Simple 1 Minute Scalping Strategy To Make $300/Day (Backtesting REAL Results)
Summary
TLDRThis video outlines a one-minute scalping strategy for traders with limited time, focusing on the first two hours of the market day. It details a method using the 5-minute opening candle's high and low to identify four potential trading scenarios on the one-minute chart. The strategy emphasizes quality over quantity, aiming for a 2R multiple on each trade, and demonstrates a week-long backtest on SPY, showcasing an 80% win rate and emphasizing the importance of risk management for trading success.
Takeaways
- 📉 This video explains a one-minute scalping strategy for trading the first two hours of the day.
- 🕔 The strategy focuses on using the 5-minute opening candle to gather information for scalping on the 1-minute chart.
- 📈 The strategy involves identifying the high and low of the first 5-minute candle and using four different scenarios for entering trades.
- ⚖️ The four scenarios include two bullish setups (holding the 5-minute low or breaking and retesting the 5-minute high) and two bearish setups (breaking and retesting the 5-minute low or rejecting the 5-minute high).
- 🕵️♂️ The strategy emphasizes the importance of understanding price action and candlestick patterns.
- 📊 The average risk-reward ratio aimed for is 2:1, and the strategy can be adapted to higher time frames like 2-minute or 5-minute charts.
- 🔍 The video demonstrates the strategy through backtesting over a one-week period, focusing on one trade per day.
- 📉 The backtest showed an 80% win rate over five trading days, highlighting the importance of quality over quantity in trading.
- 💡 The strategy uses strong price action signals and key levels to filter out subpar trades, ensuring only high-quality trades are taken.
- 💰 The backtest results showed a total profit of $2,620 for the week, emphasizing effective risk management and the significance of a high R multiple.
Q & A
What is the main purpose of the one-minute scalping strategy discussed in the video?
-The one-minute scalping strategy is designed to allow traders to only trade for the first 2 hours of the day, freeing up the rest of the day for other commitments. It is based on the 5-minute opening candle and aims to provide profitable trades without the need to constantly monitor the markets.
Why is the 5-minute opening candle significant in this trading strategy?
-The 5-minute opening candle is significant because it provides a lot of information about the market's direction for the next minute. By analyzing this candle, traders can identify the high and low points and use them to set up trades for the rest of the day.
What are the four scenarios for entering a trade based on the 5-minute opening range?
-The four scenarios are: 1) A move down to the 5-minute low and holding that level for a potential upside move. 2) A move above the 5-minute opening high and then retesting the high for a continuation to the upside. 3) A retest of the high of the day or 5-minute high for a move to the downside. 4) A break below the 5-minute low and then a retest for a move to the downside.
How does understanding price action improve the effectiveness of this trading strategy?
-Understanding price action is key to this strategy because it allows traders to read the market's behavior and make more informed decisions about when to enter or exit a trade. It helps in identifying strong price action signals that confirm a trade setup, increasing the likelihood of a successful trade.
What is the recommended risk-reward ratio for this scalping strategy?
-The recommended risk-reward ratio for this strategy is at least a 2R multiple, meaning for every dollar risked, the trader aims to make two dollars in profit. This helps ensure that even if some trades are lost, the overall profitability can still be maintained.
Why is it important to wait for a strong price action signal before entering a trade?
-Waiting for a strong price action signal is important because it confirms the trade setup and increases the probability of a successful trade. Without a strong signal, entering a trade may lead to false breakouts or fakeouts, resulting in unnecessary losses.
What does the term 'displacement' refer to in the context of this trading strategy?
-In this strategy, 'displacement' refers to the move from the key breakout level all the way down before the retest back into the zone. It indicates that the market has moved significantly in one direction, and traders look for a retest of this level for potential entries.
How does the strategy handle news events that cause sudden price movements?
-The strategy acknowledges that news events can cause rapid price movements that may not allow traders to exit their positions quickly. In such cases, the video suggests not counting these as profit targets, as they are not realistically tradable due to the speed of the event.
Outlines
🕒 One-Minute Scalping Strategy for Time-Efficient Trading
This paragraph introduces a one-minute scalping strategy designed for traders with limited time due to other commitments. The strategy focuses on trading within the first two hours of the market day, using the 5-minute opening candle to identify potential entry points for trades. The speaker emphasizes the importance of trading for freedom of time, and outlines four scenarios based on the opening range that can be used to enter trades without bias. The strategy is explained with an emphasis on quick, intraday trades that capitalize on price action within the first part of the trading day.
📊 Analyzing Price Action for Scalping Opportunities
The speaker continues to describe the scalping strategy, focusing on how to analyze the 5-minute opening candle on a 1-minute time frame to identify a range of potential trades. They discuss the importance of observing the price action within this range to determine the high and low points that will guide the entry points for trades.
Mindmap
Keywords
💡Scalping Strategy
💡5-Minute Opening Candle
💡Price Action
💡Risk-Reward Ratio
💡Displacement
💡Intraday Trading
💡Trade Frequency
💡Stop Loss
💡Profit Target
💡Backtesting
💡Quality Trades
Highlights
A one-minute scalping strategy is introduced for traders with limited time to monitor the markets.
The strategy leverages the 5-minute opening candle to inform one-minute trades, allowing for trading within the first 2 hours of the day.
Traders can identify four different scenarios for entry based on the high and low of the first 5-minute candle.
The importance of trade frequency and its impact on daily trading is discussed.
The strategy is applicable for those seeking to trade daily, with potential for more frequent use than other strategies.
A detailed explanation of how to identify entry points using price action and the 5-minute opening range.
The strategy emphasizes the importance of displacement for validating breakout levels.
Risk management is highlighted through the use of a 2R multiple for scalping on the one-minute chart.
The video provides a backtest of the strategy over a one-week period using SPY as an example.
A step-by-step walkthrough of daily trades, including entry and exit points, is demonstrated.
Transcripts
if you're trying to find a profitable
trading strategy but you have work
school or other commitments that you
can't sit in front of the markets all
day to watch the charts in this video
I'm going to explain my one minute
scalping strategy that allows me to only
trade for the first 2 hours of the day
and then enjoy the rest of the day
because at the end of the day the reason
you want to be a full-time Trader is not
to sit in front of the charts all day
but rather you trade for freedom of time
and being able to do whatever you want
whenever you want so with that being
said let's get into the video so what is
the strategy the strategy involves a
5-minute opening candle as we know the
5-minute opening candle gives us a lot
of information on the one minute and the
one minute is where we're going to scalp
from now here we can see the 5 minute
opening candle but if you actually zoom
into the 5-minute opening Candle on the
one minute what do we see here well we
simply see range so this 5-minute candle
though it's bullish on the 1 minute time
frame we can see that there was multiple
candles making up this 5-minute opening
candle because of this what we want to
do is draw out the high and low of the
first 5minute candle and based off of
this we have four different scenarios
that we could enter the stock from this
allows us to not go into the day with a
bias but simply understand how to enter
the trade based off of the intraday
price action and just have quick scalps
to be done the day within the first 2
hours now the four scenarios we have
within the 5minute opening range is
simple for the two bullish scenarios we
see here it is simply moving down to the
5minute low and then holding holding
that level for a move potentially to the
upside and then number two for the
bullish side is a move above the 5
minute opening high and then R testing
the high because that's the lowest risk
entry for a move to high a bay and
continuation vice versa for the be side
we have the retest of that high of day
or 5 minute high for a move to the
downside or a break below the 5- minute
low and then a retest for a move of
course to the downside so every single
day there's four scenarios that could
potentially play out therefore if you're
someone that needs to take a trade a day
we talked about trade frequency in my
last video If you haven't watched it
it's such an important video however if
you guys understand trade frequency if
you're someone that wants to trade daily
this strategy may be for you I have
other strategy videos on my channel of
course however this strategy is probably
something that you can use more often
than the other ones just because every
day you will get the 5- minute high and
low and most likely if the stock isn't
consolidating you will get a break to
either side that you can play one of
these potential four scenarios out now
when we keep moving here this is simply
what we're looking for as you can see
here we had the break on the 5 minutes
see an impulsive candle strong
displacement a retest with a strong
price action candle our stop loss is a
close right below that 1 minute candle
and our profit Target here will simply
be high of day which is a 2.52 risk
toward trade now a couple things you
have to understand about this strategy
number one the average risk reward we're
looking for is simply a 2R multip if
you're scalping on the one minute chart
however for some people they want to go
on the higher time frame and that's
completely fine as well if you want to
trade this on the 2-minute the 5 minute
even the 10minute all you have to do is
just go higher in time frames for
example if you want to trade the
2-minute opening range you may want to
Mark out the first 10minute candle and
then look for the retest of that however
for me what works the best for scalping
is the 1 minute time frame because the
most precision and the highest reward is
going to be on the one minute time frame
if you can Master volatility now with
this being said as long as you
understand price action which I have a
full in-depth guide explaining how to
read price action and candlesticks as
long as you understand that concept this
strategy is extremely effective now in
this video what I'm going to do is back
test this exact strategy that I just
explained to you guys over a onewe
period on spy and based off that onewe
continuous back testing all we're going
to do is look for one trade a day we're
going to trade from 9 :0 a.m. eastern
time to 11 a.m. eastern time and the
purpose of this video is to give you
multiple examples so you can come back
to this video at any time in the future
and rewatch The examples to see exactly
how I enter the trade compared to how
you may have entered your trade and also
to give you realistic results over a
onewe time frame I'm going to do it
continuously and therefore you're going
to be able to see the results over a one
we period rather than me going and
looking at hindsight or cherry-picked
examples so with that being said let's
get into the the example all right so
here we can see we are opening up on
Thursday on spy and I'm going to do this
over a 1e period therefore I'm going to
do it till Wednesday now of course for
back testing results this isn't enough
data so I recommend you go and back test
this yourself as well but I just want to
show you over a onee period if this
strategy is going to be profitable or
not so the first thing we have to do on
the first 5 minute candle here is simply
Mark out the high and the low of the
first 5 minute candle now we go to the 1
minute time frame and on the 1 minute
time frame you can see of course we have
a little bit more data here we can see
this candle came up strong we had an
impulsive move to the upside we then
rejected this high and now we're coming
back down so of course the 1 minute
gives you a little bit more data that
you weren't able to see on that one
5minute candle and now what we're simply
waiting for is what we talked about
earlier number one is either a hold of
this level and a push to the upside
number two is either a break of The
Upside and a retest for a move once
again to the upside or or we're looking
for a break and retest of the downside
or a rejection of that 5-minute high for
a move to the downside so those are the
four scenarios that we're looking at for
this specific trade now let's play out
the trade and see exactly what
happens so one thing I want you guys to
notice here as well is as we moved up
here we broke the level but then we came
back and we Consolidated so this break
right here doesn't show enough
displacement what displacement means is
it's simply the move from the key break
of the level all the way down before we
get the retest back into our Zone and we
need displacement to of course enter the
trade with this level here we can see we
broke and then this candle pushed right
back up above our level therefore this
level so far has been invalidated for a
move to the downside this is where
understanding price action is key but so
far we have not entered into this trade
because we haven't gotten any bullish or
bearish signals near our key
levels as we can see here we're simply
just consolidating so far we haven't
created a clear Trend and the reason I
can't take this for a potential move to
the upside is because we have actually
broken that level and then moved back up
and therefore so far this is simply a
choppy day and now what I would be
waiting for the only way I would play
this day is if we broke the 52421 level
for a retest or if we broke the 525
level up here for the
retest here now we see this displacement
what we see here is displacement what
this refers to is an impulsive move
after the breakout this means that now
sellers are in control and therefore we
are now looking for a retest of this
previous 5 minute low so let's keep
playing out this
trade and as we can see right here what
we're getting is that rejection of the
trade we can see we pushed back up into
that 5minute opening range and we're
getting a bearish inverted Hammer candle
we also see that the green candle was
not able to close above the 5-minute low
and therefore we can enter into this
trade here now we would enter into a
short position and this trade is fairly
simple our stop loss can simply be a
break of this green candle right here
because once again if we go back into
this 5minute opening range this means
most likely we're going to consolidate
how we did back here and our profit
Target here can simply be low of day now
this is a
3.79 our multiple trade we enter into a
short position here and let's see
exactly what happens
and we made a very nice move to the
downside now this was a
$325 day on Thursday I'm going to back
test until Wednesday and at the end of
the video I'll show you the results for
the full week the total p&l the amount
we risked and the amount we actually
profited so make sure to stick to the
end but with this being said let's go
over to the next day on Friday all right
here we are on Friday I marked out the
opening High and the opening low for the
first 5-minute candle and now all we're
waiting for is the four potential
scenarios to set up so let's play out
this
trade and as we can see we got a very
strong move to the upside right at the
beginning of the day now what we're
waiting for is the retest the retest
opportunity is down here and then a push
to the upside so let's see if we can get
that potential
move now here's a scenario where the
trade does not occur the reason this is
is because when we push back in here
this candle right here had no strong
price action if this candle closed like
the candle down here then of course we
would be able to enter Because this
candle shows that sellers made the stock
go all the way down but buyers brought
it all the way back up and closed it
with the strong Hammer candle
unfortunately with this candle we can
see that buyers did try to bring it up
but then sellers came all the way at the
top and closed it below our specific key
level and because of this we can't enter
into this trade based off of the weak
price action and we still need to wait
for a potential trade to set up so you
can see with the stry you only enter A+
trades and it allows you to not enter
into these subpar trades because of the
price action that's presented near these
key levels so let's keep playing out
this
trade so we had the move initially and
now we have the displacement so now
after we did break to the upside but
most buyers got faked out to the
downside if we do retest this low with
the weak price action candle this would
be a perfect entry for a short position
so let's play out this
trade and as we can see here we came up
and we actually retested this level
right here and then we put in a weak
price action candle so how would I enter
into this trade specifically well I
would be looking for a short position
here and my stop- loss in this specific
trade would be this impulsive candle
that tried to break this level therefore
my stop loss would be up here and for my
profit Target because low of day is so
close we would have to look at previous
day levels or even psychological numbers
now in this example here we can see that
the pre previous day low actually occurs
right here at
52134 this is the previous day low and
therefore this can be used as a profit
Target for this specific trade so if we
were to enter into this trade here our
profit Target would be all the way down
here with our stop loss of course being
at the close of this impulsive candle
High because once again if we come back
into that level we could potentially
just have range or move to the upside so
this is a 3.49 R trade once again we
enter into a short position and let's
play out this
trade this was a solid trade all the way
down to those lows and this was a
$1,090 trade so this was Friday in this
example we were able to see how we only
enter A+ trades now let's go over to
Monday to continue our week here we are
on Monday I marked out the high and low
of the first 5minute opening range now
let's play out this trade and see
exactly what happens so as we can see in
the beginning of the day we were just
consolidating in between 5291 16s and
528 61s now we can see a strong move to
the downside with a strong displacement
so all we're simply looking for is the
retest of this displacement and then the
rejection of that low so let's play out
this trade and see if we can get that
retest now here's an interesting
scenario now this was a 10:00 news pop
however after the news pop you can see
that the news had the rejection of 5291
16s and then we continue to reject on
the next candle with a very weak candle
so how would I potentially play this
trade out I would look to enter into a
short position here my stop loss would
simply be a break Above This 101 candle
and the reason being for that is because
once again we come right back into range
if we do break back into that 528 61
level and of course as we talked about
earlier we need at least a 2 R multiple
now within that two our multiple what I
can see is this
526 level based off of this 526 level
right here this would give us around a
2.04 r trade and therefore because I
trade at least a 2 R multiple that's my
average risk to reward I can enter into
this trade so let's enter into a short
position here now some people are going
to ask why 526 this is a whole
psychological number if you haven't
watched my other videos it's very
crucial that you go watch those as well
just to understand more things about
price action Market structure and
exactly how I'm entering and exiting
this trade but you just need to
understand that this is a whole
psychological number and this is where
institutions mainly buy or sell at
because it is a whole number now let's
play out this trade so far as we can see
we are simply just
consolidating and there we go there's
that 526 level we can see that was
$950 on the day with a
2.04 r trade so so that's Monday so far
we've done 3 days we have two more days
left so let's go over to Tuesday once
again now we're on Tuesday I marked out
the first 5 minute opening high and low
let's play out this
trade and as we can see here this is a
different trade than we've taken so far
however what we're getting here is a
rejection into the open a move down and
then a rejection once again off 52677
which is the high of the 5 minute so so
we can look for a potential short
position because this is such a weak and
bearish candle looking for a move down
to 52577 and our stop loss in this case
scenario would simply just be above high
of day in this scenario here we can just
put it at
52690 so this would be a 3.52 risk to
reward trade let's enter into a short
position here and see exactly what
happens
unfortunately as we were making that
move down right we did have an impulsive
candle to the upside and because of this
we did hit our stop loss here and
because we wait for the candle to close
the candle closed right here and this
was a minus
$235 trade now of course with every
strategy this is why I'm doing it over
the onee period this isn't Cherry pictor
hindsight examples but what I want to
show you guys is that every strategy
right you will lose because this isn't
textbook and I'm showing you in the real
Market at what happened literally last
week you see that I lost the $235 but
because of the proper risk management it
wasn't that big of a loss because every
trade is over to or multiple and
therefore what that means is even if we
lose one trade or two trades on the
third trade if we win that we will still
be profitable or break even and
therefore this $235 loss is completely
fine on the Tuesday now let's go over to
Wednesday which is the final day of the
week and then we'll do the final total
profits for the whole week here we are
on Wednesday this is the last day of the
week for us because we started on
Thursday therefore this was one week of
back testing this is once again 5-
minute candles we're looking for those
four potential scenarios to play out for
this week so let's play out this trade
as we can see we're currently breaking
that 5312 level we're going to be
looking for the retest now this retest
here we see that it came back up and we
actually are pushing above the retest
level therefore there's no weak price
action just yet for us to enter in on
now we can see that we did break again
to the downside this time a stronger
displacement making a new low of day
showing low of day continuation and
therefore now we are looking for once
again that retest of 530 12s hopefully
this time we can get a little bit better
price action now in this scenario here
we can see that we're retesting with a
weak price action candle we came back up
and we are printing a we candle that is
closing as a red candle with a clear top
right here so we can enter into a short
position like we talked about before our
stop loss in this scenario would just
simply have to be above this previous
pivot level right here and for our
profit Target if we simply do low of day
that's only a 1.69 R multiple like I
talked about we need at least a two R
multiple so we can actually scroll back
out on the day and as we can see this
previous day high level is what we can
Target because that's a pivot level on
The Daily time frame which holds a lot
of emphasis on the chart we can have
this as our profit Target which would
give us once again a 2.93 r multiple
trade we can enter into a short position
here and let's see exactly how this
trade plays
out now this candle right here was a
news candle at 10:00 and because of how
fast it happened most likely you weren't
going to be able to get out of your
trade and therefore I want to make this
realistic therefore we're not going to
count this as a profit Target because it
did happen so fast that realistically
you weren't going to be able to get out
of that position that fast
however as we can see even with that
news candle we did make a move down now
we can obviously exit out of the trade
and this was a
$490 trade to end off the week now let's
go over and see the results of the week
the total profit the amount we risked
and the risk reward multiple that we had
per trade okay now we're here for the
results of the total week there was only
five trading days for the week of course
and therefore we took one trade a day I
hope you guys noticed that with this
strategy it's more about quality of
trades in quantity for myself I like to
only take one to two quality A+ trades
per day I don't like to push the limit
over that and recently I've only been
taking one trade per day and it's been
working out extremely well and here we
can see we took five trades four of them
won which was an 80% win rate now with
this win rate we have to look at the
results so when we look at the results
these are the five trades that we took
we can see the r multiple so 3.79 3.49
2.04 3.52 and 2.93 what this means is is
for for every dollar that we risked we
would have made
$379 for that trade so if we risk $1
that dollar would have turned into $379
now as you can see for most of these
it's much over that 2 R multiple and if
you average all of these out it would
come out to around a three R multiple
for this specific week but in my
personal opinion as long as your R
multiple is over two that's still
completely fine with this strategy as we
can see on the first day we made $325
then we made $1,090 $950 on the third
day we lost $235 on trade 4 and we won
$490 on trade five one thing I want you
to notice as well notice the loss
compared to all of the wins the loss is
so much smaller because our R multiple
is so high therefore for you as a new
Trader or if you've been trading for a
little while just understand your risk
management and the way you use your R
multiple will take you much further than
trying to get the best win rate and this
is why in my opinion risk management and
your R multiple is key to your trading
success now when we look at the results
for the 5 days that we back tested
because there's five trading days in a
week we made
$2,620 for the week now of course like I
said this is just a onewe back test just
just show you a little bit more
realistic results and examples so you
can come back to this video and rewatch
it however I always recommend try to
back test the strategies yourself to
increase your confidence and conviction
to actually enter and use the setup so
with that being said if this video
helped you make sure to give it a like
if you have any questions put in the
comments down below make sure to follow
me on Instagram and Twitter and I'll see
you guys next week with a brand new
video
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