Scalping the watchlist

This will be a slightly more in depth approach to playing the

watchlist as well as how to make your own watchlist. There are so
many ways on how you can scalp it, what to look for, applying your
personal indicators, etc. But for now I will go over the basics
Setting your levels
Marking your support and resistance levels

1. Previous day open

2. Previous day close
3. Previous day high
4. Previous day low
5. Premarket high
6. Premarket low
7. Any other levels that you see having multiple points of contact between those
other levels - this will give you those “hidden” support and resistance levels
and although they might now hold much weight they could become crucial
when it comes to your entry or exit strategy
Next slide is on FB setting these levels
FB 5min Levels
-On this image we certain see our levels that are labeled off to the side.

-Take note that we do not have a previous day low due to the opening price essentially being the low

-Next notice how we have 3 “Meaningful Levels Not Tagged” that were extremely crucial had you entered a trade and
not knowing where to take profits/trim/adjust stop loss

- Also take note on how our “Pre Market High” wasnt the true high. But had we taken that level at around 292.88 then
the next day there would have been a gap we were looking to close from that next day high to the pre market high. So
here is where I want to get a more sound level by looking for multiple candle touches to get a more accurate level that
holds more weight rather than just one touch. Another reason being had we market that level we know that we have
our previous day high only about $0.20 higher

- Lastly just go through all of these levels market that we described we would on the previous slide and how they held
up the next day (keep in mind to get this information I never looked at that second day, on the previous post and pre
market as well as previous day)
Now let’s look at these levels on a large picture to see the
weight they had and mark those

The previous chart was on 3/29/2021 - 3/30/2021

Due to recent volatility we may have to go back a bit

Now the only reason I am doing this is to show you how we can take one small
piece of the picture (1 day of time on the 5 minute chart) and how they have held
up in the past/could hold up in the future
FB 3/19/2021
FB 12/1/2020- 12/2/2020
Let’s do one more example setting levels with those
parameters
TSLA - 3/31/2021 - 4/1/2021
 Using the 30-90 day 60 minute chart to set
more levels - to give you more levels that will
hold more weight. Will go through two tickers
and the levels I would personally set
AAPL 30 day 60 min (121.70 - 126.94 price range)
Now lets see how these strong levels held up today (4/5/2021)
 Notice how we looked at nothing but the
previous price action on the hourly and how
well they were respected today (4/5/2021).
This is why it’s always good to go back in
time on larger frames and get those levels as
well
Let’s do TSLA now but on the 360d 4hr
Huge mess on the last chart right? Now let’s look at in on the intraday 5 minute chart
Now we just went through the basics of setting your own levels
RECAP:
-Previous day open
-Previous day close

-Previous day high

-Previous day low

-Premarket high

-Premarket low

-Any other levels that you see having multiple points of contact between those other levels - this will give you those “hidden”
support and resistance levels and although they might now hold much weight they could become crucial when it comes to
your entry or exit strategy

**On larger time frames look for those bounces, both with the wicks and the bodies**
Setting Levels Extras:
When scalping as mentioned your intentions are to be in and out, because that is
the case setting your levels on just the 5 minute time frame with those parameters
is all you need. But there are some extras that I will do and they are:
- Looking at all time frames (5m,15m,30m,4hr,1d) - I do this to see if there are
any much stronger levels that I am missing as the higher the candle time the
stronger the level
- Looking back days,weeks,months,or even years - This will also help me see if
there is anything I am missing after I do my normal checklist and have my
levels set, to find anything missing or possibly extra levels. Eventually this will
have lines all over your charts but you can often condense some of them
Contract Selection and Exit Strategy
Contract Selection
-When I am scalping I am typically looking for either contracts at the money, or slightly out the money, and if going out
the money I want to look at a strike that on the aggressive side I can see the ticker price getting to
- Always pick a reasonable strike, do not get one that is 50 bucks out the money

- Expiration: I will also pick an expiration that expires that week, or if available a zero days until expiration contract.
Now if there is any trade that I like to possibly turn into a swing or day trade I might get an extra week of time to let it
play out if I do not just want the scalp out of it. I will sometimes also do that if I think there is a greater risk of reversal
because that contract with the extra time will depreciate less on any reversal than a short expiration would

- Greeks: contract greeks do not matter to me when scalping. My intentions are to be in and out and as long as there
is volume to be able to sell it thats all that matters to me. You do not want to spend the time looking for greeks and
possibly miss that entry

- How many contracts to buy: Like any trade I go into every scalp with as much money as I am content losing 100%
of. This obviously will not happen because you will stop out on a reversal, but to me the mentality of losing it all makes
me trade much less aggressively. I always look at risk before reward
Exit Strategy
- Stop loss:
- Reversals will happen sto stopping out sooner than later is they key. I will either go based on
a % loss on the trade (15-35%) or using my levels and if we reject the level from where I
entered I will look at another level to either average down or stop out if it breaks that as well.
But the most important thing is to stop out and not hold. Like I said, when scalping your
intentions are to be in and out. If you get caught in a reversal it is always better to stop out and
look for that same set up again to enter the same trade, or flip sides and play the reversal.
Exit Strategy Continued
- Taking Profits:
- When looking to take profits there are 2 main things I consider, how heavy in the trade am I,
what does the chart tell me. If I am heavy in the trade I will likely not wait for those upper price
targets to hit, I will trim along the way, or sell out completely if I want to get my risk free out. If I
am trimming I will trim some at say 5%,10%,15% etc. And either get to the point to where I am
in some for free and or little financial risk so that I can play towards the price targets. But the
key is to never play to the price targets fully. As we saw on FB that upside target never hit, but
if you were in a trade on that you had great profits for the scalp and then it reversed on you.
Small steady profits win the race. This is why I like focusing on the percent return to trim along
the way and get some free runners rather than hold the full position expecting the market to
give me what I want which is those targets hitting.
Entering into the trade
Now we will get to what everyone wants to know and that is when to enter
- I will give you the bare basics below to entering into the trade and when
- These basics will get you in the door with that high chance of profit
- But as you learn more about charting and indicators, etc. Then that is when you can apply that
knowledge to advance your scalping and perfect your own strategy

- On the next few charts you will see some highlights, below is the key
- Green Oval - where I would have entered
- Red Oval - where I would have exited (this will be a 100% exit out of the trade, not including trimming
along the way)
- White Line - Stop loss in case of a reversal
- Purple Number - This is signal each separate play

Following that slide I will explain why I would have done what I did - keep in
mind we are playing the levels that we just went through how to get
Now We Will Walk Through Each Trade I
Would Have Made Here and Why (1-6)
Trade 1 and 2
Trade 1 - declining selling volume first 10
minutes on pullback and our “meaningful
level not marked” held strong with buyers
stepping in each time, forming a bullish
reversal hammer with volume. Entry long
on the break of the upper body on second
red 5 minute candle, stop loss below the
wick of that 3rd hammer candle (white
line), take profits at our premarket high

Trade 2 - Shooting star candlestick at the

rejection of that pre market high, entry
short on the break below that level with a
stop loss at the high of that candle (white
line), take profits at our ““meaningful level
not marked” which was strong support in
the morning
Trade 3 and 4
Trade 3 - Entry short on break of bear
flag with stop loss above the wick on
the last candle of the flag (white line),
take profits at out previous day high
(strong support as we cut through our
pre market gap level with no buyers
putting up a fight

Trade 4 - Bullish engulfing candle at

the previous day high support, entry
long on the break and close above that
pre market low, take profits at the
middle of our previous bear flag we
went short on as there was resistance
there, stop loss below the lower and
upper body of out previous 2 red
candles (white line)
Trade 5 and 6
Trade 5 - Entry long on the break back
above that premarket low where we
just did on the last trade with that
bullish reversal candle, stop loss same
spot as last trade as well, take profits
same sport as last trade

Trade 6 - Finally breaking the previous

day highs that we held all day, as we
broke another bear flag, entry on the
close below that level and open below,
stop loss (white line) at the bottom of
that bear flag resistance, take profits at
our previous day close (will show
some support)
Now Let’s Look At An Example From The
Watchlist On Friday (4/1/2021) And How
I Would Have Played It With The
Information Given
MSFT
- I am using this example
because I don’t think there was
any easier trade all day from the
watchlist as this that respected
its levels so well
- To the right you will see the
information you were given
before open
Trade 1
We knew 242 would was going to be
strong resistance all day. Entry short t
that double top with a stop loss (white
line) at a break above the daily highs
from earlier. Take profits at our
intraday support level.
Trade 2
Entry when we broke, closed above,
and opened above our previous
intraday high (this is where our stop
loss was last time as if we were to
break that we have room to our next
target. Stop loss (white line below the
wick of our previous candle. Take
profits at our target from the watchlist
(242.50)
Another Example From Fridays Watchlist
BA 4/1/2021
- To the right is the information
you were given
The only trade based on
the levels you were given
and why
So now I am giving a little more info and
things to spot. But something any new
trader should be able to do if they spend a
bit of time learnings.

Trade - Entry short as we broke below

and closed below out support level with
increasing selling pressure. Stop loss at
(white line) on a break above our entry
candles high. This would have given easy
profits at our target of 253.50. But now
notice how we bounce off that level but
we are doing so with decreasing buying
volume (bearish divergence). And we
form a brear flag with a nice break on
strong selling momentum. Take profits at
our last downside target given from the
watchlist
 Next we are going to go through a trade
again, but this time let's throw some studies
up there. So we started with playing those
levels if you knew the bare minimum, now
let’s add some stuff
TSLA
Same date from above. But this time I will be looking at the 30 minute time frame.
And I will also have the follow studies on my chart

- Slow Stochastic
- MACD

- Volume

- 20 SMA

- 50 SMA
Trade
- Slow stochastic
- %K (gray)crosses below %D (purple),
leaves oversold zone = bearish
- MACD
- MACD line (blue) is crossing below our
signal line (yellowish) = bearish
- SMA
- Since bullish trend change days ago we
finally crossed back below our 20 SMA =
bearish
- MACD/SlowStoch
- - Both these bearish crossovers happened
simultaneously, giving you that extra
confirmation.
ENTRY SHORT (labeled green oval)
TSLA price on entry 677.31

Stop loss - break back above 20 sma and close above, new 30
minute candle open above

Close of the 30 minute candle since breaking the 20 sma

● This candle opened below the 20 sma, buyers stepped

in and pushed it above that moving average but
couldn't keep it above and closed below it

- Both our MACD and Slow Stochastic lines are getting further
apart, meaning selling momentum is increasing

- Previous day high (support held for 90 minutes then broke)

- Multiple attempts to reclaim the 20 sma but failed, bear flag

formed and now broke

- Inverted hammer formed, possible bullish reversal candle as we

are bouncing off our 50 SMA

- Stop loss now adjusted to a break above that previous day high
and hold for 15 minutes)

- No bullish reversal but another bear flag breakdown below our

50 sma
- As this happens our MACD crosses our zero line
(bearish)

- Profits taken at red oval (661.85) which was our post market low
from the prior day and gap has been filled
TSLA Recap
Compare the first trade on TSLA we went over which was more scalping to this
recent one. That last one had the potential for a scalp, but turned into a day trade.
The first one we had 6 trades on the 5 minute chart scalping, where this one we
had 1 trade, for most of the day on the 30 minute chart. One requires far more
work, the other doesn't. And this is why I say you can scalp the watchlist from the
basics if you are new with some knowledge, or you can apply your own strategy to
it and have more potential. That is the beauty of trading is that there is no right or
wrong way
Fakeouts
PLTR - 4/5/2021
Highlighted here in green we see an
entry that may have faked some out as
they say the 5 minute candle open and
close above a target thinking there is
more to go. Here you could have done
2 things

1. Know your candlestick patterns and

spot that hanging man (bearish
reversal pattern)

2. Switch to the 15 minute or larger for

the extra confirmation to see that we
rejected that level
Recap
Setting levels and what to look for
Setting levels on higher time frames
Contract selections
Taking profits
Adding some studies
Fakeouts

**I will add to this watchlist as time goes on to give more examples and post the updates ones
when I do**