast. I will also share with you a couple of um little tidbits that you should know about market makers to help you avoid getting caught in those false breakouts, so stay tuned for that.

Now another tip for scalp trading. So we talked about trading the high relative volume stock. We talked about trading smaller moves with larger size. We talked about buying at breakouts and looking for an instant move.

Now I'm going to talk about being cautious about scaling into a larger position when you start scaling into a larger position meaning you're adding and it's going higher. and you're adding higher, adding higher, adding higher. What you're what you end up doing invariably is sacrificing the initial profit. And so let's go here.

I'm gonna do, um, the split screen here for a second. So um, let's say you have a stock at six dollars here. So the stock's moved up, it's pulled back, and you're long, right there. Which you know we would say that that right there could be a great entry for the break of six, right? That's a nice looking entry there for the break of six dollars.

All right. So you're in there at six and it goes up to 615 625. Now a conservative trader would take that profit off the table. they'd say, you know what? That's my 15 20 cents.

I'm out a more aggressive trader. What are they going to do? They're going to add right here. Maybe it does a little micro pullback just for a second Like this. and then it starts to squeeze up again.

and they're gonna add right there as it starts to squeeze up. And what they do at in that moment is they're now scaling into the trade. So their average goes from six dollars. and if they add at 630 now their cost basis is 615..

So what they've done is they've sacrificed taking that initial profit off the table in exchange for the opportunity to get a bigger trade. Now that's fine, and if this ends up going up here through 650 and then maybe pulls back again and then goes up to 675 and pulls back again and then up to seven, you could continue doing that. You could continue to scale in. So now your average is 615.

let's say you add again at 665 and you double your position. Well, once again now your average is going up so 25 plus 15. So now your average is going to be around 640 right now if this ends up going up to 670. The the cool thing is what initially was a 1 000 share position at six turned into two thousand shares at Six Fifteen and then four thousand shares at Six Forty.

If it goes to Six Sixty, you're ending up with an eight hundred dollar winner, right? That's great, and that's certainly a lot more than the initial hundred fifty dollars if you had just taken your profit all off the table. Uh, when it broke through six and went up to Six Ten. But getting to the point where you feel comfortable sacrificing that initial profit in exchange for the potential for a bigger move that takes first at least a month of consistently hitting base hits And consistently hitting base hits mean means getting in, getting green, and getting out, and not overstaying your welcome. That's so important it's adding adding, adding as it goes higher.

That's for more advanced traders and you will see me doing that all the time. Absolutely, I'm a more advanced trader. I feel comfortable doing that. but as a beginner, that's not the approach that you're going to want to take as a beginner.

You want to get in, get your profit, and then get out. So the fourth tip was, use caution when it comes into when it comes to scaling into larger positions. If you're focusing on being a scalp trader, begin with one entry before attempting scalping and sorry before attempting scaling. As soon as you have a small profit on that one entry, you're in at six.

You take some profit off the table as it goes to 615 initially as beginner trader and this is what I always have done in a small account is I've taken the whole thing off the table. So if I'm in with a thousand shares, I'm up 150 bucks, 15 cents. I sell the whole thing. I'm done one trade a day As a beginner with a small account, That's absolutely got to be the approach because your job is to try to build consistency and we know how hard trading is.

We know that it's risky and we know that most people don't find any consistency at all. So if you can get in, you can get green and get out. That's the way to do it. And what you want to focus there is on accuracy.

Focus on accuracy. Take the best quality setup. Get in, get out, and you're done. Now of course.

one of the challenges, um, with that approach, is that you know you could have the misfortune that that one trade that you took is a bad trade. You end up taking a loss on it. But that's that's life. That's part of trading.

And if you find at the end of let's say a 10-day period of doing that that you took 10 trades and you're right on only four of them. Well, that tells me that you should go back to trading in the simulator because your accuracy, your ability to choose strong stocks to trade is not good enough yet. If your accuracy through that 10 day period is 60 or 75, 60, 70, you're right on Six or seven out of 10 trades. Good.

That's great. You should be Green and do it again for another two weeks. If it's 60 or 70 at the end of that 10-day period and you're red, it's most likely because one of the three trades that were losers, or three or four that were losers ended up being a big loss. So then you have to go back.

You have to ask yourself, what about that trade Gate should have given me a little bit of a red flag before I took it and that's we're going to talk about towards the end when we talk about market makers and some of those false breakouts. So as soon as you have small profit, sell half, adjust to stop to break even on the remainder of the position. So that would be your average cost, your average entry, and one of the things that's really cool is um, you know, with the trading software for instance that I'm using, I can automate all of that with hotkeys so I'll I'll just show you right here. I'm going to switch to my my main account so I've got my my retirement account which is up ten thousand and I've got my main account which I didn't trade in today and I'm actually going to give you a um, kind of close-up here of my keyboard as well.

Split screen so you can check this out All right? So I've got the keyboard right here. so what we're going to do is we're going to pull up Zbzt is the test stock and I'm going to show you how quickly you can do this. Uh, just with keyboards. All right.

So this is going to be we're going to pretend this is a quick scalp trade. Shift one just like that. All right. So I bought 1500 shares by pressing the button shift and one all right.

So shift one, press it a second time. All right now. What I can do If I wanna set a profit target. I can press ctrl and then I can set p for profit target.

Or I can use the semicolon right there or the bracket and right. Just like that, I have profit targets already set. One is at 10 12 for a quarter position, the other is at 10 22.. Now I already set my hotkeys to be based on scaling because I don't want to do one entry, one exit, but as a beginner trader, you might set that.

You might go in and change the settings that hotkey and say no. I want that hotkey to be sell entire position up 15 cents. So as soon as I press ctrl p sell the whole thing for profit. I'm out of the trade and now what you can also do is you can press um, I can cancel this and I can press Ctrl B Stop it, Break Even so that's going to stop the rest of my position at breakeven.

So once I've taken a little profit off the table, stop it, break even and I can hold the rest. Now, I personally don't use stops in any of my orders and the reason that I don't do that is because market makers can see your stop orders and I don't want to show them my cards because I know how market makers will abuse retail traders through stop hunting so I don't do that with 10, 20, 30, 000 share positions. I never use livestocks, but as a beginner trader as you're trying to manage your risk and this is what's really important with scalp trading is that you keep your losses really tight. So for a scalp trader, beginner scalp trader, you may want to use livestock orders to help you manage your risk.

All right. So um, and then I can press on, um, back on this one, Control Q to cancel orders and control Z sell the whole position at the bid and I'm out just like that. So you know very quickly you can move in and out of positions if you're using the right software. And so this is another area where um, we'll we'll talk about that in just a second.

So um, so as soon as you have a small profit, you can sell half and adjust your exit um to your entry point on the remaining position. and then the next tip for scalp trading is to hold until the momentum slows down as you're getting better so you can jump in and if the stock is is squeezing and it's really strong, there's no reason to sell. I mean, if you're up 10 cents, that's great, but that by itself doesn't need to be a reason to sell, right? If you have profit but you're only seeing green on the tape and this thing is ripping up, then that's where I say let's let it ride. Let's see if this turns into a bigger move and oftentimes it will because you got the timing right on your entry.

It was at a key technical level and then as soon as I start seeing some red on the tape or I feel like it's a little extended, or maybe it's approaching a psychological resistance point like a half dollar or a whole dollar. that might be my cue to sell half and then I still might not sell the rest until it comes either back down or until it's just clear that it's not looking like it's going to keep going higher. again. That requires a little bit of intuition because you have to have a sense of is this the type of stock that is going to go higher or is this the kind that's just going to reverse hard and so you know you have to spend some time actively trading and practicing this strategy just like any other before you're going to get to the point where you feel comfortable holding winners a little longer and kind of letting them ride.

If the trade doesn't work out immediately, get out quick exits. You've got to just bail on these because the problem: The biggest risk with scalp trades is that if you're taking profit at 15 cents or 10 cents, you can't have 20 30 cent losses. They're going to ruin your profit loss ratio. And then you're going to need three winners just to make back that one loss.

So you've got to be really disciplined about cutting your losses and you have to be really careful not to get in too high because if you start getting in too high you can Really, you can end up digging a hole and it can create a real problem. So again, you know this is just something that through all my years of experience trading and you know, scalp trading is just a subset of momentum trading where I'm getting in getting out taking quick profits. You know, I I have to remind myself not to hold the losers too long just to be really disciplined and just let him go. And I know that it's easier said than done because as a beginner trader, you know when you get into a trade like that, you get frustrated.

you think I'm just gonna hold this, I'm just gonna. I'm just gonna let it keep going. it'll probably come back up and the next thing you know you can be really, you can be really underwater on a position and then generally a scalp trader, while as a very beginner, you might be focusing on just one trade a day. you know, get green and then that's it.

Once you have a little bit more experience, you may end up starting to take three five trades or more a day being a little bit more aggressive, and that's totally okay. All right. So uh, some of the skills and tools required for scalp trading? All right, this is important. You need to be super good at tape reading, your tape reading, and your level two skills need to be on point.

Understanding the bid in the Ask movement, understanding the spread, being able to read and clearly see when there's big sellers on the ask. This is going to be critical for you being a successful scalp trader. If you're not good at tape reading, you're not good at reading the level two practice. Keep practicing.

Try to get better, but it's going to be hard to be a good scalper if you're not good at that. Scalp trading is not a strategy where you're just going to trade based on charts. It's not going to be a strategy. It's going to be easy to trade.

if you're just on a mobile phone, you're going to want to be trading using desktop trading software, and you're going to want to be really good at tape reading. And you need an ability to make quick decisions. And that means jumping in quickly and jumping out quickly cutting losers. So if you're the type of trader that finds yourself being kind of deer in the headlights and you freeze, you're going to want to try to break through that pattern.

So you don't keep doing that when you're trying to get aggressive. As a scalp trader, you don't want to get caught at the very top of a move and then unable to have the discipline to cut those losses. And then, uh, lastly, a platform that enables fast order execution through hotkeys and routing. I really think that this is important.

You know. Again, I'm not saying you couldn't scalp trade with Robinhood or Weeble or something like that, because I'm sure people do, and I'm sure you could, but I don't think that you would be serving yourself really well if you tried to. I think that you would find more success if you're on a platform that offers direct access routing and has the hotkeys and you can see you know in the little example I showed you on my trading platform, how quickly I can move and add trades, How quickly I can set profit targets. You want to be able to do all of that.

If your platform is holding you back, you need a better platform, right? All right. So um, now let's talk for a second about predicting Algo Spikes. Um, I was gonna save this to the end, but um, why don't we talk about it here and then I'll show you a bunch of live examples before I do that. So during this class I'm going to be showing you guys a bunch of live examples.

and if you want to download those live trading archives, you can do that through this link right here. So um, on this link you will get a copy of my micro pullback strategy Pdf, a copy of my small account strategy worksheet, live archives showing the order execution, and a lot of those are going to be live archives of scalp trading. So I really encourage you guys to download that. You'll get my pre-trading checklist and you'll get a special video that I recorded on holding losing trades too long.

All right. So right on point with what you need to make sure you're not doing as a scalp trader and you guys will also get a copy of my best-selling book titled How To Day Trade. All right, So make sure and if you're enjoying what I'm talking about so far that you go ahead and I'll put a link. I'll pin it in the top of the comments for those watching this later and I'll also put this link in the description so you guys can check it out.

And it's basically continued learning that you guys can focus on on your own time after this video's done. So, a big advocate of you guys trying to educate yourself as much as possible. so I'm going to empower you by giving you some more some more resources to help you do that. So let's now talk for a second about Algo Spikes.

Um, and by the way, for those that are tuning in to this broadcast, um, a little bit late who weren't here at the very beginning? I mentioned that at the end of this broadcast, I'm gonna give away uh, one membership to Warrior Trading a full year of membership to where you're trading. Uh, to one person, We're gonna do. Um, I've got a member of my support team who's gonna be pulling names. We're gonna do a random giveaway Uh, but only for the people who have commented in here that they've liked and shared the broadcast.

So please hit the thumbs up and share the broadcast. And then for one of you guys, we'll do something special for you because you've been doing something special for us by helping support this channel. So thank you so much So What are Algo spikes? Well, algorithmic trading accounts for over 60 of the volume in the markets Now algorithmic trading? Um, these are um, trading algorithms that are running and generally are being run by institutional traders and or market makers all right now. Uh, we look for key technical levels where we are expecting a breakout.

A breakout takes the form of a surge of buying volume caused by a combination of short sellers stopping out and long biased traders going long plus by stop orders, triggering long positions at the market and also manually entered limit orders for buying at the at the limit maybe, but just above the current price. So how do market maker Algos respond to spikes in buying and selling? So let me let me pull up the whiteboard here for one second and I'll just give you kind of a little lesson on this. Um, so let's see, let me move this back over here. There we go.

All right, So let's just talk for a second super high level about the purpose of a market maker. So a market maker is making the market all right. So when we're looking at a stock, we have the bid and we have the ask right? And so if we have a stock that's trading, um, six dollars by 605 or small? Yeah, let's just let's do 605.. um, 605.

You've got a five cent spread on this stock, and most likely you. You have market makers that are on both sides of the level too. Now a market maker has to register with Um Regulators with the Sec. they've got to register and they at the end of i don't know what period it is.

Maybe every month or quarter or something, they regularly have to, um, provide transparency into their order execution and things like that. But yes, trading is in a lot of ways us against the machines. The machines dominate the market in terms of volume, so we've got to be really mindful of how they work. So, and I'm going to talk about this just briefly.

I will have there's some other videos on my channel and I've got another one that's going to be coming out soon. We're going to go into a little bit more detail on this, but I haven't posted it yet, so stay tuned for that coming soon. Or if you're done when you're done watching this video, maybe you could go search for it. But when we're talking about market makers, um, a market maker sits on both the bid and the ask and what they do is they, if you want to sell right now, let's say you want to sell seven thousand shares of this stock at Six dollars.

Well, in the entire world, there may not be someone out there that wants to buy exactly seven thousand shares of this stock at six dollars. And that's where the Market Maker comes in. They say, you know what, we'll buy your shares, We'll take your shares from you. So they buy your shares here for seven thousand, seven thousand shares at six dollars And then what they do is when someone comes along and says hey, i want to sell my shares at or sorry I want to buy shares at 605 the market maker says oh, here you go, We'll sell you these shares that we just accumulated at seven or at six and the seven thousand we'll sell those to you at 605 and the profit that they make is between the spread.

So market maker's job is basically to be buying and selling, buying and selling all day long and as long as they buy, Let's say you know a hundred thousand shares. they buy a hundred thousand shares at the bid price and they sell a hundred thousand shares at the ask price. As long as their balance between their buying their sells, they will be profitable. between the spread, They just keep buying, selling, buying, selling, and they profit from the spread.

So market makers create the spread. But remember, they do compete with each other because whoever gets the order gets the opportunity to make the money on it. So sometimes the spreads can be very tight, but on other stocks, especially small caps, we'll see that the spreads can be a bit wider and this is very common. Not as many market makers on the stock a wider spread.

These are stocks that carry more risk, just not just for retail traders, but also for institutional traders. And so I've talked with my broker about this pretty extensively because something that I kept finding was I would press the buy button and we'll go back here. I press the buy button to buy 10 000 shares at 605 and I would see that there were shares at 605 and maybe 606 and 607 and then when I would get my order back it would show that I got filled at 608 as soon as I bought. All of a sudden those orders that were sitting at 606 607 seem to disappear and I get filled higher at 608 and I asked my broker I said what the heck is going on, what's the deal with this? Why is this keep happening He said, well the algorithm.

As soon as it sees your order coming through and starting to execute, they're going to pull their offers. They're going to pull the orders that they have to sell stock. And so if you're trying to buy a big position for instance, it's very common that you're going to get slippage. And he gave me some tips of different ways I can route my order to mitigate that slippage.

But let's think about why they're doing that. They're doing that because they're seeing a surge in volume. There's and as a Breakout trader, I'm usually buying at Breakout. So I'm buying it the places where volume is coming in.

So they're seeing that surge in volume. And so to mitigate their risk, to keep their position balanced, they can't just sell an unlimited amount of position, an unlimited amount of shares at 607 or 608, they could become imbalanced, right? They've now sold a huge position and this thing rips up to 650 and gets halted up. Now their risk profile is imbalanced on the stock. So they move with the Algo they programmed it.

So it's you. get this slippage as it's going higher. So as these stock start to move faster and faster and faster, those market makers are pulling their orders more and more and more and more so it becomes a self-fulfilling prophecy. But this is also part of managing risk.

Now this is where you want to be a buyer if you're a buyer. Right at this Creek. this, um, this critical technical level here. And this is a very obvious level you're going to see as it breaks 605 as it pulls away from 610 up to 615, you're going to see it start to move faster and faster and faster and faster.

And this is a combination of retail traders buying. It's a combination of short sellers covering and the Algos, which as we know are running the market moving out of the way as they're trying to manage their risk on a fast-moving stock. And if you're using market orders, those are the type of orders that you're giving to the market maker where you're saying i want this stock but I don't care what the price is. And there's an interesting article and that I read recently where they were talking about how market makers prioritize limit orders ahead of market orders because the limit order you're you're putting a limit of how much you're willing to pay, whereas a market order you're saying oh, I don't really care, I just want the shares and that gives them the right uh to give you not as good of a fill.

Now they they. obviously you know they have competition and so among market makers you have to be. They have to compete against each other. And some stocks like a Tesla or a Facebook.

these are stocks where there's going to be a lot more market makers on them. There's a lot less risk in holding positions on those types of stocks compared to small cap stocks, so they may allow a position on a Tesla or something like that to go further out of balance on a risk, um, sort of risk profile than they would on a small cap stock. All of a sudden squeezing up 30, 40, 50 percent because if they've sold an unlimited number of shares at 605, they're short right now. their their position is that they're short and so that's not going to work.

and then if they decide they want to buy back, then what's going to happen. So so how do market makers respond to spikes in buying or selling? They pull the offers, or they pull the bids depending on whether it's spiking up or spiking down and you can get a ton of slippage on your orders. That's why, if you're seeing a stock approaching a key technical level, a critical level I often want to buy as it's approaching that level before it really starts to spike. That way, I can be capitalizing and profiting on the spike.

But the very least, I want to make sure that I'm getting in at the very beginning of that spike, which should be very close to the technical breakout. So in the case of like six dollars or 650, that's where we'd expect it. And don't worry, I'm going to show you, not just chart examples. I'm going to show you some live examples of these types of patterns today during this episode.

So sometimes we'll see really, really big moves and that can even be on lighter total volume. And that rate of change is fueling that algo spike. We see it most frequently on breaking news and around key technical levels, and on small cap stocks that aren't experiencing as much market maker competition. Spikes can become self-fulfilling prophecies, where the more they go up, the more market makers pull the offers, but then it can reverse right back down and you can have these drops.

There's definitely been criticism of how algorithmic trading can fuel volatility in the market like flash crashes. Uh, But there's also the argument that the market makers provide liquidity because they're they're taking the risk they're getting in. Um, you know, if you want to sell, they're there to buy your shares, and then when you want to buy, they're there to sell you shares. So they do provide liquidity and they get compensated for that.

But their job really does carry a lot of risk and so you know they try to mitigate that risk with these automated um, you know, algorithmic trading. Um, programs. But uh, we've seen, as was certainly highlighted in the case of Gamestop, um that these can go wrong. Things can get a little crazy.

All right. So um, a question here before you start scalp trading is always to ask yourself, am I trading the right stocks So first of all, the time frame And this is sort of the criteria for the strategy that you're trading, but um, your time frame. Generally for scalp trading is going to be when you have peak volume that's typically going to be in the morning, the early hours. Um, the stock type.

You want to be focusing generally on stocks with lower floats that are parabolic that have some type of breaking news. You want to be focusing on a stock that has a range of at least 10. Today it should have at least two times, if not five times relative volume. The daily chart should be above the nine ema and above the 200 ema.

The stock should have a catalyst or be a former Momentum stock, but technical breakouts can be okay. The price range, preferably between a dollar, fifty and twenty dollars. You can scalp on all price ranges, but higher price stocks carry more risk with big big spreads that false breakouts could really hurt your profit loss ratio. Um, and the entry will be some of the setups that we'll discuss today when I get into the live examples.

But parabolic setups are also valid when the stock is up 50 or more. The way I find these types of stocks is using scanners. So many of you guys already know this. but I have a development team that I've that I hired that built out the scanners that are part of the Warrior Pro membership.

So one of our goals is building out this software for traders. and this is the software that I use every single day. So Viru which was the one that I made, um, the most on here today. If we switch back, you'll see my, um, my last trades on Vero there.

So on Veru. This one was on our Gap scanner. right here. It was gapping up 37 this morning with news.

The relative volume today on Veru is. uh, let's see, relative volume is 931, so that certainly exceeds five, which was our minimum criteria. Um, it's flow to 64 million shares. It's a little bit higher, but that's okay.

in this case, 270 million shares of volume. It's got a tremendous amount of volume. It's uh, really insane. I mean, it's got over a billion dollars in in in in money traded trading hands today.

This is a huge amount of volume, and if we look at the chart briefly, uh, you'll be able to see that this is a stock that really did respect some of these critical levels quite well. Uh, one of my first trades on it was along on the break right here of this blue line which was a high a day break that gave me a squeeze up into this 8 40, 850 level all the way up to nine. It runs into psychological resistance there at the whole dollar, continues up then to 950. Psychological resistance, pulls back, breaks through, goes to 10..

and notice if you mark out half dollars in whole dollars, that's eight. This is 8.50 That's Nine. That's 950. That's 10..

Look at how right at these critical levels, it runs into little bits of resistance. Do you see that? And you get these quick moves in between those levels? So that's the type of area that we really want to be watching. So I found Uh Veru on this scanner here. Um, Iv da someone just mentioned is squeezing up a bit so you know this is a stock moving a little bit higher.

Right now, you're high right now. This is a little extended. your high is Uh, 469, but you've got room on the daily chart up to 5 24.. And this is a stock that we did talk about this morning and I also traded this morning.

So it's hitting this scanner here. The float is 10 million shares. It's got a relative volume of 20. 38 million shares of volume, right? So it's a stock that is clearly the right type of stock to be focusing on.

The only problem with it is that it's the wrong time of day, perhaps to be taking that trade. Now it's not to say you can't take trades in the afternoon, because you certainly can. Uh, but I prefer to trade earlier in the day. Okay, so your entry and just to step back for a second.

I saw a comment on um, on Youtube yesterday, and by the way, those of you watching this later after the fact, um, please leave comments down below. We respond to every comment that's posted on the channel, so don't hesitate to post some questions if you have them. but someone said ross, um, I'm a beginner trader and I'm having a really hard time finding stocks to trade and I said, you know what To be honest, finding stocks to trade is the easy part. That is the easiest part And so the good news is, that's easy.

Once you learn the right tools, you're not most likely in his situation. He wasn't using the right software, so he was sitting down each morning and genuinely didn't know out of thousands of stocks trade which ones to trade and someone recently said, you know I trade Forex so I know to trade the Us dollar Euro pair but I I don't know how to find stocks and there's thousands of stocks to choose. How do you choose which ones to trade? It's easy. It really is easy, and it doesn't mean that being profitable is easy because that's not.

But finding stocks of trade is the easy part. I do it by looking at what's the leading gainer today, and that points me almost every single day to the right stocks to trade. This morning, we had Uh on the Uh back on the scanner. here.

we had Hoth Gnca Ivda Vroo those are the top four and I traded two of those four and that's where my profit came from today. and that's generally where my profit comes from on any given day. It's from focusing on leading gainers and then from that from the sort, of, um, early part of the morning watching that high day momentum scanner for what's moving up right now. So that's the easy part is finding the stocks to trade.

The hard part is back over here, timing your entries and your exits. This is where it gets a little bit tricky and especially when it comes to scalp trading because you have to be so disciplined about getting in quick and getting out and taking your profit and not overstaying your welcome. All right. So these are a few of the entries that you could trade as a scalp trader, and I'm not going to go over every single entry because I have more of them in our curriculum than I could possibly fit into this class right here for the sake of, uh, concise Youtube video, but I'll tell you that these are four of my favorites.

These are four that usually perform pretty well. For me, this scalp trade setup would be buying the first candle to make a new high after a sell-off. That could be either a reversal or a dip trade. This is a micro pullback setup right here.

This is a break through a flat top right there, which I know is somewhat blocked by my video, but I can move that there and you can see it better. And then this is an Abcd pattern so you know these are these are a few of the patterns and for each one of these patterns, I have a separate chapter that has examples that are just of those patterns and including screenshots but also live trading examples. So for this let's try to be a little bit more concise and let me show you uh, some live examples here. So let's see, I'm going to jump out of this slide deck and we're going to go on to live examples.

So I've got one right here on Gbr that we'll look at and let's see if these help put a little bit of the the pieces together here for you. All right? So I'm going to go full screen By the way, those um, who tuned in a little bit late. I keep seeing people trickling in so thank you guys for joining us for the live broadcast. Um, this will be saved as a playlist on Youtube so you can re-watch it later if you'd like.

That's fine. I want to remind you of a couple things. Number one. First thing is there's a link posted um, pinned comment to download the live trading archives so you can keep learning.

I want to encourage you guys to keep learning as always and you can Also, when you download um, you're going to be on our newsletter and we'll send you a copy of my best-selling book. We'll send you a copy of my micro strategy Pdf and let's see, we had a couple other things that we were going to send you as well. Where is it? Um, I had the page up. let me just click it and put it back up and go back to full screen.

Here we go All right. So you're also going to get oh, that's right, my small account worksheet and my pre-trading checklist and the video on holding losing trades too long, which is very topical for a lot of beginner traders. All right. So that's number one.

I want to remind you of number two. Please like and share if you like and share the video comment that you liked and shared it. We're going to be putting the people that comment and doing a random giveaway at the end of this Youtube live where I will be giving away one year-long membership to Warrior Trading. All right.

So number three and this is important. You Must be here for the giveaway because if the person isn't here to claim, um, the giveaway, then we're just gonna go and choose the next person. So make sure you stay to the end of the broadcast. So uh, if you've if you're hoping to get to win, uh, a year-long membership at Warrior, you can, you can claim it All right? So now let's go ahead and jump back over here.

I'm going to go full screen. I'm going to move this out of the way and let's look at this example. So this is a stock. We're going to get acclimated here.

What are we looking at? Okay, so we've got a lot going on. Uh, this is Gbr. This is a stock that I have traded a few times over the years. Um, on and off the float on Gbr today so I can, um, just check in my uh software here on this.

So let's see. Um, Gbr. The float is, um, a 3.74 million shares. We can see that right here.

So this is, um, a pretty low float. The float's low and on this particular day it was curling back up and so on this trade. Um, we're going to watch this here. I'm gonna go back.

So this is a stock that is approaching psychological resistance of four and what you notice already on the level two, you can see a couple of sellers stacked at four about 20 000 shares. That's not that much. Uh, the stock is up 20 and watch this for a scalp trade. Okay, so for those that are uh, listening in while they're driving and we have so many uh folks on Youtube that subscribe to this channel and are driving um, semi trucks.

So thank you guys for driving uh, across the country and doing everything that you do. I know that this is going to be audio only for you, so your eyes are on the road. So let me describe what we're looking at. here.

We're looking at a stock that's up 24 that has squeezed up from 350 up to four dollars. It hit four and at four dollars there were twenty thousand shares for sale on the time and sales in Green. We just saw twelve thousand shares get bought. So we're seeing some buying and they were bought at four dollars on the Ask And so the Ask went from 20 down to about 10 000 shares.

So now here I'm about to press the buy button and I just bought 7 500 shares at four dollars exactly. Now initially my P. L shows minus 375 dollars. It says that I'm down five cents because the bid is 3.95 Remember on these types of stocks I buy at the Ask and I want to sell at the Ask.

why do I want to sell at the Ask? Because the last thing we want to do is feed the Algo. We never want to feed the Algo. That's a big no. Feeding the algo means hitting the bid because that's where you're gonna get slippage on your order.

Now I suppose I feed the Algo on the Ask when I buy at the Ask. But I'm not gonna feed the Algo on the sell side by hitting the bid. I'm gonna avoid that as much as possible. I'm gonna always try to buy at the Ask and sell at the Ask.

So I'm in here at four and immediately this squeezed up to 407 and in two seconds, in two seconds, Right there, I sold half of my position on the Ask at 407.. So I took half off the table, which locked up about 400 of profit. and now we're gonna watch. Uh, actually, no, sorry.

I locked up about 265 dollars of profit and then I sold a little bit more at 409 and now I'm holding only 676 shares. I've already locked up 472 dollars. and in this moment, right now, it's now hesitating, So it's starting to hesitate a little bit. Which is a good time to either bail on the bid at 402 or maybe keep trying to sell on the Ask.

But it's got to hold over four. And I sold on the bid there at 403. And just like that, in a period of about a total trade of 20 seconds, I made 492. Okay, so this is a stock and again, what kind of level was this at? This was at a key technical level.

All right. So let's see. so we're going to go. Just draw this out.

So remember, the stock approaches a key technical level. In this case, it was four dollars. So four dollars is the key technical level. Pulls back for a second and then it breaks through.

There was a seller of 20 000 shares I bought. As those were getting bought up, I waited first to see Green on the tape and then I bought. We got that immediate pop up to 410 in this case, only to 410 and as soon as it broke through that level, I took half off the table at 407. so plus 265.

And then I took the rest off the table at about 409. And then the rest is. it came back down. Now in those spikes, that's where we're seeing peaking volume.

You see on the chart how we had peaking volume right on that candle as it broke through. Four dollars. That's important. that peaking volume is what gives you the liquidity to get in and out with a big position.

If you're trading these when they're not moving very quickly, you're going to have a harder time moving in and out with larger positions, so you want to be trading them around key technical levels if you're focusing on scalp trading, which you probably are if you know you're watching this video. But if you, if you end up taking big positions when the volume is light, you're not going to be able to move in and out as easily. So that that was that whole example. That was a real example of trading almost 500 real money a stock around.

In that case, five dollars of four dollars. Okay, so that was our first example. So now let's go back to the second example. All right.

So let's see second example here. We've got um, and we've got a couple that are going to get a little crazy so I hope you uh, are buckled up because this is going to get wild. All right. So this is titled Huge Break of V Wap and rip to 29.

Well, the stock's currently at 19 so I can't wait to watch this. Okay, so what are we working with here again? Let's get kind of uh oriented. So we've got a stock that has a pre-market high of 17.55 it is up 313. The float is, uh, let's see.

I'm not sure what it is on this particular day. I'm not seeing it on my screen so I'm not sure what the float is, but I think it's a pretty low flow. Um, did have some news. It looks like the stock sold off and went below the volume weighted average price and now it's curling back up.

A question there on youtube. why don't you buy the retest after the breakout? I will. I will be happy to buy the retest after the breakout, but I'm also going to trade the breakout so I'm going to trade both. I'm going to do the breakout and I'm going to do the retest.

Now on that example of Gbr. I didn't do the retest and the reason was because it sort of just declined in volume. So you got that breakout and then that kind of just sort of just petered out. It was sort of like that was it, which sometimes happens so I'm gonna be more inclined to keep trading it aggressively.

When it's still, you know, moving quickly, so when you still have high volume, it dips down and then for the next leg up. Okay, so on this example right here. the stock is currently at 12 and 45 cents. Note: the last green candle broke over the volume, weight, average price, and what it's doing right now is a micro pullback.

So it the V Wap is right here and it curled up to about 1240. and then it did the retest on a micro pullback and right now it's coming up right there. and I'm drawing this out on my whiteboard. So right here as it comes up, this is where I'm going to punch the buy button.

So let's watch this. So I punched the buy button here. It looks like I filled, uh, three orders of a thousand shares at 12 28. So I'm in with 3 000 shares.

All right, let's go back to the main screen. So 3 000 shares of this is my position so far. All right. So boom in with 3 000 shares and we already are seeing 1250 on the ask on this one.

I got in a little early to anticipate the breakthrough. That half dollar. I probably wouldn't have gotten in that early on a 2.50 stock, but on 12 stock, willing to be a little bit more aggressive. Um, thank you guys.

Uh, looks like we've got a bunch of folks from Florida here today. Thank you. Um, feel free to comment where you're logging in from Everyone from Florida. Just wanted to say at the same time that they're all here.

So uh, it looks like that's that's great news. I'm really, I'm proud of you guys. You guys are from Florida. It's a great state, It's warm all year round, you have no income tax, so you're you're living the life living the dream.

Thank you I'm I'm in New England where nine months out of the year the weather is miserable and everyone is sick and we dream about living in warmer places. But we don't because our family is all here and we don't want to leave our family and they're just like a big you know, cinderblock around our legs, just holding us back day after day after day. Uh so. uh, we probably won't go to Florida until our all of our family has died and we're going for retirement And that's what it's like living in New England.

Well, that's one way to think of it. It's actually not that bad. But uh, thank you guys. So all right.

Uh so let's see, we've got 12 28 here and so I'm long with my 3 000 shares and immediately we're coming up to 12.50 What level is 1250? It's psychological resistance. Watch what happens when we break over it. If we can hold over it, we're in good shape and holy moly we just went straight to 13. we just went straight to 13 bucks.

That's called a 50 cent breakout. Matt, I'll see you at the show. All right. So we went from 1273 on the bid we've got now 13 on the ask and the halt up is at 13.08 This thing is on fire.

It is moving fast and so if we look at our um, white board on this one, we got the good luck on this stock of a instant rip through 1250 all the way to 13 in like 10 seconds. So the Algo is moving out of the way, they're pulling the orders and now you're squeezing up. And if you're short on this, uh oh, because this thing is moving quick. All right.

So we've got 1308 as the halt level and I actually let's see what happens. Um, I'm taking it looks like a little bit of profit off the table at 80 something and then actually I added back at so I took first a little bit of profit off the table at 89 and 92, but of my 3 000 share position I only filled like 270 shares and then I changed my mind. I said, you know what? I'm actually gonna go and add on this thing So I added another 2 000 shares at 1292 and 1294 and I noticed that the halt level has moved up to 1342.. watch the break of 13.

it's not breaking so I take half off the table right underneath 13 at 1297 and is it going to break 13? There's 13 42 on the Ask, we're into 13 42 and I take a little bit more off as we come up to that level. So you've got 13 41 on the bid, 1342 on the Ask and I'm still there we go. I was holding still 800 shares, but I took the rest off the table in this position. Here, you can tell that I'm still being a little bit conservative with my scalp trades I'm adding and then I'm getting out.

and then I'm adding back and then I'm getting out. So I'm not