What to do? any advice?

Hi,
I try and make money scalping small amounts. Now my question is about stop-loss. Should I have a really tight stop, say 0.5 pips, so when i win a trade, i take 1pip so in the long run i will make money. Or shall i let the trade go against me 10 pips and then watch it go back down/up were i wanted it to go and make money, or should i set my stop-loss at a money amount and say if it goes x against me i ll stop the trade. Sometimes forex just seems a question of time, in the next hour you may be down but then a day later you would have been 10 pips up etc. as long as your not over-leveraged you can wait it out, takes balls to do that i know. my biggest losses have been closing the trade only to see it would have prospered if i waited an hour. Any intermediate or expert scalpers on this forum? sorry for the long post, cheers.

Greetings mrquickbuy. I’m not a scalper, but one thing I’ve learned is that using average volatility is a nice objective way to frame your stops, and help keep the emotion out of it. Also, if you’re looking to be a scalper, why look at what the trade does if you held it for a day? That wouldn’t be scalping would it? Instead, run a scalping program for a while and look at the numbers, not just stop sizes: average win size, win%, peak-to-through, etc. And look at it over a large sample size to see the performance in different market environments; trading is a body of work over a long period of time…a marathon, not a sprint. I think once you do that, you’ll start to find the settings and framework that works best for you. I hope that helps.

Hey, What is average volatility is that an indicator you can add to your chart? The problem I have is i practised on a demo for a year but my technique involved no stop-loss. I had a 99% win rate but unfortunately now im on a live account i dont have the balls to not use a stop-loss mainly because i remember a trade having a 50% drawdown before it came back for the win. So now I have the dilemma of cutting my losses extremely short or letting them run to the point where the r/r is -10/1. I feel like i guess the movement right more times than wrong, but im worried about having too many losses with too tight a stop-loss. Then at the same time if im only after 1 pip profit i have to have a tight stop. Its something im going to have to learn the hard way. Ive heard some people say you cannot make money scalping and only trade long-term riding the trend etc but i feel like to do that you have to have a larger account.

Hello, and welcome.

For volatility you can use the VIX index but you may not
have access to it; instead, you may want to use the ATR
(AveragebTrue Range) indicator, and the Real Volume
indicator - available through FXCM - or any other volume
gauge…

The ATR is particularly useful, I think… Try this article:

https://www.google.co.uk/url?sa=t&source=web&rct=j&ei=TcACVLG7EoWp0QW9yoHICQ&url=http://www.dailyfx.com/forex/education/trading_tips/daily_trading_lesson/2012/08/28/Managing_risk_ATR.html&cd=1&ved=0CB0QFjAA&usg=AFQjCNFwkuVwN7MQFLpwk2QQU7dJQmKHDg

Hopefully you now realize practicing on a demo for a year with no attention on the issue of risk was a waste. :17:

So… now back to square one. Time to start practicing on a demo again, but this time figure out how you want to manage your risk.

+1. I could not agree more.

What you need to do is go back to basics. You don’t have any hope, none trading short term either live or a demo, until you understand what the currency pair in front of you is saying to: With or without indicators. when The trading grave yard is full of wannabe traders that thought well if I make my profit 30 pips and set my stop loss at 10 pips I have a 1:3 risk ratio. If I use a lot size of 3% of my account I can never go broke even if I’m only right 50% of the time. First thing you need to learn is why the previous is bullsheeet. The RR, 3% means nothing just like going to the casino and say well its’ a black day so I’m betting black.

Markets can lonely move in three broade ways: up, down or sideways. Currency pairs are in one of 4 stages at all times. Different traders call them by different names, but they all mean the same thing. Consolidation (happens before price moves up), Markup, When price is trending up. higher highs, lower hights) Distribution( just before price moves down)and Markdown (when price is moving down, lower hights lower lows) then back to accumulation continuously . If you try and apply the same trading strategy to all 4 phases, you have to lose if not in the short term then long.

Example


Everything to do with Forex is price and it comes by way of a picture. Will it go up, Will it go down, how far up, how far down or is it just not going anywhere just sideways. . .you get this information from support and resistance lines. You confirm the information with indicators. Support and Resistance lines determine your entry, stop loss and potential profit.

Lastly, Before you can hope to have any chance trading in the smaller time frames, you have to be able to trade in the long term. Keep this in mind. Shorter the time the less mistakes you can make. Hope that helps
Gp

Thanks for the help, I have been looking at forex for a couple of years and have never traded any of the longer timeframes only the 1 minute chart. What is the difference between accumulation and distribution? also is accumulation always preceded by a markdown im guessing it is. This could be very useful information if it as simple as it seems, I dont think price moves in such a neat way always as it does in the above chart otherwise forex would be too easy and most people would be successful at it. Foe eg if you look at the EUR/USD daily chart you will see it is in a downtrend then you could call that markdown so you are just waiting for the accumulation next right, so in the theory of the 4 phases the EUR/USD should be experiencing a sideways trend soon? Have i understood that correctly? thanks.

Trading Station will allow you to view a chart of the VIX (and many other financial indices and stocks) by using the Yahoo Finance chart view.

In the Marketscope charts window, simply go to File > Create View and use the appropriate ticker symbol such as ^VIX for the VIX.

Thank you, Jason Rogers!!!

Hi Jason- that’s a great piece of information!
However, I can’t seem to get this to function properly.

Screenshot:


Thoughts?

Figured it out @ FxCodeBase.

Thanks, this is legit.

Do trade P&F and Renko too?

G’day bro. As much as we would love to scalp, it is a term that has been abused by marketers and the reality is that it takes a highly skilled speculator to prefect this art form. Doesn’t mean you can’t pick single digit pips through out the day. So adjust your perspective and think of yourself as a day trader and things like money management will fall into place. But as for a point to set a stop loss. On the presumption you are using the min or 5 min chart, look for the last or second last swing high/low to set stop loss at. Set your take profit the same distance from entry and you have a 1:1 RR ratio. I do recommend that if you are going to pursue this style of trading then a demo account wont cut the mustard. You’ll need a small micro account to practice in. Also head over here 301 Moved Permanently and see if you can get some ideas or share some thoughs

Quite right, Jake

I forgot to mention in my previous post that I installed the Yahoo Finance chart view on Trading Station as a custom indicator. I’m glad you found the free download at FxCodeBase.com

Excellent advice, bobbillbrowne…

Yes, ‘scalping’ is a very skilled way of trading that, perversely, attracts all new traders… The expression ‘death by a thousand cuts’ springs to mind… That is what could happen if you scalped without any idea of how to do it, and when to do it … Scalping during big-ticket news events, for example, is just the opposite
of what scalping is trying to achieve… But, of course, there is nothing wrong with trying… A micro account is the way to go, definitely…

Good luck.