I have just picked up scalping again after a long time and I desire to attempt at becoming consistently profitable with it. Scalping is certainly a very stressful and demanding style of trading, which in turn has the potential to open up incredible % results over short periods of time. The scope of this journal will be to keep track of my failures, by posting and commenting my scalping sessions based on my most aggressive scalping technique. As the title suggests, I am using a fixed stop loss of three pips (on EUR/USD) and my style of trading is 100% indicators free and exclusively based on pure price action.
DISCLAIMER: I'm not here to teach anyone anything, nor to promote any service. So I discourage anyone to follow my trades. You can consider this thread for entertainment purpose only.
As a point of reference, my trading style can be summarized in:
DISCLAIMER: I'm not here to teach anyone anything, nor to promote any service. So I discourage anyone to follow my trades. You can consider this thread for entertainment purpose only.
As a point of reference, my trading style can be summarized in:
- I check the daily and 1 hour timeframe to spot possible market signals i.e. an outside bar at the end of a rally on the daily, or any other trend signal to have an idea of where the market might move to.
- My stop loss is set to 3 pips and it is automatically set on every trade. I might consider changing this value in the future to 4 or 5 but as my main goal is to risk as little as possible on each trade, I think it will be extremely important to adhering to this rule.
- Focusing in on the 1 minute or 10-sec charts, I'll simply trade what I see utilizing only 100% price action. This include momentum trades (at the end of a swing), support/resistance bounces, and failed breakouts.
- Once in a profitable trade, I'll move my stop to BE as soon as possible after just a few pips in profit. Take profits will be taken at the end of the current swing, based on current market momentum. I personally don't like to let my trades run for long unless a strong clear trend is in action, so my TPs are usually below 10 pips.
Some things that I need to remind myself:
- Beware of overconfidence - always trade what you see in front of your eyes and not what you wish the market would do.
- Stick to your risk management, even if it means it will be frustrating. Keep your SL at 3 pips maximum and aim to reduce the risk as soon as a trade is in positive. If you keep your SL so small, you'll eventually recover most of your losses even if you screw up a couple of times.
- Take profits when trading so aggressively need to be precise and quick - unless there is a very strong trend in your favor don't let the market take back your profits. In practice, that translates to about 5-6 pips profits on average on EUR/USD or whatever the current momentum swing can give you.
- When the market gets choppy, don't be afraid to get out. Do not let a trade unnecessarily cost you a 3-4 pips loss when you could have closed it at 2 pips in profits, just because you were hoping it could go a bit more in your favor.
- Beware of overtrading. While keeping a SL at 3 pips will help you overcome huge losses and perhaps increase your long term gains, don't just shoot at every opportunity. Before entering a trade, always consider where you plan on getting out. If a potential trade doesn't seem to have much space to develop, let it go. It's better to let 10 good price movements go by in front of your eyes, than risking your chances on 1 questionable trade.
- Even if you're scalping on small price movements, seek confirmation before jumping in.
- If you feel tired, stressed, unfocused, and not passionate about trading, let it go and take time to recuperate. Do not trade while you're not in a good mental state - this will save you a lot of money.
What do I aim to do here?
- Keep reporting and analyzing my sessions. Hopefully, by bashing my head enough times analyzing my trades I will improve and become more profitable.
- Avoid any kind of dumb trading, such as revenge trading, flip trading, and generally screwing things up unnecessarily.
- Develop the most precise entries possible, entering when price is about to swing in your desired direction.
- Cut out anything that won't work or will just unnecessarily cost me pips (for example: specific bad entries without context).
- Increase my win rate and profits to the maximum possible value, while keeping a max SL of 3 pips. I'd say reaching a 60-70% win rate with an average loss of <3 pips and an average profit of 5< pips would be ideal.
- Study possible improvements to my setups and trading style.
- Reach five positive sessions in a row. Then achieve ten positive sessions in a row. Wow!
- Possibly, reach 100+ pips in profit on my experimental demo account with negligible DD.
- Eventually gain enough confidence and experience to open a small real account.
- And if I'll make it that far (highly unlikely), then trading with 100+ lots and earn 10 grands a day would be the end goal here.