Simple 1 Minute Scalping Strategy To Make $300/Day (Backtesting REAL Results)

Summary

This 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.