I call myself a swing trader, but can I enter on a 5 min chart with a 16 pip stop and still be called a swing trader? Or am I confused and have the psychology of a scalper?
Because here’s the plan:
I trade the London session from Australia for a couple hours. I watch the 60min chart and enter on the 5 min chart risking $30 on my $5,000 account, and move my stop to break even once price goes my way and allows me. Granted I could have gotten stopped out 1 or 2 times before reaching this stage. Then I go to bed. In the morning, I either wake up to $50, $100, or $150 profit OR with NO positions at all. But if I’m still in profit, I’ll look to add another position to the same pair in the next session.
Does it sound like I’m doing the right thing? Just want to know what others think of this strategy.
I am also from Australia and I trade both the London and the first 3 hours of the US sessions. I consider myself a swing and scalp trader so if I may I will attempt to answer your question as per what I do and what I have been taught.
I learnt to swing and scalp trade through the Brooks Trading Course. Al Brooks defines a scalp trade on the FX market as a trade that is about 40 pips and a scalp trade on the EminiS&P500 as 1point or 4 tics. I personally call a scalp on the FX market as any trade of 10 pips or less.
A swing trade on either market, FX or Futures, is at least 2X risk reward. So if I risk 10 pips to make 20 pips that would be a swing trade.
I like you idea of moving stop to break even and then letting it run. If you wake up with a profit you must be using a take profit level. I have tried to do this in the past but found that it was frustrating to wake up in the morning to find that price just missed my take profit only to have retraced back to my break even stop and I had nothing.
Unless I am in a position trade I am reluctant to leave a trade unless I have a trailling stop in place or my fix stop is in profit.
Adding on is also a great strategy and is recommended by Al Brooks. However I prefer to take off. So I enter with 3 lots and take one off as I reach certain support and resistance levels. The last one I will let run and trail my stop. Sometimes I kill it other times it doesn’t work so good. But that’s trading. What I do subscribe to is getting my stop to break even as soon as it is practical to do so because I hate losing money. I also use a 60 min to look for trend direction and support and resistance levels but enter all trades on a 5 min chart.
You see the very short intervals, so there is no need and time to set SL or TP (sometimes it occurs, that a trade “stucks” because of sudden “lack of Gasoline”, than maybe is set SL or TP , but normally its not necessary)
Thank you for always sharing your words of wisdom. It sounds like we are almost on the same page in terms of how we approach the market from Australia.
But I must say sorry if I wasn’t clear, I don’t set Take Profit levels before shutting down for the night. The cash values I mentioned are where my trades are when I check them in the morning, either in profit, or stopped out. Maybe I should do that though. My entries have become sharper, now I’m learning how and where to exit.
I like your definition of a scalp/swing trade. So it’s not so much the time frame, it’s your Risk/Reward ratio the defines it. Thanks for that.
Hope you had a stellar couple of weeks there in March. Sure did feel like the US dollar was going to smash everyone else’s currency.
Yep including the Aussie Peso. I have had to change my strategy to deal with the extra volatility. Spreads are wider stops are wider commissions on options outrageous.
I find myself taking very quick profits and at the same time getting out of what I think are losing trades much quicker. Yesterday gold fell 470 tics in one day. that is a $4700 move in one day. Ridiculous!!!
I also use a 60 min to look for trend direction and support and resistance levels but enter all trades on a 5 min chart.