If you have been reading my morning trading plans, or if you follow me on twitter, you will notice that I mention a lot about how I will “scalp” various ETF’s throughout the day. While I am a swing-trader primarily, on the side I like to scalp a few of the ETF’s I am familiar with, mainly those pegged against an index. The ETF’s that I typically use for scalping are those from the S&P such as SPY, SDS, and SSO – the latter two of which, are 2x Ultras. I will also keep an eye on the Russell 3x Ultras like TZA and TNA. I really don’t have a preference between 1x, 2x or 3x, but I do tend to lean more towards the 2x because 3x can move sometimes faster than I can get the order in for and 2x doesn’t require that I commit as much capital to the trade as a 1x like SPY or QQQQ.

Much of the same strategies that I use in swing trading, I also use in scalp trading as well. But with scalping, my positions are MUCH, MUCH larger – sometimes four or five times the amount of a typical swing trade. As a result, I will never, ever, ever hold a scalp trade over night – that is about one of the surest ways to capitulate a portfolio – and I am simply not willing to do that or even take the chance that I can get away with it even once or twice. But  I’m not going to lie and not say that there haven’t been times when I bought a huge chunk of shares in TNA, and the next morning the Russell index is up 2% and I say to myself, “Man, if I had held overnight, I could have made a real killing!” But I know better than to act on those thoughts and actually do it. So make that RULE #1 – Never hold a scalp/day-trade overnight.

In the coming days, I will talk about risk management, what kind of setups I prefer, the ones I do not prefer, when I take profits, among other things. There are a lot of parallels to swing-trading and day-trading, however with day-trading I like to rely a lot more on indicators to determine my entry, which is also another area that I will dive into with you all.