Traders Expo Presentation Slides – Scalping The Open

Al Brooks
Scalping the Emini open
Al Brooks
Live Emini trading room
When does opening range end?
 No specific time, usually before 8:30 am PST
 As early as first bar or as late as 10 am
 With breakout, if day starts with TR
 With TR, if day starts with BO
Why trade the opening range?
90% chance of swing trade…
 4 points or more profit
 Reward at least twice risk
 Strong swing = best math for scalp
Either high or low of day forms in…
 First 5 minutes on 20% of days
 First 35 minutes on 50% of days
 First 2 hours on 90% of days
Goal of most traders
 Find one or more swing trades
 But, many traders scalp while waiting
How many scalp setups?
 Great scalpers see setups on every bar!
Take 20 or more trades a day
 Most traders should focus on swings
Take only occasional scalps
Scalps during
 Very difficult to make money scalping
 Better to look for swing
 Best scalps are also swings…so swing!!
Main reason to avoid scalps…
 Requires quick thinking and quick ACTION!
 If cannot exit quickly when wrong, don’t scalp
 If cannot quickly reverse mindset, don’t scalp
When wrong, exit quickly!
 Always have a plan to exit
 Have stops in market, not in head
 Stops protect you from yourself!
If TR becomes trend, trade like trend!
PB below bottom of bull breakout
If initial tight trading range has bull BO…
 PB can fall below bottom of bull leg
 Look to buy…
Reversal up
Below TR with limit order
Buy more below!
Enter with stops or limit orders?
 Trading range = limit orders = bet breakouts fail
 Trend = stop orders = bet breakout succeed
First few bars often tell if…
 Trend day
 Trading range day
Trend from the open
Trend from the open
Trading range day
Limit order open
Dojis, tight trading range, at MA
Signs of strong trend
 Consecutive strong trend bars
 Strong reversal bar if gap
 Strong breakout from TR price action
3 consecutive bear bars, 3rd one = strong
Strong bull reversal bar, good context
Consecutive trend bars, but bad context
 Unlikely to form trend
 More likely will reverse
 Likely will form opening reversal
Dojis, tight trading range, at MA
Reversals are common
 Market always searches for direction
 Probes up and down
 Needs to find out what is too far
 Most days, first direction is wrong
 Initial move creates opening reversal
Opening reversals
Strong, quick test of support or resistance
 Creates tail on most trend bars on daily chart
Opening reversal at 60 min MA
Opening reversal at yesterday’s low and high
Always look for…
 Major trend reversal
 Breakout or failed breakout of anything:
 Swing high or low including high or low of yesterday
 Trend line
 Trading range or channel
 Moving average
Is trend continuing or failing?
 Is breakout continuing from 1st bar
or failing (reversing)?
 If failing, is market just pulling back
and about to resume breakout?
Swing begins with strong signal bar
Bull swing usually begins with…
 Bull body
 Close at or near high of bar
Bear swing usually begins with…
 Bear body
 Close at or near low of bar
Strong buy signal bar
Strong sell signal bar
If no clear signal bar…
Wait for strong breakout up or down…
 1 big trend bar, especially with follow-through
 3 – 5 smaller consecutive trend bars
Strong breakout after bad signal bars
Opening reversal at MA after gap up
Opening range setups
Double bottom, PB to MA
Wedge, big Low 2
LL MTR = Lower Low Major Trend Reversal
Trading the open
Trading the open
Parabolic wedge on open
Endless pullback, then reversal
A week of trading the SPY opening range
 Pay attention to yesterday
 Look for reversals, breakouts, and failed breakouts
 Look to swing, using usual management
Tuesday: after sell climax, expect rally
Now 2 big bull bars
Management of initial long
Buy closes, probable MM up
New BO so raise stop
Buy failed reversal attempts
Management of initial long
Spike and channel, MM, top of TR, 2LU
Management of initial long
Wednesday: gap above TR
Thursday: TR open, AIL
Thursday: FOMC report
Friday: Follow-through buying
Friday: parabolic wedge, buy climax
Al Brooks
Scalping the Emini open

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