Live Trading - How to Scalp NQ with the $TICK
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Live Trading - How to Scalp NQ with the $TICK

John F. Carter - January 21, 2016

Hey guys, it is John, and welcome to the free video. It is 2 o'clock right now, and we're betting on a rally here into the close. I'm going to buy 3 NASDAQ futures here. We got a squeeze. I'm a little late to this party, but the fact that we're making new highs on the day, and You can see here, ticks are 1,000. In this type of a situation, what I'm looking for is that we can actually go up here to 4127. Okay? I've already had some good trades today, trading 3 contracts. It's been a fantastic day for trading futures. As we head into the last hour: Are bulls going to be able to keep up the pressure?

Well, we want to know how much we're willing to risk on this trade. Generally on something like this, I'm thinking about 15 points. I don't want to risk a lot. But as long as the ticks are above 0 (zero), I have no concerns. Just because we've got that nice buying power. That nice pressure in the markets here. If you're staring over here, like, "Wow, I was up $100 and now I'm down $100," that can freak people out. So keep your focus over here on the internals. Now, it's normal to get a pull back here. We're going to get some back and forth. But what I'm looking at is, who is more nervous in this market? If you're looking at this, you're like, "OMG I'M FREAKING OUT, I'M DOWN $400!" The ticks are not doing anything. Okay? This is normal movement.

It's a good lesson in position sizing. How much heat are you willing to take? At this point, there's no danger here. If you've got a situation where there's no danger, but you throw in a 20 lot trade and you're freaking out, that is where position sizing comes into play. And that is where you've got to be careful. As of right now, I'm like: I'm watching this, the ticks are fine. Could we get short covering back up to the treeline at 4127. And, am I in any danger? I would consider myself in danger if we come down here to the -800 tick level. Okay? So at this point, things are kind of slow. I'll pause it, then check back in to see where we are.

Back. Okay, so now you can see that the NASDAQ futures are making new highs. The ticks have just been hanging out here. It's very bullish. Now the 4127 kind of becomes a target, right? I unchecked auto-center, so I can just scroll up here, and just come up here to 4127. I don't know if we'll come all the way up here. I'm going to show you how I'll manage it. I would want to sell at least two of my three contracts. Now 4127.13, we don't need to be greedy pigs. Let's go 4126. Get a little in front of it. Okay? Now I've got my preplanned order there. And if for some reason, we blow through it, we've got one contract to trail.

So now the question is, what about a stop loss? Well, our entry here is 4103. When you take out the swing high, then you should move your stop loss from 10-15 points to entry + a point. Now we're guaranteed a profit. Boom. That's the fun part of doing this. The tricky thing with trading futures is that everything is moving so fast. It's like, "I've got $600 and I want to take it, and it's pretty addicting. But we can stick to our targets. You know, is it okay to take some off the table here?

Yes. But just let the ticks be your guide. As long as we're hanging out here, then we've got some good pressure. The NASDAQ is only down 34 points. Remember, earlier today, it was down like 150 points. Now the shorts are screaming, "Have mercy on us!" So this good. Good for the futures. We'll keep an eye on this trade, and see how it ends up.

Right now, you can see the ticks have come down. They're sitting at +500 on this pullback. That's nothing to be nervous about. That's fantastic. Because the market's so volatile, we might get stopped out when we don't want to get stopped out. There's different ways to look at that, and modify it. At this point, if we can make new highs here, then I'm going to trail up my stop a little bit more. Or break it up.

Okay, so how can we make sure we don't get stopped out of this? Well, let's cancel our stop, and now let's stagger it. Now that we've got new highs, let's lock in 2 points on that one. And then I'm going to put one down here to give it some room, in case we do come down. 3 and 1/4 points here. So if we do come down, I have the chance to hold onto this for ultimately a bigger target. And I still have my order up here, to try to get out at the 4127 level.

Having said all that, is it okay to just take some off the table? It is, just be careful. If we start taking some off the table without a plan, we're not instilling good habits. We'll encourage ourselves to be subjective, which we don't want to. So, we've locked in some profit, and all is well there. So let's see where this is going to end up. We've also got to check some of the key stocks.

Wow! GOOG (Google), $717. That thing is on fire. Another benefit when you're trading futures: It keeps you front and center on the internals, and what they're doing. That helps you stay on the forefront of what's going on in some of the key stocks. That gave us an opportunity to get into GOOG earlier. We got GOOG at $26, some in the money calls, we also sold some put spreads here, and you can see on these ten contracts, it's up about $12,000.

All in all, even if you don't trade futures, if you learn how they work, it will help you with all your other trades. It helps you catch reversals and things like that. We're starting to see this melt up. So, 4126.

Now, this is where it gets tricky, to be perfectly honest. When you get close to your target, but you're not quite there. I would not be too pleased if this came allll the way down and stopped me out. At the same time, I'm on a good horse here. I want to ride that horse. So what can you do? That's where the saying, "Sell down to the sleeping point" comes from. I just sit there and I watch the ticks. As long as they're staying high like this, great, not much to worry about. But if it starts coming off pretty hard, then I could take one off the table, right?

The other thing you can do: Remember, we've got our one lots here. Let's just put one here at 4115.25. That way, if it does swoosh down here, at least we're taking a little bit off the table. Boom! Great! We just booked some profits. Now, you can set this to do it automatically, right? But I'm doing it manually. So I'm going to cancel that one. So I've got my balanced orders. I've got two stops in place, and my two targets in place.

Right? So now, I'm going to want to trail my stops a little bit. There's different ways to do that, depending on your platform. I can just grab this and move it up. Easy. And now, again, I've just locked in some profit. I don't need to be as nervous about it. What's nice about the futures is, it gives you an overall feeling for how the markets work.

Now, if you're watching the ticks lose their lustre, and you want to place some sell orders here, that's fine. But I encourage you, if you see some momentum like that, just be patient. You can always control your risk. If it stops me out, instead of hitting my target--is that a good thing or a bad thing? It's neither! You have a plan and you're following it. You're making bank. Anyway. That's the process there. Hopefully it helps, and makes sense.

You can see that the NASDAQ is down 30 points now. The way it's acting, we could actually go positive on the day. The question is, how far down do we come? Now if I get stopped out, it's not the end of the world, because I can get right back in. That's the thing about futures. You can't sit there and cry, "I've got to redo it because I got stopped out here!" No. You just get right back in. The name of the game is Risk Control. Do this right, and you're not going to have big losses when you're scalping--I consider this scalping--to me, a scalp is when you're trying to make 10 or 20 points on the NASDAQ, like this. But you're managing the trade in such a way that you are prolonging the potential of big reward, while at the same time continually decreasing your risk. And it's very simple to do.

So, the futures are now down 28 points. A little bit of consolidation here. So let's do this. Let's see if we can get one off here at 4115. And we'll just get down to one lot. My one lot here is holding down the market: Oh! Here we go. Okay. Great. So now, I've almost booked $3000 today trading a three lot. In the NASDAQ, which is great. So now I've got a 1 and 1, and 4127--oh, I've got to change that one to one. 4126. Now I can just let it sit. Hopefully that makes sense. That's just some of the things we do in terms of managing these trades, etc.

Okay, I'd paused it there, but let's see if we can get our target hit. So it's push, push, look at the ticks. And this is a great time to take profits on longs, when I've got-- +1200? Are you kidding me? That's the bull. Boom, blowing their wad. Trading a 3 lot today on the NASDAQ, up $3455. It's 2:15 pm CST, so there's still some opportunity here. I may get right back in, but when you see a big voodoo line like that, that's the easy move. The rest of this move, we're going to catch in GOOG, etc. Look at that. +1200 ticks!

The tough thing with this is like, when you're trying to buy a stock option? Those things just run away from you. Because they screw you on the bid/ask. All you've got to do on something like this is just click it. Hope it helps. Have a great night, and I'll see you at the next update.