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On this episode of the Words of Wisdom podcast, host Riz sits down with Paul Scott—an old-school City veteran with 30 years on the London Metal Exchange and across commodities, FX, and precious metals—to talk shop. Scott’s path from clerk to client liaison to trader gives him a rare, ground-level view of how institutions actually move size, think in ranges, and anchor decisions to price and value instead of predictions. If you’ve ever wondered what pros mean by “trade from specific prices” or why timeframes matter less than you think, this interview is pure signal.
In this piece, you’ll learn Scott’s core playbook: stop trying to predict direction, hedge around predefined levels, and harvest volatility while the market “shows its hand.” We’ll break down why he treats time as “non-existent,” how institutions reuse the same price areas for decades (business continuity), and the practical way to set stops and targets around those levels. By the end, you’ll have a simple, beginner-friendly framework to evaluate setups like a desk pro—price, value, ranges, hedge—without drowning in indicators or guesswork.
Paul Scott Playbook & Strategy: How He Actually Trades
Core Philosophy: Price, Value, Ranges
Here’s the big idea Scott pushes: stop predicting and start operating from prices that matter. He treats time as irrelevant and focuses on value areas that institutions repeatedly defend or attack. You’ll use pre-defined levels, then let the market choose the direction while you manage the risk.
- Work only from pre-defined levels (prior swing highs/lows, obvious consolidation edges, round numbers institutions use).
- Treat time as “non-existent”—don’t force trades by the clock; act only at your levels.
- Expect re-use of the same ranges over months/years; mark them and recycle them.
- Don’t forecast direction; prepare for both outcomes around the level.
The Level Game: How to Mark the Prices That Matter
Before any orders go in, Scott maps the battlefield. He identifies ranges and “decision points” where order flow must choose up or down. This section gives you a repeatable way to mark those zones so your trades start from strength, not guesswork.
- Draw the current range (last clear swing high to swing low); the midline is informational only.
- Mark the most recent two swing highs and two swing lows; extend them forward as decision lines.
- Add round numbers (00/50 handles) that coincide with prior reaction points.
- Keep the chart clean: remove indicators; keep only price, levels, and session markers if needed.
Hedged Execution at the Level (Make Money From Movement)
Scott’s twist: he doesn’t care which way it goes—he cares that it moves from the level. He structures for either outcome and accepts that one side will be a cost of doing business. Here’s how to operationalize that without overcomplicating it.
- At a decision level, prepare both a buy plan and a sell plan; you will only activate the one the market confirms.
- If price reacts and bounces: execute with the bounce (e.g., buy the hold above level). If it slices through, flip and execute with the break (sell the breakdown).
- Size both plans in advance so that a typical stop-out on one side is comfortably covered by the winner on the other side.
- Never hold both sides open; the “hedge” is optionality—two plans, one fill. If you do bracket orders, immediately cancel the non-triggered side.
Stops That Make Sense (Beyond the Typical Overshoot)
Scott places stops where the market usually stops faking and truly flips. That means learning the level’s “overshoot” behavior, not using a fixed number everywhere. Use this simple measurement routine and apply it consistently.
- Measure the last 20 touches of similar levels (or as many as you can find) and record the average overshoot (in ticks/pips) before reversal.
- Initial stop = level ± (1.2× average overshoot) to sit just beyond the usual fake.
- If trading a clean breakout, the stop goes back inside the range (beyond the last failed breakout wick).
- Position size = (risk per trade) ÷ (distance to stop). Do not compromise the stop to fit size.
Targets and Trade Management (Harvest the Range)
Targets are planned at the same time you plan your stop, before entry. Scott anchors take-profits to nearby structural points and accepts that targets are aims, not promises. Manage as the market reveals strength or weakness.
- First target (T1) = nearest opposing structure (last base/ledge/failed high/low); move stop to break-even after T1 is hit.
- Second target (T2) = edge of the larger range or next major level; trail below/above swing structure, not by a fixed number.
- If momentum weakens before T1, reduce size by a third and re-add only on fresh confirmation.
- If a break turns to a failed break (back inside the range), exit fast and look for the opposite setup.
When to Stand Aside (No Level, No Trade)
Not every candle is a signal. Scott is explicit: if you’re not at a level, you’re not in a trade. This keeps your equity curve smooth and your head clear.
- No trade if the price is mid-range with no clean decision level nearby.
- No trade if a scheduled high-impact event is moments away and your level is too close to be measured.
- No trade if the level is “dirty” (multiple whipsaws in the last few sessions without edge).
- No trade if the stop required exceeds your maximum risk per trade.
Preparing the Chart (Minimalism That Works)
You need a chart you can read in 2 seconds under stress. Scott’s process is Spartan: mark the map, then wait. Here’s how to set it up so you actually take the right trades.
- Use one higher timeframe to draw ranges (e.g., H4/D1) and one execution timeframe to trigger (e.g., M15/M5).
- Keep only two colors of levels: primary (major swings) and secondary (recent decision points).
- Add a simple session marker (e.g., London/New York) if it helps you anticipate liquidity.
- Screenshot your plan before the session and write one line: “If holds, I do X; if breaks, I do Y.”
The Two-Plan Checklist (Execute Without Hesitation)
The moment you’re at a level, decision-making must be mechanical. This checklist helps you flip between bounce and break instantly, like Scott does.
- Bounce plan: confirm higher low (or lower high for shorts) at the level; market order or limit with stop beyond overshoot; T1 at nearest structure; T2 at range edge.
- Break plan: confirm acceptance beyond the level (close outside + continuation); stop back inside the range; T1 at next shelf; T2 at major level.
- If neither plan conditions print within your pre-set window, cancel and reset—no “revenge scout” trades.
- Log the result and the overshoot observed; use it to update your stop template for next time.
Risk, Frequency, and Payoff (Trade Like a Desk)
Scott’s style is built for consistency: small, repeated edges instead of lottery tickets. These rules keep you durable through chop and expansion.
- Risk a fixed fraction per trade (e.g., 0.25%–0.5%); never increase risk after a loss.
- Cap daily attempts at each level (e.g., two tries max per side); if both fail, the level is done for the session.
- Track win rate by setup type (bounce vs. break) and by level quality (primary vs. secondary); shift focus toward the top performers.
- Withdraw “emotional capital” by enforcing a daily stop (e.g., -1%); flat is a position.
A Simple Weekly Routine (Rinse and Repeat)
Scott’s edge compounds when you plan, execute, and review the same way every week. Use this loop to keep your levels fresh and your execution sharp.
- Sunday: mark fresh ranges/levels on higher timeframe; note three best decision points for the week.
- Daily pre-market: write the bounce plan and break plan for today’s nearest level; define stop distance via the overshoot method.
- Post-session: journal fills, overshoot measurements, and whether T1/T2 were realistic; adjust level quality tags accordingly.
- End of week: promote or demote levels; keep a “Hall of Fame” map of the prices that paid you.
Size Risk First: Fixed Fraction, Variable Distance, Zero Ego
Paul Scott starts every trade by deciding how much he’s willing to lose—never the other way around. He fixes the risk as a small percent of equity, then lets the chart dictate how far the stop needs to be, so the position size flexes while the dollar risk stays constant. That separation between “how much” and “how far” keeps him from cheating the stop to fit a bigger size. It’s a discipline move, not a prediction move.
Scott also measures typical overshoot around his levels, placing the stop just beyond where fake-outs usually die. If the required stop is too large for his fixed risk, he simply reduces the size or skips the trade—no exceptions. He treats risk like a bill that must be paid up front, not an optional tip at the end. Ego never gets to vote; the math decides, and Paul Scott follows it.
Let Volatility Decide: Allocate, Adjust, and Stand Down When Wild
Paul Scott sizes positions and sets expectations based on current volatility, not gut feel. When the range expands, he cuts size and widens stops to keep the same dollar risk; when the range contracts, he allows tighter stops with slightly bigger size. He uses ATR or recent average swing to gauge “normal” movement, then calibrates entries, stops, and targets to that bandwidth. If volatility spikes beyond his predefined bands, he doesn’t “adapt”—he stands down.
Scott also links profit-taking to volatility, so targets aren’t fantasy numbers. In calm conditions, he’ll aim for smaller, quicker T1/T2 milestones; in fast markets, he stretches targets but only if the structure supports it. Any sudden volatility regime change after entry triggers a rules-based rethink: reduce, hedge, or exit to preserve the equity curve. The message from Paul Scott is simple—let volatility lead, and your sizing, patience, and exits will take care of themselves.
Diversify Smart: Underlying, Strategy, and Duration—Not Just Symbols
Paul Scott spreads risk across what actually matters: different underlyings, different strategy mechanics, and different holding durations. Owning five tickers that move together is not diversification; it’s a costume change. He pairs mean-reversion bounces with breakout continuations so one style eats when the other starves. He also mixes session timing—London open plays vs. New York reversions—to avoid loading the same clock risk.
Scott balances the book by risk units, not by number of trades, so one wild product doesn’t dominate the P&L. If correlations spike, he dials down total exposure or chooses the single best setup and bins the rest. He won’t take two trades that express the same idea through different symbols; “same trade, twice” is banned. In Paul Scott’s framework, diversification is engineered at the edge level, so the portfolio survives regime shifts instead of hoping they don’t happen.
Trade Mechanics Over Predictions: Rules, Triggers, and Pre-Planned If/Then
Paul Scott treats forecasting like background noise and execution like the whole game. He shows up with two scripts at every level: a bounce plan and a break plan, each with entry, stop, and targets prewritten. Confirmation is mechanical—close above/below the line plus a micro pullback, not a hunch. If the confirmation doesn’t print within his timed window, the trade is canceled, not “massaged.”
Scott’s order type is chosen by context: limit on clean retests, market on decisive breaks, and no scaling unless the structure gives a second, rule-based add. He moves to break-even only after T1 is banked, not just because the price moved a few ticks. Any failed break that re-enters the range triggers an immediate exit and a flip alert, per rule, not mood. With Paul Scott, the mantra is simple: write the if/then before the session, and during the session, just follow it.
Choose Defined Risk Setups and Enforce Process Discipline Every Session
Paul Scott prefers trades where the maximum loss is known before entry and locked by structure—clean levels, measured stops, and prewritten exits. He rejects undefined risk behavior like averaging down, moving stops wider, or “it’ll come back” holds. Each session starts with a checklist: risk per trade, active levels, bounce/break scripts, and a daily loss cap that takes him to flat if hit.
Discipline is enforced in the journal, not in memory. Scott logs whether the setup was truly defined-risk, if T1/T2 matched the structure, and whether he obeyed the stop without exception. Two strikes at a level and he stands aside; one rule breach and he reduces the size the next day until compliance is perfect. In Paul Scott’s world, consistency isn’t a vibe—it’s a contract you sign with your plan and honor trade after trade.
Paul Scott’s message lands with unusual clarity: stop forecasting, start operating. Across three decades from the LME pits to the screen, he learned that institutions don’t worship predictions—they work from price, value, and ranges. Trade only at pre-marked decision levels, accept that time is irrelevant, and let the market show its hand. Risk comes first, always fixed in cash terms, with stops set just beyond typical overshoot. If volatility expands, size down and widen room; if it contracts, tighten up and let size breathe. When the market turns chaotic or your measured stop exceeds your risk budget, you simply stand aside.
Mechanics beat opinions in Paul Scott’s world. Write two scripts for every level—a bounce plan and a break plan—and trigger only the one the tape confirms. Targets anchor to structure (T1 nearest obstacle, T2 the range edge), and a failed break back into the range is an automatic exit, not a debate. Diversify by underlying, by strategy archetype (mean reversion vs. continuation), and by duration or session, not by holding five symbols that express the same idea. Keep a journal that measures overshoot, setup quality, and rule adherence, and promote or demote levels each week based on how they actually pay. Do this with discipline and humility and, as Paul Scott keeps reinforcing, you’ll harvest movement from the same prices institutions have respected for years—without needing to guess where tomorrow goes.
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