Your opening post in this thread summed up what has been beating around in my brain for the past 4 days.
This is my conclusion for my “pip-extraction” - My head hurts from staring at charts. 20 pips a day following the price action and using very basic MA’s. I have MACD and Stoc as well, good for spotting divergences, but as I read more and more (thanks TRO and others!) and develop my “plan”, I see that the MACD and stoc isn’t really needed, just price movement. Visually looking at charts it would appear that my plan is very achievable.
For me, scalping suits my personality and makes sence. Doing any sort of short term “speculative” trading, I dont care if in stocks, options, or forex, I do not like to hold positions over night or for any extended period of time. It is a war and there are lots of people, traders, institutions, etc that have more money and are smarter than me.
15 min Candle Chart
20 MA, 6 MA, 3 MA.
Linear Regression Trendline
MACD 2 line w/ histogram (8,17,9)
SMI (10,3,3,3)
When 3,6 MA pierce down through the 20 MA while above the LRT and MACD,SMI are turning downwards and the odds are stacked in my favor that the price action is weakening and will head lower especially when moving past the most recent support. Does that mean it cant go higher? Ofcourse not.
The opposite scenario is used for going long.
Also, when all of the MA’s are consolidating and moving tightly together horizontally, you just sit back and wait, because the price is usually flopping around in a tight range moving sideways.
If the price stalls in the direction I am trading, I’ll close the trade for whatever I can get, I dont care if it is 2 pips. If I am dead wrong and price immediatly goes against me I will close and take a few pip loss. I’ll wait for another opportunity to enter another trade. Again, from what I have been seeing is that by not fighting with the trend, you can be wrong, close the trade, and not get your head chopped off as long as you are disciplined.
The cool thing is from what I have been observing is that by using these guidelines, you will catch some decent reversals to ride up/down.
Will it work? I’ll just have to keep everyone updated.
Example for the E/U which Oanda has a spread of .9-1.5 pips. My TP might be 5 pips and a stop loss of 6 pips to have a ratio of 5:20 is dangerous to your bottom line. Who ever does that has A. a great entry system. B. like to gamble. Its all about the momentum. So if a person has a good momentum setting they can realistically make 15 trades with 1 loss. In scalping you dont need to follow the 2 percent rule. In scalping the in and out method your setup should have the field tilted your favor. Even though you can use it candlestick formations are not a major factor its the trends. I recently was watching TV and seen the bike messengers. They hold on to cars for a block or to to spend up where they are going and not to be tired. he said about every 50 times you hold on to car thats turning. I think of that as scalping as long as its moving fast it will keep going those few blocks for you. then you grab on to another car. With the field tilted to my advantage a 5:6 ratio is really good in my book. I fall short and have to take less pips or lose a trade roughly about 1 in every 12-14.
lol so far i am 0/0.
i come from the option and stock world so i am a “noob” in the forex arena. I didnt want to trade today due to the holiday, but i wanted to test my acct to see if i was live, good thing because there were some issues. Had i been able to get my first trade placed as planned this morning, i would have netted 12 pips.
i log all of my trades so ill let ya know how i do.
Thanks for all your helpful comments. Your experience really shows. I just got done posting a new thread about my own scalping system. (Should’ve checked first and found this one)
TO EVERYONE ELSE: This is NOT meant to disrespect anyone else. I really appreciate ALL help and advice I receive, I just wanted to give credit where it’s due.
My own little comment on scalping: All I use is a Fibonacci retracement and I check the news. I trade on the 5 min. charts with Oanda and it seems to work really well. I check the 15 min and 1 hr charts to see the trend also, then I watch the support and resistance…So easy and I have fun doing it…I cannot agree with the people who say it’s boring. What’s boring about watching your money grow in seconds???
Pipsrgood,
Thanks for the props. After 3 years of trading its nice to see your money grow. After you have a profitable system you expect to see your money grow and its boring. Its good to hear your profitable. I had a great day today 75% increase on my trading account I used trailing stops. I read your post I do ssay start out small and build your account until you are comfortable and sure you can trade full time. Then see if it becomes boring. Thanx I do hope I can show other people whats scalping is all about.
As to scalping. When scalping to have a high success rate you need momentum. Momentum indicators have different settings. Defaults are usually for hour trading or higher. Adjust the momentum indicators so that you are comfortabe with them and they are accurate. Experiment on a demo to see if you like a indicator and closely tells the speed and direction. The more accurate the indicator to the momentum the higher you win percentage. Reason being as momentum ends the reversal begins. You can use resistenceand support, fibs, BB’s, etc. But they turn alot because you dont know the momentum.
ANYONE thats trying to scalp play with some momentum to increase your odds. Once you find that right indicator you will have a high win rate(if its within reason).
That’s good advice, I’ve been doing that today and it has really helped…I tried some longer term stuff today and lost $300.00 of my practice account, better stick with scalping!
I agree that you do not need to use indicators.
There is a whole group of traders on this forum who do not believe in indicators - Rhodytrader who has left us was one of them.
I abandoned indicators some time ago when they produced only losses for me.
I like your colourful charts and simple entry method.
But now, what about the exits?
Stay in the right amount of time and you make a profit, but stay in too long and you end up with a loss.
Do you have a strategy with the exits?
Hopefully just as simple!!
Now, considering that you base your entry direction on the candle colour plus the added agreement of a higher time frame candle also being of that colour (eg both green)…
…have you done any work to be able to quantitatively estimate the probability of a random entry (such as you suggest) actually going in your favour?
That is, at random entry…
What is the probability of trade continuing in your favour?
and therefore,
the probability of trade immediately going against you?
Finally, would this probability be altered by where you randomly entered the candle eg, near bottom, middle, near top?
