How Can One Become A Successful Option Scalper

Introduction

[Quick summary explaining what the blog post will cover]

  1. What Is Scalping?
  2. Scalper vs Normal Traders
  3. Have a Scalper Should Trade?
  4. Scalpers Key Focus Area
  5. What a Scalper Should Do
  6. Key Things For Scalper
  7. What Commoners Do
  8. Why Most Traders Fail
  9. OTM - Out Of The Money
  10. Greed & Fear
  11. Who is a Successful Trader?
  12. Effort & Discipline
  13. Execution
  14. Can Part Timers do Scalping
  15. How to Use your Capital
  16. Road To Success


What Is Scalping?


  • Scalping refers to a style or a pattern of trading where an intraday trader takes trade & makes quick bucks purely on the price momentum between min 1 to max 30 minutes time frame in terms of dull markets.
  • To make it even simpler, an option scalper is someone who does multiple trades daily just using few of the chart indicators following the Trend on a 3 or 5-minute Time frame.

Scalper vs Normal Traders

Scalper:

  • Nifty 12500ce buy 150 @ 10 booking at 12 to 13 booking at Repeat it multiple times a day for instead of taking multiple trades quick profits say 3 to 4 
  • Nifty 12500ce buy 450 @ 10 booking at 18 to 20 instead of taking multiple trades just 1 trade.

Normal Traders:

Have a Scalper Should Trade?

1. An option scalper should create perfect trade setups with proper entry, SL/ Trailing SL/ Exit points - typically with a good risk reward ratio.

2. A scalper should be aware of the fund allocations the market dynamics on each trade understanding and its volatility of the specific time frames.

3. Order Execution plays a vital role when it comes to scalping, efficient order placing skills is one of the key area a trader should spend enough time in improving the execution part and use the best of the trading platform to reap the best outcome.

Scalpers Key Focus Area

1. Most Importantly For A Scalper- Targets Or Goals Is Vital To Achieve Your End Objective When I Say That Let The Target Be Proportionate And Reasonable To The Capital In Hand Otherwise Its Just Playing In A To Casino.

2. Inter Pretaion Of Data & Be Updated On Every News On A Minute To Minute Basis Is The Most Needed Skill Set As Avery Few Follow This Religiously.

What a Scalper Should Do

If you can be good at one set-up you can be successful in the long run and it will help you to further retinue that process, which will improve your confidence.


1. Try to master one good Strategy, instead of focusing on different setups.

2. My Favorite set-up is Opening Trade & Follow the trend through the day.

3. If you can be good at one set-up you can be successful in the long run and it will help you to further retinue that process, which will improve your confidence.

Key Things For Scalper

  1. Don't be an Impulsive Trader and being Patient is extremely important to be successful Scalper
  2. Always Trade with SL - Stop loss
  3. Always ride the trend
  4. Try to Trail your Profits, if its above your BEP
  5. Adjust risk and Take trades with trend
  6. Always look for Patterns and change accordingly
  7. Use Terminals which are user friendly and ones which you are comfortable
  8. Don't put All eggs in one Basket


What Commoners Do 


1. Though Trading May Look Easy&fancy From Outside

2. Many Trading Aspirants Who Need Quick Money Wanted To Try Their Luck And After The First Few Initial Wins.

3. They Consider Themselves Brilliant And Invincible & Follow A Fixed Trade Pattern Or Strategy With Bigger Risks To Lose Their Entire Capital.

Why Most Traders Fail

Skill, Discipline & Execution combining with taking quick decisions will improve your Trading methods.


1. Scalping & Day Trading requires you to take Quick decisions and it requires a lot of Discipline.

2. Many Traders Initially lack the ability to make good decisions and maintain composure when the trade goes against.

3. Skill, Discipline & Execution combining with taking quick decisions will improve your Trading methods.

OTM - Out Of The Money

1. OTM- People call it OUT OF THE MONEY CALLS/PUTS

2. To me OTM means OUT MARKET OF THE

3. Yes, Many think quantity matters, buying a huge volumes on OTM calls can multiply profits yes it can but not all the times, this is one place people bet huge and get lost from the party.

4. 90% of the time Retail Traders are wiped out in these trades.

5. So, better to trade in ATM and ITM for a quick 10 ta 20 Points.


Greed & Fear 

Greed and Fear are the two important parameters which impacts the P+L of every trader


  • Greed and Fear are the two important parameters which impacts the P+L of every trader 
  • So its always wise to have a risk reward set up based on the capital or based on your financial readiness 

Who is a Successful Trader?

A SUCCESSFUL TRADER WILL ALWAYS TRADE WITH A TARGET AND TRADE FORA TARGET WITH HIS EMOTIONS ON EQUAL BALANCE


Effort & Discipline

1. Every effort we put = Results 

2. But will they yield positive or negative results is the Big question? 

3. Well someone start trading as a career first do all groundwork not only for trading but for every business 

4. Three key things are needed to be successful here Patience, Trend & Strike Price Selection and Entry & Exits.


Execution

1. Presence of mind is another key strength some one should develop it you want to be successful life in trading.

2. There are different types of traders who trades with less quantity for more points, there are few who trades more quantity and exit quickly.

3. So it again depends on your personal attributes. 

4. All this go hand in hand when it comes to successful trading. 

5. And the last point being timely execution. 


Can Part Timers do Scalping

1. Any individual who is working and trading in between office hours, can make 1 to 2 K with a capital of 1 lakh.

2. Look at the returns ?? Calculate with 15 trading sessions forget about the expiry day Trades.

3. When I say 1 lakh, actual funds should not exceed 25 to 30k in each trade with a profit of 1% of your Capital deployed

4. But why 99 percent unable to make it ?? WE ALL WANTED TO MAKE BIG IN SINGLE TRADE

How to Use your Capital and How to buy or sell stock in scalpers?


  • If I start with say 1 lakh capital in an options market
  • Will spend atleast 6 months to understand complete basics of options with all tools 
  • Though we may have 1lakh, each trade should never exceed 25 to 30 percent of entire capital on a usual day and 30 to 50 percent on an expiry day
  • Means I trade say 32000ce buy at 100 90 80 70
  • My avg should be 83 to 84 and the max qty should not exceed 80 to 100
  • 1lakh capital 82 * 100 8200 investment Considering up to 18 percent I can max go till 240 qty that too on a case by case basis where 18 to 25 percent risk
  • But I am assuming the strike goes to zero 
  • We should have a risk reward pattern I buy from 100 90 80 70 my avg is 83 and the strike moving still downwards , I should know whats the max risk I can take say 20 points , then I should exit between 60 to 65 range
  • Unless a trend day very rarely, otherwise market doesn't move one side always It gives you multiple entry exits but there are people who dont understand the volatility but keep waiting for the targets
  • When I use the word volatility its both sides when 10 can go to 100 obviously 100 can become 10

Road To Success

1. Having said all this, becoming a Scalper is not very difficult unless the individual has the zeal and passion.

2. Nothing comes easy in life - if PV Sindhu could only breathe badminton all the time for so many years, no wonder is the reason for being world’s no.1 Player.

3. But many of the traders wanted to invest 1 lakh and there were few people when they ask “what to expect and I say 15 to 20 percent”.

4. They ask me - every day basis ?? I how ever welcome those brilliant minds here to stock market, so our job becomes easy.

5. Expect Small targets of 1% and achieve it consistently, you will be amazed at the results after a while… Just do it and see for yourself.

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