Scalping Price Action

Beginner Questions Candlesticks, Chart Patterns, and Price Action
1

This thread is dedicated to scalping using price action analysis. Timeframes 5 minutes and lower.

Here is a review of the 2 minute chart for EURJPY on 29th Aug 2013. Descriptions below chart.

EURJPY 29 AUG 2013.jpg700Ă—340 24.7 KB

One

A Small trendline is developing, lower highs and lower lows forming, moving averages have rolled over signalling short term momentum is changing. Price forms a small rejection candle off the moving averages and trendline, price has also reacted several times at this area in the last 15 candles. Entry on the close of this candle and stop above (approx 4 pip cost with commission). There is the opportunity to take 2R out of a trade like this.

Tips: When scalping the 2 minute chart your intuition comes into play as execution needs to be quick and efficient. Using a fixed stop loss of, for example 5-7 pips, for all trades allows for one-click trading, consistent lot size and risk per trade.

Two

Price forms a flat bottom with 4 attempts to break lower without success. Price then forms two inside doji candles in a row. Entry on the close of the second one, stop loss of 5 pips, 1:2 risk to reward achieved on the next candle.

Tip: Given the strength of the momentum drive back up you can look to hold onto the position with a wide take profit. Many times at the start of the session you can get in at the ground floor and ride the move for significant value so long as the momentum holds.

Three

Price is slowing down and reacting multiple times, price then breaks through this level and rejects back down, then forms another red rejection candle. Entry off either one of the two, stop loss 5 pips, price runs back down to the previous area of resistance from earlier on in the session and makes a 50% retracement of the move up. Potential for 1:2 risk to reward on this trade.

Four

Rejecting off the previous area of resistance and 50% retracement of the last move up, also off the 50 EMA and in the direction of the short term trend. Entry on close, 5 pip stop, 1:2 risk to reward potential.

Five

Price has tried to go higher multiple times but has failed and formed a trendline. Price rejects off the trendline with moving averages coming back together and closes well down the previous candle. Entry on the close, stop 5 pips, take profit potential 20 pips.

Six
Price drops back down to form a double bottom from earlier in the session and reacts strongly off this area. Entry on the close, stop 5 pips, 1:2 risk to reward possible.

2

Here is my most recent intraday price action analysis, enjoy!

3

The EURUSD 5 minute chart on 5th Sept European session was stagnant and formed a floor with the momentum candles being bullish with weak selling pressure to push price further south. There were only a few opportunities (but that’s all we need). With this style of trading we need to be patient and its about getting in and getting out, only taking a handful of trades per day.

During this session you could have taken multiple trades with 0.5 R results so sometimes we need to read the low volatility and readjust our targets and expectations. No use sitting there waiting for price to make a massive breakout when we can clearly see that price action is slow.


4

To scalp or not to scalp? That is the question I will answer in this video…

5

Why do you prefer short time frame? This is risky and u will not get the time to evaluate the chart I think! Price actually moves to the longer time frame’s set-up and in shorter time there is always waves on both the directions for short periods but ultimately it is moving according to the longer time’s forecast.

Your analysis is good but newbies should not trade the short time frames.

6

I am sorry but this is the exact reason why I am out here talking about scalping. The mis-information that is constantly put out there by people who have no experience (I mean long term or successful experience), people who have been burnt and those that have brought into the collective fear that scalping is “high risk”.

If a newbie trader wants to start scalping I say absolutely, the sooner you start learning the better and as I say in the video it’s a journey. You must learn and practice and use a demo account. I am not telling newbies to put their capital at risk straight away. If you have no patience to learn your trade then you shouldn’t be trading any timeframe cause you will eventually lose by your impatience. Would you tell someone no you shouldn’t become a surgeon its high risk? No you would say yes go for it, but go to school, learn your trade, practice on dummies…

In answer to your questions, if you watched the video I covered most of your questions.
Price isn’t moving to the longer term charts, price is moving to what is happening right at this exact moment in time. There is only the now, price doesn’t move in the future it moves now. You don’t know if there is going to be an earthquake in Japan in 3 months time, you don’t know that some country is going to go to war next month. To say price moves to the longer term charts is BS, you only think it does because you can look at a daily chart and see a pattern. Price moves from tick to tick and nothing is real until someone decides to put his/her money into the market.

For those newbie trader out there, scalping is entirely possible but you have to learn your trade so go out there and start learning. Don’t let negative BS and collective fear stop you from doing anything in your life. Anything is possible.

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7

I’ve always thought that. Thank you! I’m now free (in my mind) to start really learning this. With price action only. Man…I’ve always read "noise, noise, noise at the very short term levels. But now hearing this from you forex alchemy, and chris capre, I’m on a mission!
I will be following you. Keep it all coming. I like your videos. I appreciate your work!
Mike

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Hi Mike, nice to have you on board, and thanks for the feedback, let me know if I can help out in anyway.

9

Interesting thread, FA. I’ve dabbled in 5M trading but just absolutely could not beat the spread. I’ll follow your thread with keen interest since you seem well-informed.

10

I am in too Forex Alchemy
Lets see it.

11

Hey I’ve been really interested in your trading strategy, it’s exactly what I’ve been trying to do minus volume (a product of reading all of the VSA threads) but you don’t post very often… I’ve watched every video, read both threads and still want more man. I know you offer a newsletter and thought about subscribing but havn’t do to the abundance of people who try to “sell” you there products or their interests. Yea, so this is just a request for more info forex alchemy, I like your picks and analysis SHARE.

12

very interesting thread guys, it’s help me to learn become trader…
Good job guys…

13

I have to agree with Forex Alchemy. I’ve been studying forex now for 8 months, about 5 hours a day (I am recovering from a car accident). After a few courses, a few books and HOURS of demoing I have found that even though I can successfully trade on longer time frames I have developed a “feel” for the charts and am MUCH more successful at scalping. I can add to my account almost every day. I don’t get greedy. Keep the s/l close, don’t wait for too many pips and stop after a few good trades then call it a day. I can do it for an hour or two a day now and come away ahead. But you MUST DEMO PRACTICE A LOT!!! Don’t expect to learn this over night and I’m sure it’s not for everyone.

14

I totally agree about the speards. I personaly believe that scalping is possible because when you are used to read and analyise charts. You know for a fact that smaller time frames are possible to trade. Think of the logic as trading the daily calendar events but using technical indicators. Yes volatility is higher and taking a decision to buy or sell requires quick action, but that will come with practice. Do i consider it gambling? yes but i also consider trading in general as gambling because of the uncertanity behind it. Floor traders are technicaly 1 min chart scalpers, they win huge but sometimes loose it all.

Anyways, back to spreads. In smaller time frames, the 2 to 3 pips spreads technicaly almost as 20 to 30% comission if you consider yourself a 10 pips scalper to every wave you trade.

I also want to add that higher time frames are more consistant and also very profitable and should not be under estimated. Partialy because majority retail traders are part time and use analyise the market action on daily basis.

15

thx for all the grat posts I am learning so much from them.

16

Any timeframe is able to make you some pips and they have their pros & cons over each other.
I prefer to be flexible with my trading, while waiting for a good set up on the hourly for a swing trade why not scalp the 5min or 1min? You might end up catching the exact moment when the Big Boys enter their trade which makes your entry at the very start of a trend. It happened to me quite frequently.
Yes its easier said than done but without knowledge, practice, dicipline & good risk management any strategy over any timeframe won’t work well.

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17

Why do you incline toward brief time period? This is dangeruous and you won’t get an opportunity to assess the diagram I think? Cost really moves to the more drawn out time span’s set-up and in shorter time there is dependably waves on both the headings for brief periods at the end of the day it is moving as per the more time’s estimate. Your examination is great yet beginners ought not exchange the brief timeframe outlines.