Shroomheads Scalping Log

Beginner Questions
1

Time to finally share my trading log with you guys, and since there seems to be a lack of scalpers in the newbie forum its time to even the playing field. I’ll update this daily with all the trades I’ve made for the day, and we’re starting out with a great one.

Firstly I’ll talk you through the strategy; I’m scalping EUR/USD mainly on the 1min time frame using a double CCI, Bollinger Bands and price action to make my trades. There are three types of trades I’m making, trend continuation (probably the most profitable strategy so far), range market swing trading and the occasional breakout trade (with good confirmation). There are some very simple and easy setups to get you in and out of these trades with very good profit potential and very small risks.

Firstly to set up the chart I have a 14 period CCI and a 6 period CCI (14 is the main indicator), then standard 20 period 2nd and 3rd deviation Bollinger Bands to show us “extreme price” movements. Eww indicators, why the CCI you ask, well the CCI is very accurate at tracking the acceleration and slowdowns in price which occur when we start filling contracts (meet Support/Resistance) and therefore identifies reversals for us.

This can be done with price action, but if the indicator makes it easier and provides confirmation then why not use it? Especially when we are dealing with fast timeframes, speed is of the essence.

Anway the most profitable trades occur in a trending movement and we simply buy or sell after a pullback and ride the price until we see a rejection or slow down where the price could potentially reverse. Using the CCI, a pullback in a trend is seen by the price pulling back over the 0 line, however if the price pushes back over the 0 line again then the deceleration in price has ended and the trend will continue, which is where we enter the trade. Here is an example of a couple of trades taken today.

Stop loss is simply set just below previous low or high created by the pullback, profit is taken when we see a possible slow down in the price, usually occurring close to the 3rd deviation Bollinger band. The benefit of trading with the trend is that we often won’t have any drawdown, allowing us to take easy profits and get out at BE easily if the price moves against us.

The second type of trade takes place in a ranging market, where the price is bouncing quickly between two trend lines. The movements will be observable on the CCI as very fast swings across the 0 line, as the price accelerates towards support or resistance and immediately swings back the other way. Entry occurs when the CCI trend is broken, stop losses are set just above the support or resistance line and profit is taken if the price reaches the trend line or if there is a clear slowdown before. An example of today’s trades can be seen on the chart below.

At the start of that chart you can also see a divergence trade against the trend. These trades are much more risky, so early entry is a must. Unfortunately the price pulled back to BE and I exited the trade before reaching my profit target, although I was correct. Better divergence trades occur when a peak is reached on the CCI but the price continues to rise, then the CCI passes back below +/- 100 and the price moves away from the current trend. And example of this can be seen on the last of today’s trades.

I’m up over 96 pips today (which is an exceptionally good day for me I must say), 7 wins, 1 break even, no losses. Let us hope tomorrow goes as well. Thoughts, comments, suggestions?

2

Great work. The CCI indicator is standard in MT4??

3

There is a CCI indicator in MT4 under custom indicators. But I use this one (see attachment Double CCI.zip (2.19 KB)) which also has an optional LSMA and CCI trend identifier (although I don’t use the LSMA the coloured trend identifier is nice).
If you’re interested in using the CCI for trading take a read of the link, it’s only short and doesn’t give you a trading strategy but it shows the best CCI trade setups at a glance.

CCI - Trading the CCI by Steve Fitzsimmons aka Fitzy40

4

Since there’s some news out on EUR/USD at the moment I’ll post the mornings trades. Up +20 pips today, with 2 wins and 1 break even trade. So far so good. The first trades were quite easy to spot and backed up nicely by the CCI. They were very different sized trades, but pips are pips :slight_smile:

I had another nice trade line up after a long wait, but unfortunately I was feeling a bit nervous about it and moved up my SL too tight and it was hit right before a big move. Missing this juicy trade was my own fault, that’s the second time in two days that BE has cost me pips. At least I didn’t lose any.

Finally I’d like to present an example of why using indicators intelligently is the key to sucess, rather than just blindly following an indicator system. In the example below the news was about to come out anyway, but for arguments sake let us just ignore it. A typical CCI swinging rejection appeared which if we were blindly following a “system” we would have been stopped out. However just by reading the chart we can easily avoid making such mistakes.

So there you have it, reading the chart is just as important as reading the indicator. Now let’s see if we can scalp a little more today once the news has died down.

5

The other of todays trades: +7, B/E,
Total pips today: +27

I missed a big move, I had it all lined up and read to go but the price moved too quick and put me off. Went a long long way down, I’m anoyed that I missed it. To avoid chasing more trades im going to call it a day, that makes two good days in a row. :smiley:

(this is the one I missed)

6

This is fascinating ~ I was just demo trading the Euro last night, ah, better to say, during London Open using the 1 minute, to see how it compared to historic data simulator trading. As expected, I got slaughtered, and lost huge amounts of imaginary money, but it was a very valuable experience. I wish I had read this just prior, though!

Also, brilliant writeup ~ impressively clear. I really like that! I’ve been quietly testing trading systems that have been clear and succinct, the last ones have been gasanvill’s and a pinbar method (james16), though unfortunately I have to use historic data to test something like those, or wait a fair while.

The nice thing about scalping is that it reminds me a bit of video games ~ quick on the trigger, rapid, and something that allows you to gain skill steadily, or, conversely, give very rapid feedback that you aren’t any good at it yet… Which is what I got last night.

How long has this system been working for you? I’m guessing years?

7

Thanks shroomhead, this is very interesting. The problem I have with running SL like that is how on earth do you manage to have the reflexes to input a SL based on the last 1 min candle as they close, you must watch it like a hawk. I would like to scalp in addition to my current trades, because scalping just loses me pips at present. Have 5 stars.

8

Thanks for the CCI link and indicator. I’d always wondered how to use it correctly. Looks like your doing well. Good job man!

9

Thanks for posting that CCI link. I am going to be doing research and see if i can incorporate this into my swing trading plan.

10

Ooh feedback and a few questions, great.

I’m literally sitting there with the order window open constantly, as I see a trade develop I’ve got the candle hi/low programmed in as my stop loss before make the trade (or set an imidiate 5 pip SL with a script as my broker wont let me set SL closer than 5 pips :28:) and I keep it open as the trade goes on to adjust the stop loss on the fly. Most of the time I don’t really worry about it, I just let the trade run unless something looks suspicious, and I only really move the SL when I want to make sure I dont lose anything if the price flies back at me. I usually just set it, then have my finger hovering over move to BE if I need it.

A great idea would be to build a script which moves the stop loss to the high of the previous candle. That would save me so much effort, I’ll have to look into that. :wink:

I love scalping for the very same reason, quick ins and outs. Plus I’m a pretty nervous trader so I think I’d have a heart attack if I held a trade any longer lol.

I’ve only really been trading the CCI like this for about a month (although I have been trading for about 6 months), as I’ve only really just gotten to grips with the CCI. It seems to makes a lot of sense to me and it’s quite nice to finally find a strategy which clicks with you.

If you’re having problems with scalping but seriously want to give it a go I have one piece of advice. Scalping does not equate to constantly trading, you can’t just switch into scalp mode and expect pips to come flying your way, this was my major problem for a while. It can take nearly as long to find a good scalping setup as any other strategy. I thought that because I was only scalping a few pips I should be trading almost constantly, trying to take a piece of every move on the chart. But this simply isn’t the case, as a scalper you should bide your time, look for a great setup that you can control and have a good win probability on, then take your shot. I only made 5 trades today but I was sat at the computer for 5 hours.

If you would like me to explain anything else about my scalping technique or CCI setups let me know, drop me a pm or skype me.

11

I am very interested… trouble is, teaching me at this point would probably be about like trying to explain nuclear physics to a beagle. I’ve got to absorb what you’ve already put down (rather a lot, really) and then break a few eggs first.

I’m going to try this a bit and see if I can get myself into the ‘intelligent question’ range. I was trying purplepatch’s VSE stuff and didn’t see setups for days and days… made only two or three VSE trades so far, so it would have been pointless to pester him until I’d at least tried it a bit more.

The drawback to this… five hours for five trades… those would have to be some valuable pips, or it would become… joblike. Though, maybe some alerts could mean you can do other things during sketchy periods, or perhaps a few times of the day are ideal?

12

Well the other day I made 9 trades, so it varies. My point is mainly take trades when they come, but don’t go searching for them. Remember this is just one currency pair, when you’ve got the technique down you could have a few different pairs up at once and potentially double or tripple your number of trades. But I’m not at that stage yet.

Even so, 5 trades a day could grab you 40 or 50 pips which could work out to a juicy profit each day. Plus I do intend to do this full time, so waiting around is not a problem for me. Good luck :slight_smile:

13

I got up a little late today so I’ve only done 3 and a bit hours scalping, but I’ve made some interesting trades today which I’d like to share. I think I missed a few morning trades on EUR/USD thanks to oversleeping but there were a couple of nice setups shortly after I sat down.

After that however the market went a bit choppy, I ended up making a pretty stupid trade resulting in my first loss in the log.

After that I was fed up with the EUR/USD price action and opened up the USD/CAD chart, which has a similarly tight spread on my broker. I didn’t take the first oppertunty as the bull move looked weakened, plus I had only just switched onto the chart. I had a typical CCI 0 swing trade come up pretty quickly afterwards, followed by a gutsy divergence trade which more than made up my loss.

After waiting around without getting any entry oppertunities on a big downtrend I saw a risky looking counter trend oppertunity and took it. It was a similar setup to the one I missed on the first chart so I wanted to take it. I was scared stiff so I got out on the first bearish candle, worth the thrill though.

I’m done for the day (the Battlefield 3 beta has just finished downloading lol), another good days trading.
Total pips: +5, +19, -6, +6, +10, +8 = 42 pips
Not bad for just over 3 hours work.

14

good job bud, keep rockin it

Dont break the rules, Im waiting on a trade, just because I did just that.

Had 99 pips, ummm, like 9:50am, EST

And my goal is 100, and thru excitement of having my day over in 2 hours, I missed something, and BANG, now i wait…

15

I had a brilliant hours scalping this morning, some easy and obvious setups just rolled my way. You could have traded them without the help of the CCI really.

+37, nice and easy. Again those fast candles showed up to try to ruin the fun, but I’ve figured out that you can easily spot these danger zones on the 6 period CCI too. They show up as rather erratic behavour hovering around a similar level on the CCI, if you see this happening just sit back and wait for a clearer picture.

I haven’t really explained what the 6 period CCI is for; being the more sensitive indicator it shows moves a little earlier than the 14 period CCI and also tends to follow the actual price a little closer. We use the 6 period CCI as a signal of where the 14 period CCI is likley to follow, so for example if we see a hook around starting on the 14 CCI and it is just about to reach back to 0 we can enter a little earlier if the 6 CCI is showing a more extreme hook, ending in a value of around +/- 100 (a bullish or bearish signal), as we expect the 14 CCI to follow shortly. When the 14 CCI is clearly following the 6 CCI then we can use the 6 CCI as confluence when a potential trade is developing.

But don’t use it as the primary indicator or you will recieve a lot of false signals!

Take a look at the trades above and notice how the 6 CCI was always leading, or roughly equal to the 14 CCI. Now take a look at this example below (I didn’t take these trades as I’d already made pips and the market was getting a little choppy) and notice how the winning trades occur as described above, but when the 6 CCI failed to lead the 14 CCI it would have resulted in a losing trade.

I’m going to have a couple of hours off and maybe scalp a few more pips later on.
Happy pipping.

16

To make keeping track of my stats easier I have opened up a new account with GKFX which I’m tracking on myfxbook. The account has a £5000 starting balance, it’s leveraged at 1:50 and I’ll be risking about 1% per trade; let’s see exactly how this method performs. There’s a graph of the stats on the first page and the link is here. So now the pressure is on!

I had a bit of a nervious start to the day, exiting a trade far too early, essentially risking my money for nothing. This was such a bad pyschological trade, as I was just looking for excuses to exit. I’ll have to learn from this mistake; look at the charts, not the profit/loss.

Seems like that early wobble has dented my trading today, three more trades came along and it failed to take any of them. I think I’m worried about the spread ruining my risk/reward ratio. My confidence has totally disapeared, perhaps it’s the pressure of keeping a trackable account!

Again more trades showed up and I just sat and watched! “If I don’t enter I can’t lose.” :mad:

I’m going to have a break, get some lunch and force myself to make some trades today!

17

I finally made a trade, only a small one but its positive pips. I guess I’ll work up slowly to using this account at full tilt, patients is key.

18

Is it possible that starting a public log of your trades caused enough stress to affect your trades significantly? While obviously good in some respects, it seems to be a double edged sword.

19

Yeah that seems to be the case, I’ve certainly felt a lot more pressure with the knowledge that my results are up for everyone to see. But on a positive note if I was using real money I would have a similarly stressful incentive to get the account to perform at such a high level. If I can build the account up under this level of stress then I should be better prepared for the pressure of live trading.

I know that the method is solid as I traded it well for over a month in a pressure free environment. All I have to do now is master the confidence and psychology when under pressure. I guess time will tell if I can cope :56:

20

Another bad start to the day, lost 2.9 pips making an over eager trade (I had literataly just sat down at the PC for 2 minutes). If I’d actually taken some time to analyse the chart I would have stayed clear, so this time it’s entirely my fault rather than nerves.

Still, I think this speaks volumes about how good my system can be, I’ve made 2 bad trades (1 psychological and 1 error) and taken only 1 megre profit yet the account hasn’t taken any drawdown lol. The problem is definatley with the trader at the moment, time to move on and make back my pips.

Ha brilliant, I stuck with a very nail biting trade and it paid off. I was in the red for quite some time, but I read the chart rather than my account balance and stuck with the move right to the top. +7.7 pips and a nice £50 (1%) for the account.

I’m going to take a break for a while to look for a broker with lower spreads, 1.5 is a pain in the backside. CMCmarkets have recently updated their webplatform and offer 0.7 typical spreads on EUR/USD, at half the spread I think I have to check them out.

EDIT: Wow, look at this for a spread.

Although it’s not a flexible as MT4 it does have all the tools I need, hmmm I’m seriously contemplating a switch.