NickB's 4H Scalping Method

[phil838]

I’m keeping my faith and believing that I found this method at a bad time. Many claim to win 70% but I am 1 for 4. And the 1 I won was a bit of a rule breaker.

I’m starting to think my karma can ruine any system.

You have. In over a year of trading these I had my first negative month in May. It was barely negative, -50 for the month, but it was a losing month.

[Revone]

I think if you use this method with much more patience during a down month, it’s way more profitable. I didn’t even take the trade or see the trade a few people are talking about today.

[phil838]

my trade went to +50 which was my target. I didnt use a sl and i stepped out for a hour or so, so im going to say that was reckless of me but it is hard for me to shake my old no stop loss habit that I have formed over the past 4 years. if we notice alot of trades stopping out and then turning to profit then maybe we need to adjust our stops accordingly so im probably going to get killed by phil for suggesting a less than 1:1 win loss ratio but it seems to me that it might help us to give the beast a little breathing room.

anyway im just thinking out loud if anyone has any input it is certainly welcome

It’s not the win/loss ratio you need to be killed for, it’s the trading with no stoploss!!!

Moving on, I have to agree with Orpips here. Feel free to experiment with the stoploss if you wish, you might actually find a better way to do it, but I’m sticking to 50. Both Metalhawk from Forex4noob and I have 1.5 years of experience that shows 50 works, and Orpips has 6 months (or more?) showing it works.

If it ain’t broke don’t fix it!

[ThePhoenix]

The high of the bounce was 157.17 with my broker, so you would have needed an SL greater than 77 with your entry…would you have had a good reason for staying in the trade that long, or just wishful thinking, hoping that it would turn back in your favor?

Just remember that any given losing trade “could” have been a winner if you did something different – but how would doing that same thing have affected your results over the long term? If you stayed in every loser until 80+ pips of drawdown, then would the few extra winners you have outweigh the fact that you have changed the r/r from 1:1 to 1.6:1? Always something to think about…

Based on what I was seeing before I went to bed, I would have stayed in. The only reason I set a SL is because I was going to bed, I didn’t want to wake up to -300 pips. I should have just set a price alarm and set my computer speakers loud, and got up for a manual entry and engaged my brain instead of hoping an automatic SL wouldn’t be hit before my automatic TP. Which was eventually hit.

I think you’ll find if you tighten the sl to -45, and consistantly use an automatic SL, you will have more losers. When you shrink the SL you mathmatically make the chance of hitting the SL better than hitting the scalp target of +50

So, I don’t think it’s really a, “you must have a hard 50 SL and get out no matter what,” situation.

Nick doesn’t even use SL, unless he is away from his computer. He sets price alarms at his SL and decides, based on price action if he thinks it will go back his way or if he should get out. I think that is part of the reason for his 80% win rate.

So far my losing trades have all been because of automatic Stop losses. In my journal I made note of each trade after. Every single one of them was stopped out, then reversed back and went to my TP and even beyond. I’ve traded 9 nickB trades. (2 of those lines were not his) 6 wins /3 losses.

4 of the winners were without a SL or TP, where I was in front of the computer to babysit the trade and watch price action. When it got to a target I just set the SL postive. Had I done that with my losers, I believe I could be 9 for 9.

Now, I’m not advocting not using SL. I’m saying this is my personal research thus far. So, far it’s leaning towards using price alarms and manualing exiting as the trader sees fit is better… at least for me.

[phil838]

Nick doesn’t even use SL, unless he is away from his computer. He sets price alarms at his SL and decides, based on price action if he thinks it will go back his way or if he should get out. I think that is part of the reason for his 80% win rate.

Hopefully Nick can chime in and tell us for sure, but since I’ve been following his blog I’ve never seen him use any stoploss besides 50 pips on a scalp trade.

I see him use variable stoplosses on reversals, but not scalp trades.

Nick??

[Pukey]

You have. In over a year of trading these I had my first negative month in May. It was barely negative, -50 for the month, but it was a losing month.

Thanks Phil. I will hang in there.

[orpips]

“I think you’ll find if you tighten the sl to -45, and consistantly use an automatic SL, you will have more losers.”

At least for 2009, which is as long as I’ve been keeping detailed records, that is not the case. Not one of my winners (I think 25+) ever had more than 40 pips of drawdown, and I’m not sure if any even went that far (I’m away from my home PC with the spreadsheet right now). Whereas the majority of the losers went to -100, -150, even -250.

“Nick doesn’t even use SL, unless he is away from his computer. He sets price alarms at his SL and decides, based on price action if he thinks it will go back his way or if he should get out. I think that is part of the reason for his 80% win rate.”

From what I’ve seen, most of the time if he is not out at -50 he is out earlier, not later. He does not post detailed records – in fact he says he doesn’t even keep them – so I wouldn’t be too concerned about finding the difference between metalhawk’s stated 70% win rate and nick’s stated 80% win rate.

As I said, letting the trades go to 80 or more pips of drawdown would indeed have turned the last few losers into winners, but would have resulted in lower profits for the year, not greater. How much drawdown are you willing to take? At what point will you call a trade a loss and close it out, and how many winners will that loss erase?

Please note that I’m asking these questions as much for the benefit of others here, just as questions every trader needs to think about. It’s very dangerous to look at a few losers over a period of just a month or two and make a decision about how to trade in the future based on what variable would have made that particular, tiny sample of losers into winners.

[Hypochondriac]

There still 2 scalp lines remaining right? Probably more, but the recent ones remaining are 154.86 and 162.57?

[phil838]

There still 2 scalp lines remaining right? Probably more, but the recent ones remaining are 154.86 and 162.57?

Correct. There are more lower down but I doubt they will ever get hit.

[orpips]

Metalhawk has a long @ around 160.40, but I don’t like that line any more than the last one. Although it does have the advantage of matching up with previous support from June 12, and previous resistance from June 3, so there is reason to think this price is significant.

[phil838]

Metalhawk has a long @ around 160.40, but I don’t like that line any more than the last one. Although it does have the advantage of matching up with previous support from June 12, and previous resistance from June 3, so there is reason to think this price is significant.

Yeah, Metalhawk is usually pretty strict on his scalp lines, I’m not sure what he’s thinking with that one.

The last one had a good trend downwards to it, but this one has nothing.

I’m staying away from that one.

[johnnykanoo]

If it ain’t broke don’t fix it!

well you are right and im going to listen to yours and orpips wisdom and not tinker weth the s/l.

im glad there is some solid data supporting the 50 pip sl/tp

thanks, john

[phil838]

well you are right and im going to listen to yours and orpips wisdom and not tinker weth the s/l.

im glad there is some solid data supporting the 50 pip sl/tp

thanks, john

Don’t get me wrong, tinkering is fine. Just do the tinkering on a demo account for a few months before you try it live.

Just don’t tinker with a proven system for a few weeks then abandon all the solid data.

[NickB]

I saw a few points raised that I want to comment on.

First of all Metalhawks 70% and my 80%.

Metalhawk has been trading less than 1/3 of the time I have so I think it all comes down to experience. I know GBP/JPY very well and I know when to stay out of the market (like on today’s trade). When a trader gains experience they become more efficient. I consider that to be the reason why I average 80% and Metalhawk 70%.

As for today’s trade. I didn’t take this one because the MPC minutes, unemployment and Claimant Count Change came out around 1hr prior to this trade. Generally speaking I wait 30 min after a report but these were all big reports. I saw the market as very volatile after and even before the releases so I suspended my trading.

I saw some of you mention the 160.40 line. As far as I am concerned its a like I will likely trade this one.

I should also say my stops and targets are based on 3 years of trial and error testing. They are refined and work very well. We have been having a bad period recently but it happens every year. I wouldn’t make changes to stops based on a few bad trades. If anything you should just diversify a little, try trading on other pairs. GBP/USD is looking good I have been watching it for a few days now.

[Revone]

I definitely wouldn’t tinker with the S/L. Lower your position size to allow the size of the stop while maintaining your risk tolerance. The only reason a tight stop works is that price moves in your favor sooner, doesn’t mean the extra room isn’t necessary. I always keep a 50 point stop and I am completely comfortable taking the loss, it doesn’t bother me one bit.

I thought the GBP/JPY moved fairly well today, but I love the way this pair moves almost all the time. I managed to pull 67 pips on one trade, and my second trade I pulled 37 pips.

I’m keeping an eye on 160.45 also, doesn’t mean I will trade it, but I have an eye on it, I have an eye on 155.60 also.

[Revone]

Sorry I meant is IF price moves in your favor sooner.

The point of the S/L is that the amount you risk is the amount your willing to pay to see if the trade goes in your direction or not. You place your entry on probability factors. If your tinkering with the S/L I assume you either haven’t predetermined your risk, or you aren’t really accepting your risk. In either case it’s not a good idea, when price reaches your S/L, how do you react?

[mumpips]

HI all,

I am a newbie, hope you guys can help me on the followings:-

(1) Refer to the scalplines given in NickB’s blog, it seems the candles take very long time to reach there, what will you guys do with the area in between the scalp lines?Is this called as No man’s land?

(2) Do I need to draw new scalp lines and remove old lines every day?

Thanks

[phil838]

HI all,

I am a newbie, hope you guys can help me on the followings:-

(1) Refer to the scalplines given in NickB’s blog, it seems the candles take very long time to reach there, what will you guys do with the area in between the scalp lines?Is this called as No man’s land?

(2) Do I need to draw new scalp lines and remove old lines every day?

Thanks

Between scalp lines you don’t do anything… you just wait.

This method of trading usually gives 1-3 trades per week. That’s all the trades you really need to be a successful forex trader. But if you want more trades you can trade other pairs, or other systems.

You should probably check for new lines every day, but you don’t have to. Once a week, or every couple of day, would be fine if that’s all you can do.

[NickB]

@mumpips:

1)You wait for the lines to be hit. However, most weeks lines form in between the current lines. You need to read the free e-book and learn how to place scalp lines that forum during the week.

The truth is if you do not have the patience to wait for trades you shouldn’t be trading.

Also you do not always have to wait. This week there was a lot of waiting but many weeks trades happen at or close the the weekly market open.

2. You remove lines after they are broken and draw new ones when they form. You rarely have to do this every day.

Read the free e-Book to find out how to trade my method.

[mumpips]

Thanks Nick and Phil,appreciate your fast respond. I will read the ebook again.