Hi All,
I am starting this thread from pure curiosity, if I am capable of profitable scalping. I’ve started playing around this week and decided to add some structure and discipline (discipline part may become a joke).
I would appreciate any comments, hints or questions
Money Management Plan
I will start from smallest lot size (0.01 lot with 30:1 leverage) possible and aim for very small amounts. Aim is to work with real money but without being stressed
I plan to assess results on weekly basis and risk fixed amount per week. So for starters I want to risk 10 PLN (around 2.6 USD) - If my trades lose more than that (or close) I am waiting for next week. If I manage to get 20PLN I will increase the position size by 0.01 lot next week and increase risk/goal accordingly. If I make good profits I allow myself to trade larger, in case of losses I am taking my time and step down to lower sizes.
I want to be consistent - If I cannot be consistent risking few USD why should I put more on the table?
Trade "Strategy"
I will trade in CET time zone, without being glued to the screen. I want to jump in from time to time and look, if something happens around previously drawn areas.
I will trade pairs with lowest spread possible.
I will use basic price action (trend lines, support/resistance zones, candles) + potentially Fibonacci and pivots.
I will take general direction from H4 chart.
I will use H1 to see more important levels.
I will use M1-M5 charts for entry (price action)
I will not use any fixed strategy for SL / TP - it may be trailed, it may be moved to break even at some point, closed manually or just waited out for hit.
I will not care about R:R and win rate - I know how much I can lose for week and don’t want to bother with nothing more. It may come into play, If I manage to stay in this longer.
EURUSD
On H4 I see price trending lower in a channel with nice support zone around 1.175. Price was reaching the trend line and support zone.
On M1 chart, cup with handle formed exactly on round price / support area and trend line - I’ve placed pending order above handle which went off soon after and is open right now. SL below the cup and TP as 2:1.
Apart of this I’ve taken few bad trades. One on GBPUSD which I wanted to post as pending order but accidentally shoot a market one… fortunately it ended manually in profit (+1.09 PLN). Two pending trades I’ve forgot to cancel and went to eat a dinner +2.37 PLN and -2.72 PLN
Hi and welcome,
I think this looks like a good plan because it is written and has some hard rules and some variables to play with.
Importantly, and perhaps more important than your plan itself, is to maintain a trade journal, so that between the days you can check whether each trade (winners, losers and break even trades) followed your written plan. If they did, award them 100%. If they did not (even the winners), award them 10% deduction for each of your trade plan rules they broke. After, say, only 10 or 20 trades, do you see any patterns emerging? First if you are not following the plan, you may as well give up. Change the way you enter trades. Write your plan checks in RED in front of your screen (or on a wall behind it) and make sure you tick every rule before you enter, manage or exit the trade.
You should see a pattern building, so then with those scores of least value, try one by one to amend or adjust your rules that you think MAY be the reason those particular trades did not work out or where exited prematurely even if you made a profit.
It is my experience (over more than a thousand trades over more than ten years) that my “success ratio” is very much higher than it was a decade ago. Apart from very long term holdings that I do not count as trades (and I mean holding more than 3 months), I still have not reached a consistent edge in pure trading. But I am dangerously close to it, and those “trades” that I then decide to hold (not leveraged) tend to work out profitably the longer I hold them.
Good luck with this plan. It looks like one of the better ones I have seen written. Go test it in the real world
The last two points disturb me, youre not going to have a plan for SL or TP and you dont care about RR. They are pivotal points in a trading plan and need to be constant.
During my trading history (10+) I have always felt uneasy about fixed R:R. I know what agreed consensus is around win rate / R:R, yet with my current preference (and psychological limit) I don’t feel good with it. So, I started to treat it as a result of trading, not an input.
When I enter a trade I don’t know, if market will allow me to take 2:1, 3:1 or 0.5:1 and it is not in my control. Therefore, if I see market structure break - should I close in the profit or wait until it goes back to Stop Loss or break even after not reaching the set R:R? If breakout is not as violent as I expected - should I react and reduce risk with aggressive breakeven or just wait what happens?
Lack of plan for SL/TP means it will be discretionary - sometimes under the last local low/high, below candle formation or as far as area of resistance ends. Instead of writing all possible entries with all variations as rules - I will use SL/TP as per my best price action knowledge and hope this trading exercise will let me either confirm it is good enough or correct it (constant improvement).
Woke up with cup trade being in profit - yay. Moved SL to break even + few cents below the recent low (short blue line). Now price reached the daily Pivot, so moved SL under last low to book in some profits. Price is somewhat streteched without deeper correction and double top forms, so banking some profits with SL and looking what happens.
Quick profitable trade on GBPUSD
Price respected the green area of resistance and daily Pivot (red line). After small break and retest I’ve set up the pending order just above and SL below Pivot.
Exited manually due to low momentum of new candle and dropping momentum on EURUSD - it felt like at least not going up.
Not sure, if I should be rewarded for this gut exit, but price dropped below Pivot right after my closure
+1.55 PLN profit
Closing trading for today and attaching weekly summary.
Few good and few bad trades. Mistakes are made, but overall weekly risk was not breached.
I consider this as good result for first manual scalping experience
I will not use any fixed strategy for SL / TP - it may be trailed, it may be moved to break even at some point, closed manually or just waited out for hit.
I will not care about R:R and win rate - I know how much I can lose for week and don’t want to bother with nothing more. It may come into play, If I manage to stay in this longer.
OG stated I will not use any FIXED strategy for SL / TP, and did not state he will NOT USE a SL or TP.
And with respect to not fixing a TP I entirely agree with that strategy. For example, if you have a fixed 2:1 TP, and consider the following scenarios:
Price action reaches a 1X profit and your strategy for that trade says move your SL to break even. From now on, you cannot lose on this trade.
Scenario 1 - price moves to 2X. Your risk was $10. You reach your preset TP and you gain $20 for that trade. Congratulations.
Scenario 2 - price moves to 2X. Your risk was $10. You reach your preset TP and you sell half of your trade. You get $5 stake and $10 profit = $15. You move the SL on your remaining half ($5) to the 2X price. You take $15 ($10 profit). Some time later, price moves to 4X. You sell the remaining $5 stake and get $25 ($20 profit). Overall the trade makes $30 instead of the simpler “set a TP” strategy. That is a 50% bigger profit.
As I said, maintaining the journal and analyzing what worked and what didn’t work is probably more important than the actual content of the strategy or plan.
I also interpreted the “not care about RR” to be in the same overall spirit. It is not required to fix all the variables at the outset of a plan. After all, the more you set in solid stone, the more you have to change one by one to record improved results, and that may take longer than the OG strategy.
Just my opinion, of course. I think there is no 100% right way or 100% wrong way - just an infinite number of potential outcomes that need to be whittled down by analysis and continuous improvement.
scalping without a SL and not having a set RR can be extremely risky, because we open larger positions and if price moves only a few pips, it’s big losses for us. not to mention any sort of slippage that could happen.
This is like listening to CNN news. Who mentioned scalping without a SL? And by whose rules can you NOT have a minimum RR and ride up once you have protected a break even position? Peeps seem to be reading into this post things that have not been said. GGgggggggggggrrrrrrrrrrrrhhhhhhhhhhhhhhhhhh!
Scalping is by definition short - term and you will be sitting by the machine - open and close manually. Certainly if you leave your post, SL could be set to cover the possible eventuality of a larger move Otherwise physical SL and TP are not necessary.
A big sudden move is always possible but such a move is always likely to simply Jump over your SL in any case.
As per @Mondeoman I too am quite impressed with the thought and methodology that @wilczasty is showing here - more power to your elbow and have confidence in yourself - Many of those who regurgitate what they have read are merely playing semantics although they may not even realise that themselves.
This goes to the heart of what I think of Forex trading and the mass education that sloshes around the internet like a poisoned swamp. For a couple of years back in the noughties I accepted a challenge to be a chair of governors at a private school. Looking back I may have done more harm than good. I used to tell the “young adults” as we called them for political correctness, that the existence of education within modern society was to drill into the masses the need to be “sheeple”. A sheeple is a people who grow up like sheep and think that life is all about “being a sheep, not rocking the boat, doing as you are told by your seniors, be they teachers, parents, the police, any authoritarian figure”.
I asked them to think about whether that felt normal and comfortable or abnormal and uncomfortable. Then I asked them to question everything that had been taught to them with a mindset that asked "why am I being taught this way and only this way? I think the Forex world is full of people trying to find their own way, but perhaps being bogged down many times by the sheeple mentality that is drilled into us from such a young age it is difficult to get away from.
I am surprised to see this thread derail due to my SL/RR approach (in this particular strategy). At the same time, I am happy to see the discussion around herd mentality and breaking the rules.
@Mondeoman - I totally agree, that too many opinions are repeated without extra thought given. In forex and multiple other themed forums. In go (ancient chinese strategy game) there are old proverbs, which help to find proper moves or tactics. Yet, these are only hints on what to consider before making a move - not definite rules, and are broken regularly in professional games. I treat most “conventional forex knowledge” just like go proverbs.
To all who are jumping in or did not fully understand the rules from first post or clarification in - yes I use Stop Loss, I usually use Take Profit and I never look at Risk Reward nor Win Rate - If weekly result is green on Friday, R:R and WinRate were good. If weekly result is red on Friday, I will look at lessons learned from single trades and believe that continuous improvement will pull the win rate / R:R automatically in mid-long term.
EURUSD - Downward channel holds up. Small indication of starting correction on H4. Previous high was below channel line, what looks like increasing sellers power. Looking to either jump in correction or break through last support.
GBPUSD - Price moves in similar channel as EURUSD (due to high correlation), yet last candles on H1 shows more bearish power than EURUSD. Bearish candles with upper wicks show momentum despite running into bottom of the channel. Wondering if this will break below without correction (or with very flat one).
EURGBP - I like the way how it ranges between round prices for weeks. Unfortunately, too high spread and pip cost for current trading parameters (10PLN risked for this week)
USDJPY - Steadily ranging for many weeks now. Acceptable pip/spread cost - will be watching how it will behave around Pivots and H1 S/R levels. Recently formed local high and bounced off resistance. Maybe worth jumping in while dropping to next level - need M1-M5 structure confirmation for this.
Now that’s a hard beginning of the week I’m 1-2 trades from my weekly loss limit.
I won’t paste the trades here, just my view/thoughts on what is happening and what are my lessons learned.
It is crazy how scalping is different from mid-long trading. I’m making all the same mistakes which I’ve done on higher timeframes solid few years ago. Emotions are strong and it’s so easy to slip and start overtrading and even trying to get back on the same move (on M1).
With price moving fast and new candles drawing on the chart there is a strong rush. Urge to jump in was stronger than really thinking about the entry. Shame on me
M1 bull/bear balance shifts VERY fast. It is rare to find a longer move which would not hit narrow Stop Loss after correction. Level breaks, proper pull back forms and suddenly momentum is lost. M1 momentum is also a deceptive thing - you see beautiful long candles run and in total the move is around 5 pips.
All trades managed to be in 1-2 pips profit at least for a moment during trade lifetime (before hitting narrow Stop Loss)
Corrective actions / lessons learned / things to test:
Only one trade open per pair.
Close trades with minimal profit. All trades are in profit for at least 0.2 PLN for some time. This is definitely not a way to hit target weekly profit for “level up”, as I would need > 70 profitable trades without any loss. But depending on results I may change the weekly profit target to accommodate this change.
Cool off between trades - at least 15 minutes break before jumping in new trade on any pair.
Just curiosity. And it is not a shift, more like an experiment. I still hold my portfolio and look for trades on D1. Here I am trying something new with laughable (expendable) capital.
