[B]Preface:[/B] I would like to start out by saying that this is not a signal service, nor will it ever be one. This system is in its early infancy and should certainly not be followed with the expectation of making money. I am literally building it from the ground up. That is, I will start trading with only a few basic principles, then expand and refine my system further and further by learning from the outcome each trade.
[B]About Me:[/B] I’m currently a Junior in college studying engineering. I quickly realized that the 9-5 rat race is not for me. I have 3 years of experience trading stocks, and I discovered Forex a year ago. Since then I have been learning and practicing in the Forex market. I love Forex and the opportunities it offers. I am determined to make it in the market and I hope to be a full-time trader within the next couple years.
I have already achieved consistency as a trader on the Daily charts thanks to the Forex School Online method, which I highly recommend. However, personality-wise I think scalping the smaller time frames suits me better, and I have always been curious about it. I have very little experience with scalping and it’s probably going to show. I made this thread to chronicle my progress.
[B]System Background:[/B] Although I have achieved a consistent 5% average monthly return for the past few months on the Daily charts, I find that my profits are limited by the number of opportunities presented to me and I cannot increase my returns without risking more of my account than I am comfortable with. I also do not like being locked in a trade for several days. I think scalping is a much better fit both for my personality and to allow me to meet my trading goals faster.
I am a firm believer that price action is all a trader needs to understand the market. Indicators are usually just smoke and mirrors that give you old news and misleading signals. You won’t find me trading with any indicators on my charts, or trying to develop a method that can be automated. There’s a human element that can’t be removed from price action, which is why I believe it endures when so many other systems fail.
The point of this system is not to try and take advantage of every move the market makes. Some days no trades will be placed, and that is okay. I don’t want to be like some scalpers that take hundreds of trades per day and barely break above even. I want to win most of my trades, to show that I’ve truly developed an understanding of the market and what makes it move.
The thoughts I had which would later form the foundation of this system were about the power of compound interest. If I can win just a single trade from the market each (trading) day where my R:R was 1:1 and I risked 1% of my account, that would become over 1200% return per year after compounding. A linear increase in the daily return will lead to an exponential increase in the weekly, monthly, and yearly returns. That is why I am not concerned with catching every move of the market. I only need to be able to consistently net a handful of pips on average every day to achieve my goals. The key is [B][I]consistency[/I][/B], which is why I will only be hunting for the handful of high probability scalping trades that the market has to offer.
[B]System Goals:[/B]
[ul]
[li] To develop a price action scalping method which will consistently return 1% or greater of the account balance on average per day
[/li][li] To achieve the above while spending 3 hours maximum of chart time per day
[/li][li] To foster a deeper understanding of the market and its underlying mechanisms
[/li][li] To show that all that is needed to be successful in the Forex market is a passion for the market, a desire to learn, and some chart time
[/li][/ul]
[B]System Rules:[/B] The rules for this system will be very few in the beginning. The reason for this is that I want to start with a blank slate - nothing but my price action knowledge - to ensure that the outcome of this system is 100% the fruit of my own efforts. The rules that I will begin my journey with are as follows.
[ul]
[li] I trade only the AUD/USD and EUR/USD
[/li][li] I never trade when volatility is low, or when the spread is larger than 2 pips
[/li][li] I trade only the 1M chart
[/li][li] I will use commanding candlestick signals (mainly engulfing bars, pin bars, and 2 bar reversals) for entry, and will not enter until the candle closes
[/li][li] I will trade .5 lots (50,000 units) which will give me a value of $5 per pip
[/li][li] I will exit when price has moved in my favor and shown signs of stalling, or when price has convincingly headed the opposite way of my trade
[/li][/ul]
As you can see, risk management is almost completely non-existent. Like everything else in this system, it will be developed over time. For this reason, I will be trading a [B]demo account[/B] with Oanda, with a starting balance of $1000.00 USD. I will remain on demo until such time as I deem my performance fit and consistent enough for a live account.
Although it’s not a rule, I usually trade during the Australian/Asian market overlap, from 9:00 PM - 12:00 AM EST due to my schedule. It’s not uncommon that I will only trade an hour or two per day, however I’ll often go back the next day and see how the rest of the session played out. EUR/USD and AUD/USD seem to both have decent movement during this session and the spreads on Oanda usually range between 1-2 pips, hence why I have chosen those pairs. I usually just pick one chart at a time to look at.
I’ll try to update this journal at least once per day, although I’ll likely be posting trades the following day so I can get to bed. I will edit this post with a link to a Myfxbook sub-account once I get it set up.
https://www.myfxbook.com/portfolio/jadds-pa-scalping-demo/884462
[I]“If you don’t build your own dream, someone else will hire you to help build theirs.”[/I]
