Attached is my chart from a trade i placed today But what happens in it seems to happen every time I made a trade. I see a nice resistance trend where all day it is bouncing off 1.16975. I see it approach the resistance line, there are 2 green candles with little movement before it, the moving ave crosses over and building momentum down, the RSI moves below 50, I make my trade and BOOM off it goes in the other direction until it hits my stoploss (1.1710).
And I mean it goes UP just enough to clip it too, then down it runs actually way past where my limit was set.
First can you look at the chart and tell me if I read it correctly and what you would have done different and 2nd this seems to happen often almost like “they” know what I’m doing and grab my money and run. Is that possible???
as charting goes I think you read it right. I don’t trade s/r levels so i’m not the best judge. But here’s where you went wrong I think.
First, you’re trading off the 1 minute USDCHF. I hate trading low time frames, but many people trade them well. I’d suggest going to a higher time frame but if not then we’ll move on.
Did you look at higher time frames to get the general trend? Because except for recently the 1h and 4h’s were trending up so I wouldn’t have gone for a short trade even on the 1m.
It seems that many people who scalp off the min charts look to the 15/30 min or 1 hour for general trend and only scalp in that direction. Try using your rules but add the looking for the general trend and you should make better trades.
Virtecs, I did check the 5m and 15m and resistence looked good, but i will take your advice and trade more off those charts i think I’ll have better success. If’ you’re trading off 1h & 4h charts how big of a stop loss spread are you putting on?
Phoenix, i like your point about “first bounce is usually the best bounce” that was the 4th bounce of the day… i will keep my eyes open in the future!
Not sure if you did read the charts right, a few thoughts;
If you’re trading counter trend, I would look for a divergence or some sort of reversal pattern. You did get a crossover, but a meaningful divergence in the RSI didn’t appear. Better to go with the trend?
Could it be that if you are focused on such short time frames you didn’t notice a wider trend?
Finally, I would have said that is quite a wide stop for a day trade. I would have gone for maybe 20-30 pips at most.
Hope it helps, don’t waste too much time worrying about it.
I’m not like the rest. I don’t usually use any stops. They usually say to set the stop at the nearest swing high or swing low, which will make your stops bigger.
I back tested my method and tried to see what the maximum draw-down was before the trade either resumed or continued further negative. For me this is about 50 pips. Anything more and the trade is a dud.
in looking at your chart posted on your first of this thread, I’m looking at your MACD, your support line, and your s/l. I think I might read that situation much differently than you did.
First, if you are below support, it isn’t support any more, its resistance.
Second, because there is no identifiable trend on this chart, I don’t really comprehend your choice of trades. You may want to remove the RSI from your M1 and try a CCI as it better identifies volume and direction.
Third, if you had taken the time to understand the MACD histogram a bit better, you would have seen that the position of your s/l is actually your entry point for the short.
I spend a lot of time in the chatroom available on the tool bar at the top of the “forum” page. If you would like to chat with me and some other respectable traders live, market open is usually a good time to catch people there. I’d be happy to answer any questions you may have there.
Im a touch unhappy about not being able to see what currency pair this was (and im NOT gonna hunt all over by price) so please next time identify what pair you speak of so i can check on my charts !
NOW, i can see youre dealing with FXCM MICRO, and there has been much discussion concerning what appears to be “funny” activity on their part (not the higher priced accounts, which i like very much, but the micro ones)
the MACD is a fairly useless indicator for this type of trading as it is always behind the curve, and i would exchange your RSI for a 5/3/3 or 8/3/3 STOCHASTIC WITH a CCI to show overbought and oversold WITHIN the current move (which may not be the whole move, but WOULD have alerted you to the upside move about to happen — maybe !)
[B]ITS LIKE THIS ---- you see the stochastics start DOWN, but you see that the CCI is BOTTOMED (has NO more room down) and perhaps its STARTING UP — this immediately tells you that there will be an UPMOVE BEFORE THE STOCHASTICS INDICATED DOWNMOVE, and so you are protected ![/B]
an alternative to the CCI (although i use both) is the “accumulation/distribution” indicator which seems much more intelligent than the CCI — try BOTH and choose what you like, or be like me and use BOTH !
using stop losses on scalping plays is similar to using a football as a prophalactic ---- bad from a number of reasons — first it takes you TIME to enter and thats wasted time for trading, and one finds that “trends” continue (or, the price RETURNS to the mean), which you found out once the price returned to where you wanted after being stopped out ! And once you LEARN your indicators (and lose the MACD) you will find much more success WITHOUT the sl, as the one minute price movement can get “funky” at times, but usally WILL hit exactly where you want, if you can wait it out ---- if i had done that trade i would have the original short position (well, i WOULDNT have gone short UNLESS i saw a bounce from resistance, so you jumped the gun a bit, which MAY have been assisted by FXCM) and then simply gone short AGAIN, once i saw the reversal coming up — THIS WAY, even if you dont hit your original tp point, your second trade “averages out” the loser and either gives you a small profit, or makes your loss zero !
while one can go on forever on this, its really a matter of EXPERIENCE and LEARNING so that you can instinctively react to what “APPEARS” to be a BAD trade that is SIMPLY moving higher before dropping then you originally figured, and the stochastic and CCI combo will do that for you.
Knowing trends, so that you are not afraid to remain in what might look like a BAD trade is the most important thing there is — if trading the one minute, look to the 5 minute for your trend or use the 15 min (NOT recommended in “whippy” conditions as it can and DOES alter trend within its time frame) for an “absolute” trend !
MOSTLY it comes down to knowing trend, understanding support and resistance, not bothering with stop losses on “scalping” plays and having a stronger stomach when things APPEAR to temporarilly move against you !
Its actually not a hard thing to do.
were they out to “get you ?” — probably not, as stop hunting is usually done with a “group” of stops, and not just yours unless were dealing here with a few million lots, which is certainly NOT normal on a micro account, but remember “just because youre paranoid, doesnt mean they aint after you !” and proceed accordingly with FXCM MICRO !
ps – besides teaching i also make the best bagels in new york !
enjoy and trade well
mp
[I][B]Within the great hall at Elfinore stands a wondrous coffer, precisely four cubits square and securely latched against the outside world. Inside that repository, shut away from impertinent eyes, abides many an intriquing trading secret garnered from around the world and over the ages !
As a child, i used to watch from the darkness as the secrets were debated and annotated by the elders. No one there held a single thought of my presence – BUT I KNOW WHERE THEY HID THE KEY !![/B][/I]
Good post MP, I think that helped me out as well with further insight!
Ive read from a few people that scalping on such low timeframes(1min) is pretty dangerous unless you know whats going on, have multiple lots and have your trading psychology(self discipline) in line?
With that being said, I dont know how many times you have traded with this method… but say it has a 70% success rate… out of 100 trades you theoretically should get 70 trades that are winners. The problem is when do those losers happen? Maybe its just bad luck for your system.
Hey ctbasscatcher, my first post here and hopefully a very helpful one.
I was intently listening to those company CEO’s on cnbc and i specifically heard one of them say they are making more money from stop gains and their primary goal is to protect their clients capital. Once I heard that I really sat and thought about it.
they are profiting fro stop gains. just like happened in your situation.
I also noticed some free forex signals sites that have been pretty spot on with their signals are losing due to their stops.
From hearing that and noticing the losses i’ve come to the conclusion that these guys are intentionally buying (in your case) before letting the market take its natural Acton.
Look, If MP is willing to take the time to speak out on this trade, I feel you are definitely on the right track, and agree with him concerning your current broker. Though I can appreciate a “free $25 live account”, I am certain I have learned my lesson with FXCMMicro and will be moving in another direction as far as future accounts. I would refer you to a Thread I created a couple weeks ago this Sunday, but its probably back a ways by now. It is titled “New Problem Found With A Common Micro Account Broker” here on Newbie Island. It includes posts from many “team player” type traders here on Babypips, including MP and others, (no disrespect intended for not mentioning other names).
If you should choose to find a good broker, I would ask people who I see as reputable who they use, do some homework of your own by talking to different brokers on your own without following links, and see what they are offering you, as, afterall, we are living in a “buyer’s” market frame of mind.
If, for what ever reason, you should choose to continue your contractual marriage with this less than lawful brokerage, hmmm.
Please know that not all brokers are out to get you. There are good brokers out there, but this one you are seemingly currently with would be one to be more than concerned about.
Further, there are people out there that will more than willingly share their tools and maybe even help you set up your trading station, but again, be careful to choose from reputable traders… MP is definitely a very good teacher and I have yet to be billed. I still owe a “pound of flesh” or 5 myself.
sorry you couldn’t see the exchanges, it was usd/chf bought on 2/6 at 11:54 and was stop loss was hit at 12:05 (one minute chart)
"i would exchange your RSI for a 5/3/3 or 8/3/3 STOCHASTIC WITH a CCI "
for the CCI what is the parameter for number of periods…default is 14 will that work?
ITS LIKE THIS ---- you see the stochastics start DOWN, but you see that the CCI is BOTTOMED (has NO more room down) and perhaps its STARTING UP — this immediately tells you that there will be an UPMOVE BEFORE THE STOCHASTICS INDICATED DOWNMOVE, and so you are protected !
Do you have an example on a chart as to what this would look like? I’ve looked through some charts for examples and not sure it I see it properly.
an alternative to the CCI (although i use both) is the “accumulation/distribution” indicator which seems much more intelligent than the CCI
Where can I find this, I don’t see it in my “add indicators” box. Is this a custom feature or one that is only available in mini or larger accts?
what charts time frame are you using for all these indicators?
Since beginning my Forex trading I have been reading, absorbing and following as much as possible not only learn but also create my own system of trading. Hopefully these questions weren’t too forward of questions as I know some traders are very protective of their systems…alot like fishermen are of their fishing spots :O)
And Last and probably most important
ps – besides teaching i also make the best bagels in new york !
Boiled or baked???
I owned a bagel shop not too long ago and (IMHO) Boiled is the only way to go!!!
Looked to me to be a rising wedge, with higher lows as it got closer to where you placed your order, so it really was just a matter of time time it broke through.
take into account everything you see on the chart, price action!
It tested the resistance 5 times… making it seem like that is a strong resistance level… but if you look at the support, it only tested it, what? two or 3 times (one double close together) and then kept sliding up
Following the 5 tests it started smoothing out in an upward direction and it looked to me like sellers were losing momentum to the buyers…
IMO you did read the charts right for that time frame, but the fact it kept bouncing up against the resistance and didnt test low very many times would have made me VERY leery of making a sell even with the indicators crossing.
If you had slapped stochastics and a bollinger band up there I think you might have gotten a little more insight into what was happening, but it is good you are analyzing the trade… even if a trade goes well its good to go back and verify signs and see what went right, for keys to future trades
Edit: Also, consider the stop loss… If you are betting hard on that resistance level, why not set the stop loss just 5 above it? That way if it breaks what appears to be an established resistance, you can be fairly sure its going to keep going a little ways… on the other hand if your stop loss was larger, you could have kept going and caught the downtrend, but thats not something I would have bet on.
Trading is about probabilities. You may read charts “right” and still lose individual trades. Nothing is 100%. It’s like playing blackjack. It’s “right” to take a card every time you’re holding 12 and the dealer is showing a 9. Does that mean you’ll win every time? Of course not.
finally got around to looking at one of my charts and can see exactly what happened and what you did.
you went long (in an uptrend, so it was ok) but you bought at the top of the upmove at that particular time ---- the price retraced (as normal after hitting resistance) and then WENT UP AGAIN ---- youre sl was much too tight for what you were doing.
now people know i NEVER set a sl on ANY timeframe trade, but would NEVER do it on a one minute scalp — first it takes too long and second, its sorta useless (ill use a mental stop if i feel the need), but you should have checked your five minute chart and your indicators to see the uptrend was STILL in place and you wouldnt have been stopped out.
try using “barrys support and resistance” and the LRC that i always speak about in my thread, and i think you wont repeat the situation again !
the first arrow on the left shows your entry and the second arrow shows WHERE it would have gone had you not used a stop or a looser stop ! The indicators show the same thing as the price action.
enjoy and trade well
mp
[I][B]Within the great hall at Elfinore stands a wondrous coffer, precisely four cubits square and securely latched against the outside world. Inside that repository, shut away from impertinent eyes, abides many an intriquing trading secret garnered from around the world and over the ages !
As a child, i used to watch from the darkness as the secrets were debated and annotated by the elders. No one there held a single thought of my presence – BUT I KNOW WHERE THEY HID THE KEY !![/B][/I]
