E-Mini Scalping: verb To resell (or repurchase) something rapidly in order to make a quick profit.

Throughout history, there have been periods of expanded range and contracted range, and recent history has proven no different. What has changed is technology. As with most positive technologies, advances in trading execution and short-term strategies have done 2 things: Provided even greater liquidity at almost all price levels and driven the costs of doing business for retail traders down.

And, along with these advances has come a wave of change in short-term traders' sentiment. Many traders now believe that, for the serious profit seekers, the big intraday swings are now gone. How can a trader be profitable trading E-Mini futures and only targeting, let's say, 2 ticks? Let me tell you.

The S&P 500 E-Mini futures are my favorite trading vehicle, with one contract equaling Index Value x $50, Trades in .25 increments (a tick) and each tick having a value of $12.50. With commission costs ranging from $4.00 - $8.00 per round turn per contract (round turn = both the buy and the offsetting sell or vice versa for short positions), the active trader only needs to realize one tick to realize a profit.

Back in the "olden days," strategies such as "scalping" were next to impossible unless you were actually a floor trader in the pits of the exchange picking off quarter points in a regular fashion from "order flow". But, new technologies, such as eSignal and certain third party software compatible with eSignal, combined with advanced order execution platforms that allow a virtual plethora of pre-defined "order placement strategies," have exploded on the scene.

The ability to enter the market with one click and automatically set stops and profit targets and have your execution platform "trail" your stop loss orders is quickly becoming the norm and not the exception in online E-Mini futures trading platforms.

Now, we all know that just having a stop loss order in the market does not guarantee that your order will get filled at that price. But, my experience tells me that it is a very reliable way to protect my equity and keep me from getting "emotionally attached" to a position. With advances in timing software, order execution platforms and the decreased costs of doing business, this new "rapid fire" style of trading is emerging as a true opportunity to profit a little more today than we did yesterday.

Watching your eSignal Advanced Charts, say, in 1-, 3- and 5-minute time frames simultaneously, along with your favorite indicators, you see an opportunity to enter the markets long based on your particular strategy.

Remember: Fundamentally, we want to buy support and sell resistance. Let's take a sample trade: One click and we are long (buying) 3 contracts at market and placing a stop loss order based on our personal risk tolerance. Let's say .75 or 3 ticks below our entry price.

Our automated strategy offers: "Sell, with limit order above the market, 1 contract @ +.50 (2 ticks)." Price moves in our direction, and the limit order is filled for a +$25.00 gain.

The stop loss order on our remaining 2 contracts automatically moves to break even, virtually ensuring a profit ($25.00 realized profit — 3 round-turn commissions) after realizing a gain of only 2 ticks!

Our strategy automatically offers another contract for sale @ + 1.00 (4 ticks or 1 pt.). Price again moves in our favor, this time filling our order for a +$50.00 gain (4 ticks). One more contract left, and our stop is automatically trailed up as price increases and now rests at the breakeven entry point: plus .25, or one tick. The tide shifts, and we are stopped out for a gain of $12.50. Results: A $67.50 gain in a matter of seconds.

While this example does not take slippage into consideration, it does not include commissions. So, let's deduct a median commission of $6.00 per contract for active traders per round turn. That is still a $49.50 profit in a matter of seconds with only a one-point move, and the opportunity to repeat this process occurs dozens of times a day.

Let's take another sample trade: One click and we are long (buying) 3 contracts at market and placing a stop loss order based on personal risk tolerance. Let's say .75 or 3 ticks below our entry price. Our automated strategy offers: "Sell, with limit order above the market, 1 contract @ +.50 (2 ticks)." Price moves in our direction, and the limit order is filled for a +$25.00 gain.

The stop loss order on our remaining 2 contracts automatically moves to break even, virtually ensuring a profit after realizing a gain of only 1 tick!

Our strategy automatically offers another contract for sale @ + 1.00 (4 ticks = 1 pt.). Price again moves in our favor, this time filling our order for a +$50.00 gain (4 ticks). One more contract left, and our stop is automatically being trailed up as price increases and now rests at the breakeven entry point: plus .25, or one tick.

The trade continues to go in our direction, the stop loss order continues to move up behind us, and the S&P 500 E-Mini moves an additional 2 points, providing the opportunity to realize an additional $150.00 (12 ticks). Results: In this example, we entered the E-Mini S&P 500 market, and the position was virtually ensured profitable after only 2 ticks and ultimately realized a gain of $207.00 in a quick, 3-point move.

The daily range of the S&P 500 regularly gives traders multiple opportunities to catch a 2- or 3-point move. While there are many ways to "skin the cat" (or maybe a better way to put that is "scalp the cat"?) in the market these days, depending on your personal preferences, scalping continues to emerge as a very popular way to seek profits. Advances in technologies, such as eSignal's advanced charting capabilities, order execution platforms and additional timing tools, such as my SP 500 scalper software, aid traders in seeking short-term profits.

My credo: "A little more today than I had yesterday!"

*Reprinted (and modified) with permission from Jim Harrison