Scalp Trading: Equities
Status: Scaffolded - Content pending Last Updated: 2025-12-11
How Equity Scalping Works
When you request a SCALP trade on a STOCK, here's what the algorithm does:
Data Collection
| Data Type | What We Get |
|---|---|
| Current Price | Real-time snapshot (bid, ask, last, volume, VWAP) |
| Historical Bars | 2 days of 1-minute candles |
| Bars to AI | 20 most recent bars |
| Indicators | RSI(9), EMA(9), MACD |
| VWAP | Volume-weighted average price (from snapshot) |
| Previous Day | PDC, PDH, PDL |
| Market Context | SPY, QQQ direction |
Analysis Flow
1. Data Collection (2 days, 1-min bars)
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2. Technical Agent analyzes:
- Support/Resistance (last 30-60 min swings)
- Opening Range (first 15 min)
- PDC, PDH, PDL
- RSI(9), EMA(9), MACD, VWAP
- Chart patterns
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3. Macro Agent checks:
- SPY/QQQ direction
- Market regime
- News sentiment
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4. Wild Card Agent checks:
- Breaking news
- Timing risks
- Lunch hour rule (12-1 PM ET)
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5. Supervisor synthesizes:
- Entry zone
- Stop loss (guardrail typically $0.50-$1.00 on liquid equities; anchored to support/resistance + volatility)
- Targets (typically $1.00-$1.50 and $2.00-$2.50, anchored to resistance)
- Position size
Entry Methodology
Mike's Approach for Scalping:
- Identify Key Levels — Opening Range, PDC, PDH/PDL
- Wait for Pullback — Don't chase breakouts
- Enter at Support — Let price come to you
- Full Position — Don't scale in, commit at support
Position Sizing
Risk Amount = Account Size × Risk Percent
Shares = Risk Amount ÷ Stop Distance
Example:
- Account: $50,000
- Risk: 1% = $500
- Stop: $0.75 below entry
- Shares: $500 ÷ $0.75 = 666 shares
Exit Rules
| Condition | Action |
|---|---|
| Price hits Target 1 | Exit 50% of position |
| Price hits Target 2 | Exit remaining 50% |
| Price hits Stop Loss | Exit 100% immediately |
| Time Stop (15-30 min) | Exit 100% at market |
What the Trade Plan Looks Like
Direction: LONG
Entry Zone: $48.20 - $48.40 (support bounce)
Stop Loss: $47.50 - $47.80 (below support)
Target 1: $49.20 - $49.50 (50% of position)
Target 2: $50.00 - $50.50 (remaining 50%)
Time Stop: 30 minutes max
Position Size: 500 shares
Max Risk: $500 (1% of account)
Scalp Equity Checklist
Before entering:
- Volume above average for time of day
- Clear support level identified
- Not in lunch hour (12-1 PM) for small caps
- Bid-ask spread < 0.05% of price
- No major news imminent
- SPY/QQQ not in freefall