Guide 14.6
Intermediate, 11 min read. Checked with Scalpel 1.12.8 on .
In short
Scalpel is built around the small-cap momentum style Ross Cameron teaches at Warrior Trading: find stocks priced about $2 to $20, up 10% or more, trading 5 times their normal volume, with fresh news and a low float; trade them in the pre-market and at the open on patterns like gap and go and the micro pullback; and keep a small fixed risk, about 2:1 reward to risk and a hard daily loss limit. Each step maps to a Scalpel feature. This style is hard and risky, and many people who try it lose money.
Small-cap momentum trading looks for the handful of stocks each morning that are moving hard on news, and tries to take a small, quick piece of the move with a tight stop. Ross Cameron is one of the best-known teachers of the style, and his public material describes it in a consistent way: strict stock selection, a pre-market routine, a few repeatable patterns, hotkeys, Level 2 and the tape, and risk rules that keep losing days small. Scalpel was designed so each of those steps happens in one place, on your Interactive Brokers data.
The method's best-known part is its stock filter: five things a stock should have before it is worth watching. Here is each one, in plain words, and where it lives in Scalpel.
| Criterion | Why it matters | In Scalpel |
|---|---|---|
| Price about $2 to $20 | Cheap enough to move a lot in percent, liquid enough to get in and out | The PRICE column. Running up filters to Price min ($) 2 and Price max ($) 20 by default. The IBKR scanner's own range is wider (0.1 to 100) so sub-$2 runners still show |
| Up 10% or more on the day | Something is happening today, pre-market included | CHG%. The IBKR scanner's Min change % and Running up's Min gap (%) are both 10 by default |
| Relative volume 5x or more | Far more traders than usual are involved, so moves are real | RVOL, today's volume against normal. Running up's Min rel volume (x) is 5 by default (glossary: relative volume) |
| A fresh news catalyst | A reason for the move: news brings buyers | The catalyst chips in INTEL, such as FDA 4m or Trial data 52m: the kind of news and how long ago it broke, graded from None to Explosive (guide 9.4). Require news catalyst gates Running up |
| Low float, often under 10 to 20 million shares | Few shares available to trade, so demand moves price fast | SHS OUT: shares outstanding from SEC filings, the stand-in for float. The float is never larger, so a small SHS OUT means a small float. Running up's Max shares out is 10M by default (guide 8.4) |
Read the list the way the criteria do. WXYZ is $4.20, up 38%, at 12x volume, on a deal announced 25 minutes ago, with 3.0M shares out: all five. TUVW passes too. XYZA is under $1 with 152M shares out and a dilution warning. CDEF is up on an offering, which is new stock for sale, not a reason to buy it (guide 9.2). BCDE and QRST are moving on modest volume with 20M+ shares out.
The SQZ column folds most of this into one number from 0 to 100: a tight float (or few shares out), heavy relative volume (10x or more scores fully), shorts trapped, short interest, days to cover, a price in the $2 to $10 sweet spot and a small market cap, cut back if the company is selling or can sell stock. It is a quick way to rank the list, not a reason to buy.
The method does most of its work before 09:30, and so does Scalpel.
Guide 14.2 turns this into a full routine with times.
The method trades a few repeatable patterns. Scalpel's Setups scan watches every name on the IBKR scanner's list for them on the 1-minute candles, marks each with a lettered chip, and calls it out by voice and toast (guide 8.2).
| Pattern | What it looks like | Scalpel chip and callout |
|---|---|---|
| Gap and go | A stock that gapped up pre-market breaks above its pre-market high after the open | G, "Gap and go." The first cross above the pre-market high in regular hours, once per stock |
| Micro pullback | In a fast move, one small red or indecision candle that holds the run's low, then a candle that takes out its high | M, "Micro pullback." |
| Bull flag | A strong push up (the pole), one to three tight candles drifting sideways or down by no more than half the pole, then a break above them | F, "Bull flag." |
| Flat top breakout | Three to five candles stalling at the same high, within 0.3%, then a break above that shelf | T, "Flat top." |
| New high of day | Price breaks to a new high for the day in regular hours | H, "Breaking highs." |
| Consecutive run | Five of the last six candles green, then a new high | R, "On a run." |
A chip says a pattern is there; it does not say it will work. The detectors are deliberately simple, many patterns fail, and the same chip on a stock with no news and 50M shares out means much less. Use the chips to know where to look, then read the book and the tape yourself (guide 3.7).
The method relies on hotkeys, because momentum moves faster than a mouse. In Scalpel every action has a key (guide 4.3):
Every fill and exit is spoken, so you can keep your eyes on Level 2 and the tape, which is where the method reads the entry: buyers lifting the ask, a seller at a round number being cleared, the bid stepping up.
The method's risk rules matter more than any pattern. Scalpel has a control for each.
Decide what one trade may cost you and size every trade from it. Risk (Cents) does this: set the buy buttons to dollars of risk ($25, $50, $100 and $200 by default) and Scalpel works out the shares from your stop distance, 30c by default (guide 4.2).
Aim to make about twice what you risk. Every entry gets a take-profit at Take profit (R) times your risk above the entry, 2R by default (guide 5.4): on a 30c stop the target is 60c up. Selling half at the target and trailing the rest is a common variation (guide 5.3).
Stop for the day after a set loss, before a bad morning becomes a bad month. Settings > Risk > Daily loss ($), $1,000 by default, blocks new entries once your day's realised and open loss reaches it, with a RISK LOCK banner, and can flatten everything with Auto-flatten on daily loss (guide 7.1).
A worked example for a $25,000 account: risk $50 a trade (0.2%), a 2R target of $100, and a daily loss limit of $150. Three losing trades and the day is over; one winner pays for two losers.
The method judges a trader on accuracy and on the size of wins against losses. Analytics > Goals shows the same targets against your own trades, in SIM and LIVE separately (guide 6.4): ACCURACY (win rate, target 75%), PAYOFF (WIN/LOSS) (average win over average loss, target 2.0), PROFIT FACTOR (gross wins over gross losses, target 2.0) and EXPECTANCY (average R per trade, target positive), with a trader grade from Novice to Pro.
Do not go LIVE, or add size, until these numbers hold up over many SIM trades. Most people find their accuracy falls when real money is on the line.