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Waiting Until You Are Right (4 of 6)


Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

This segment, the fourth in a planned 6 part series, explains why when entering a scalp you should have a price target and not a time target, how to use this information to pick higher probability scalps and stay engaged in the markets.

The tastytrade way of scalping is not necessarily a day trade. It isn’t really a swing trade either. What we do is to look for a specific profit target rather than a set amount of time in which we hold a position. This results in our time-per-scalp to vary widely as will be explained.

We can calculate the probability of reaching our target in a given time period based on volatility,. Given a 7-day expected move of approximately $2.50, /CL has an 84% probability of reaching +/- $0.50 ($500 profit or loss) today. TP helps explain the math and makes it understandable.

A table was displayed of the standard deviations and probability of exceeding range was displayed. The standard deviations shown were 0.25, 0.50, 0.75 and 1.00. We can use this table to calculate profit targets for our scalps. An example using the e-mini was given. The probability of reaching your profit target will increase due to the additional time in the trade; however, targets may need to be adjusted if the scalp has moved against you.

Watch this segment of "Scalping” (and the rest of this compelling series), with Tom Sosnoff and special guest host Tom Preston to better understand and to learn how to scalp futures and how this can improve your overall engagement in the markets.

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