Here is the current method i use to trade during the London & NY sessions. Nothing too complex about it, but does require discipline & practice of price action reading skills. I will try to keep it as simple as possible, and will be open to suggestions or questions about it. I usually make 20-40 pips/day, and I find this method quite consistent for myself. If you believe shorter time frames are “noise” then this is not the method for you. Also if you are not interested in putting in screen time - then forget this.
STEP 1: PLAN YOUR DAILY LOSS LIMIT & MAX POSITION SIZE - Losing excessively leads to foolish decision making, revenge trading, and using too much size. I cannot trade without this strict discipline, and deciding these factors before hand. NEVER opt to change this plan in the heat of the moment. Just my advice.
STEP 2: CHART SETUP: The pairs i trade this method currently include EURUSD & USDCAD. I use a 5 minute chart and a 1 tick dot chart for each pair. I also check the 15min & 1hr to plot key levels. The 1 tick dot chart is available on the cTRADER platform. Also, you should use an STP ECN type broker - variable spread, commission type if you are scalping.
STEP 3: STUDY ENTRIES: Typically i am looking for a bounce or push off of a support/resistance level, or also breakouts - although probabilities suggest more breakouts fail - and so the primary method of entry is off a bounce. This aspect of monitoring price action cannot be taught as theory. You must put in the screen time, and chart study to develop an eye for entry.
THE 1 TICK CHART: While some people think it is madness to use a 1 tick chart. It is a useful tool to understand the volume of the market, and the pace of order flow. You can see the spread better, and note points where spread widens, and there is tension in the order flow. It will tell you things that will be missed on a candle chart. It is also highly effective for scalpers to use as an exit for trades, since one can trade from the chart and exit a trade by placing a stop as tightly as needed. Here is a screen shot, that shows the order flow in USDCAD - note the mini trend and swings.
STEP 4: SCALE UP or STOP OUT. This is the KEY to the method, and achieving the size of gains necessary to outpace the losers. When the trade goes your way, quickly add to it, and position as the market turns in your favor. This is also the aspect that requires the most discipline. If you have added and the trade is not going your way. Clip it! Essentially, you test the market with a small sized entry, and add as it goes your way. I will allow myself to average down only once, and only in certain circumstances. If at this point it still moves against me - I STOP out immediately. Do not hesitate to do this. On the other hand, don’t be afraid to pile in when the market is turning your way - this is where the big wins are!
STEP 5: EXITS. If price is not spiking your way - I take the profits and get flat immediately. If price does spike your way - Exit half or more of the position, and put the remaining stops in the money. With at least one portion of the trade - trail the stop on the one tick chart and keep setting it below the mini swings. This is an excellent way to maximize the profits on a trade, as you can keep following it as long as the spike continues.
FINAL NOTE: this is a method that requires practice, speed, and a keen eye for the movement of the market. I find I have thus far been able to trade consistently using this method - and it works for me as an action kind of person. Keep in mind though not to overtrade and be patient as with any style of trading.
Hope this helps - if anyone else is doing something similar - let me know!:44:
