NickB's 4H Scalping Method

[phil838]

So it looks like 155.0 will be a scalp line? Right? 2 4 hours candles hit it. Now 3 candles are moving up. If another 3 candles move up will it be a valid scalp.

How do you back test for other pairs? I see a few scalp line, but the 4h bar that hits it goes +/- 50. So how do I know if that would have been a profit or a loss?

Is there an automated way to check or do I then have to look at the 1h bars or less to see where it hit?

155.00 is not a scalp line because there is already a line 15 pips below that at 154.85.

That’s close enough to be considered a double bounce off the 154.85 line in my opinion.

[Dane]

So it looks like 155.0 will be a scalp line? Right? 2 4 hours candles hit it. Now 3 candles are moving up. If another 3 candles move up will it be a valid scalp.

How do you back test for other pairs? I see a few scalp line, but the 4h bar that hits it goes +/- 50. So how do I know if that would have been a profit or a loss?

Is there an automated way to check or do I then have to look at the 1h bars or less to see where it hit?

What I do to go back and look is draw vertical lines on my charts on the 4 hour break candle and then scroll back on the 15 min chart and find the lines to see price action there.

[Hypochondriac]

155.00 is not a scalp line because there is already a line 15 pips below that at 154.85.

That’s close enough to be considered a double bounce off the 154.85 line in my opinion.

Thanks, an shouldn’t it be a triple bounce since the candle next to is is at 154.96

[phil838]

Thanks, an shouldn’t it be a triple bounce since the candle next to is is at 154.96

Yes, you’re right. I didn’t look at it close enough.

[s050399b]

Also, for any traders new to the system, I always have a 5 pip buffer past the actual scalp line before I enter the trade. That helps to filter out the fake breaks like the one we had on the 12:00GMT candle.

btw, do you also add the 8 pips spread too? Hence for a pending buy, it’s 13 pips away from the line?

[akeakamai]

btw, do you also add the 8 pips spread too? Hence for a pending buy, it’s 13 pips away from the line?

I think 8 pips is too pricey for GBP/JPY, maybe not significant on a 4hr chart, but high spreads can get you into a false breakout more often than a low spread would.

I would look around for 5-6 for GBP/JPY if you want to get the most out of this system

[s050399b]

What made you get in at 140.63? On my charts the line was at 160.45. [B]I added 5 pips to over the spread and 5 more for a buffer [/B]and I got in at 160.55.

Just wondering.

Finally found what I was looking for.
In such a case, you would put the pending orders in, and left it to work?

In what kind of situations would you stare at the computer for price action?

[s050399b]

Furious angel at NickB’s Website talked about ADR and posted the formula for figuring it out

"The range is calculated from an average of the following four values.

Previous 01 Days Range
Average of previous 05 Days Range
Average of previous 10 Days Range
Average of previous 20 Days Range

This makes the value heavily weighted in favour of more recent days."

Sounds pretty tricky to me but I am not good with excel spreadsheets so programming it into there may make it easier

Not sure if you have found it:

// Average Daily Range (ADR)
int Average_Daily_Range ()
{
int Range_Yesterday=0, Range_Past_5_days=0, Range_Past_10_days=0, Range_Past_20_days=0;

Range_Yesterday = ( iHigh(NULL,PERIOD_D1,1) - iLow(NULL,PERIOD_D1,1) ) / Point;

for (int i=1; i<=5; i++)
Range_Past_5_days += ( iHigh(NULL,PERIOD_D1,i) - iLow(NULL,PERIOD_D1,i) ) / Point;
Range_Past_5_days /=5;

for (i=1; i<=10; i++)
Range_Past_10_days += ( iHigh(NULL,PERIOD_D1,i) - iLow(NULL,PERIOD_D1,i) ) / Point;
Range_Past_10_days /= 10;

for (i=1; i<=20; i++)
Range_Past_20_days += ( iHigh(NULL,PERIOD_D1,i) - iLow(NULL,PERIOD_D1,i) ) / Point;
Range_Past_20_days /= 20;

return( (Range_Yesterday + Range_Past_5_days + Range_Past_10_days + Range_Past_20_days ) / 4 );
}

[s050399b]

I think 8 pips is too pricey for GBP/JPY, maybe not significant on a 4hr chart, but high spreads can get you into a false breakout more often than a low spread would.

I would look around for 5-6 for GBP/JPY if you want to get the most out of this system

So currently, if line break = 100.00 (bid price), I will have to put 5 pips buffer + 8 pips spread for buy, hence making buy entry at 100.13

True, I want some base currencies to be either in AUD or SGD, and still looking out for brokers too.

[s050399b]

After reading thru the thread, here are the pairs mentioned in the many post that has been identified with SL/TP:

GBP/JPY = 50
USD/CAD = 35
EUR/JPY = 50
GBP/USD = ??? (mentioned by NickB - but he didn’t state his SL/TP, so I guess need to calculate and trail and error)

[ThePhoenix]

I think 8 pips is too pricey for GBP/JPY, maybe not significant on a 4hr chart, but high spreads can get you into a false breakout more often than a low spread would.

I would look around for 5-6 for GBP/JPY if you want to get the most out of this system

The spread doesn’t get you into false breakouts if you account for it. I put my entry either on a line break or a few pips ahead, but I always use the bid even for longs. That way I’m entering on what is causing the candle formations and where the lines are drawn.

[phil838]

The spread doesn’t get you into false breakouts if you account for it. I put my entry either on a line break or a few pips ahead, but I always use the bid even for longs. That way I’m entering on what is causing the candle formations and where the lines are drawn.

That works if you are entering manually, but if you’re setting up pending orders you have to add in the spread on long trades, otherwise you’ll be in the trade 8 pips (or whatever your spread is) [I]before [/I]the line breaks.

[phil838]

Finally found what I was looking for.
In such a case, you would put the pending orders in, and left it to work?

In what kind of situations would you stare at the computer for price action?

Personally, I don’t stare at the compute for price action on these trades. I set them up with pending orders and walk away.

If I happen to be at the computer when it hits I may move the profit target based on price action, so I can squeeze a few more pips out of it. But that’s optional and not necessary to the success of the system.

[phil838]

What’s wrong with a double bounce? The lower still remains valid as a SELL point doesn’t it?
Also, would you consider the line marked with an arrow here a scalp. It’s a bit weak but there was a reversal from it:

Would the EU chart candles circled in black be a scalp or too weak?

Nothing is wrong with a double bounce, I was just saying it doesn’t make two separate scalp lines 15 pips apart. Yes, the lower line is still a valid scalp trade.

I don’t think the point with the arrow is a good scalp line, but Nick said earlier that he does. It just comes down to the individual trader’s judgment.

I do consider the black circled point a good scalp line, though.

[s050399b]

just divide adr or daily atr by 6 to give a rough guide.

Found it using an indicator
ADR = 248

SL/TP = 41
hmmmm, should I put 35? hmmmm, going to try

[Hypochondriac]

My broker is a bit weird. During NY trading hours the scalp is 5 or 6 don’t remember atm. Otherwise it’s 8. So to be on the safe side I should have an 8 pip margin into all my buys?

[s050399b]

My broker is a bit weird. During NY trading hours the scalp is 5 or 6 don’t remember atm. Otherwise it’s 8. So to be on the safe side I should have an 8 pip margin into all my buys?

That’s the spread, how about the buffer?

[Hypochondriac]

That’s the spread, how about the buffer?

I guess 5 pips of buffer? Or is that too much?

[phil838]

I guess 5 pips of buffer? Or is that too much?

I use 5 pips as a buffer. I’ve found it to be just the right amount.

[phil838]

So, on the GBPJPY, you have 5+6 for longs?

Yes. If 150.00 was a short scalp line on my chart I’d set a pending order at 149.95 (5 pip buffer). If it was a long scalp I’d set my pending order at 150.11 (5 pip buffer + 6 pip spread).

The reason is because of the difference in the bid and ask prices. You need to remember there are two price lines are your chart, but only one of them is visible.

If the scalp line is draw on your chart at 150.00 that is based on the bid price, but long pending orders are executed on the ask price. If you had a 6 pip spread and you set your long trade for 150.00 your pending order would trigger at a bid price of 149.94, six pips before your scalp line was crossed!!