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Simple Scalping

Hi Jenx - great thread, thanks!

Just setting up a chart as you describe on your first post.

I don't use MT4 and my charting package doesn't have an option for 'smoothed' MA.

Can you elaborate? Presumably you're not using not a simple MA, so maybe it's exponential or weighted?

Cheers
Would just like to add having knowledge of candlesticks seems useful. Gives added confirmation. I really like steve nison book Japanese candlesticks.

When its hits a band and you get a reversal conformation with candlesticks,its really sweet to see.

Im also checking order flow. You can't to this with forex. Getting a delta that supports your entry will be beneficial.

These two things could give a better edge or/and added confirmation.
  • Post #143
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  • Edited 12:30pm Sep 14, 2017 11:40am | Edited 12:30pm
Quoting Fxpen
Hi Jenx - great thread, thanks! Just setting up a chart as you describe on your first post. I don't use MT4 and my charting package doesn't have an option for 'smoothed' MA. Can you elaborate? Presumably you're not using not a simple MA, so maybe it's exponential or weighted? Cheers
Thanks.
To be honest, although its not a complicated system, it did take a while to refine it, and, using smoothed averages is pretty important to this strategy. If you compare it to a chart with say, emas, you'll see what I mean.
A lot of successful signals suddenly turn into losers.
Maybe your broker offers MT4? Most do. If not maybe you can download a demo account from a different broker and use that to give you signals?

A bit crude, I know, but those smoothed MAs are pretty imperative.
Cheers
Where price is now, it has been before, and will be again.
Quoting Jenx
using smoothed averages is pretty important to this strategy. If you compare it to a chart with say, emas, you'll see what I mean.

A 120-period smoothed MA will be totally different from a 120-period exponential MA, for sure.

But it should be exactly the same as a 239-period exponential MA.

The formula for "translating" a smoothed MA into an exponential MA is just "2n-1" where "n" is the periodicity.

Put them both on your chart and see if they overlap completely? If they don't, then this isn't a standard smoothed MA but something different.

Hope it helps!
Quoting KarlKraus
{quote} A 120-period smoothed MA will be totally different from a 120-period exponential MA, for sure. But it should be exactly the same as a 239-period exponential MA. The formula for "translating" a smoothed MA into an exponential MA is just "2n-1" where "n" is the periodicity. Put them both on your chart and see if they overlap completely? If they don't, then this isn't a standard smoothed MA but something different. Hope it helps!

Wow Karl that is impressive. As I have the same problem. No smooth on my charting provider.

But how would I do close and open ? Any ideas ?

Thanks you very much.
Quoting KarlKraus
{quote} A 120-period smoothed MA will be totally different from a 120-period exponential MA, for sure. But it should be exactly the same as a 239-period exponential MA. The formula for "translating" a smoothed MA into an exponential MA is just "2n-1" where "n" is the periodicity. Put them both on your chart and see if they overlap completely? If they don't, then this isn't a standard smoothed MA but something different. Hope it helps!

Sure... in a trending market with 100% of the moves in the same direction I suppose it might.

It doesn't work like that though.
"The fun is in the hunt. Not the kill."
240 ema = 120 smoothed
POW!
Quoting Redeflect
It doesn't work like that though.

Well, I think that if you look up how standard smoothed and exponential MA's are constructed and calculated, you'll find it should, Redeflect.

If not, then sorry I wasn't able to help after all.


Quoting goose4
But how would I do close and open ?

Sorry, Goose - I haven't read the whole thread, and don't immediately see what you need "open" and "close" for? (MA's - if not specified otherwise - are usually constructed from the close, though I prefer the "typical price" myself). I thought you needed the highs and lows for this system? (I only saw the OP, sorry if I missed something else).

For myself, I wouldn't worry about using just one line instead of two, if that's easier for you. It's going to make very, very little difference.

As Jenx rightly says, when combined with "essential, basic price action skills" this method is going to have a genuine positive expectancy ("edge") because it's based on an entirely logical and sensible underlying principle.

(No offense to anyone, but these wouldn't be quite my choice of indicator settings for it - but maybe that's just me. Anyway, commendations to Jenx for posting "a good one", here).
Quoting fxprimate
240 ema = 120 smoothed

Not quite: 239, actually. It's "2n - 1" (the difference is terribly tiny!).
Quoting KarlKraus
{quote} Not quite: 239, actually. It's "2n - 1" (the difference is terribly tiny!).
Yes, microscopic difference but I prefer a round number.

EDIT:
I forgot to thank you Jenx, for your kindness by posting your system.
POW!
[quote=fxprimate;10291944]{quote} Yes, microscopic difference but I prefer a round number.

Wow - some serious techs on this thread...!

Be good if someone could try out the 120 smoothed and 239 ema (or 240 if you prefer.... it's nice and symetrical after all) next to each other on a chart and post it... to put this question to bed....as I wouldn't want it to detract from the real subject matter of this interesting thread..

[But thanks to Jenx, KarlKraus, goose4, Redeflect and fxprimate for your replies to my 'simple question'...!]

Cheers
Quoting KarlKraus
{quote} No offense to anyone, but these wouldn't be quite my choice of indicator settings for it - but maybe that's just me. Anyway, commendations to Jenx for posting "a good one", here.
Hey KarlKraus - what variations would you suggest?
Quoting Fxpen
{quote} Hey KarlKraus - what variations would you suggest?

I'm a little reluctant to say!

Jenx has recently tested it, and is actively trading it, and I'm not (I tested the underlying idea and some variables of this indicator-combination, many years ago, but not on spot forex).

I know how irritating it can be when you post a system in a forum, especially one as promising and sensible as this, having been trading it successfully for quite a while, and along comes someone else who isn't trading it and starts suggesting all kinds of "improvements" to it, which very often turn out not to be improvements at all!

And I don't want to sound disrespectful to Jenx!

Having said that, personally I'd be interested in the combination of increasing the time frame a little while reducing the width of the standard deviation of the Bollinger Bands.

I used to do quite well with this, on 2-minute futures charts, using a BB setting of 18/1.8 instead of 25/2.0 as shown here. You get more entry opportunities. But note that that does also reduce the reliability (win rate) which may be why Jenx has chosen these parameters, of course. I got around that by entering a trade only when a candle specifically opened below the lower BB and closed above it (long trade, when the MA/channel gave that bias) or specifically opened above the upper BB and closed below it (short trade, when the MA/channel gave that bias). So I was really trying to catch entries in the underlying trend-direction just after a retracement had turned out to be "most likely just a retracement rather than a reversal". I did get more mileage out of it, this way.

I appreciate, of course, that M1 forex charts may be different from M2 futures charts for this purpose. As they always say "the devil is in the detail" and Jenx doubtless knows more about the detail and more recently than I do.

That would be my instinct, anyway. (I did an awful lot of backtesting.)

The underlying principle is a very valid one, anyway, whatever the instrument and time-frame, because everything is a bit fractal, anyway. It's one of the best methods I've seen posted here (and I don't mean just since I joined, in July - I've been reading here a lot longer than that).
Quoting KarlKraus
{quote} I got around that by entering a trade only when a candle specifically opened below the lower BB and closed above it (long trade, when the MA/channel gave that bias) or specifically opened above the upper BB and closed below it (short trade, when the MA/channel gave that bias). So I was really trying to catch entries in the underlying trend-direction just after a retracement had turned out to be "most likely just a retracement rather than a reversal".
Thanks for your comprehensive and diplomatic reply..!

Without having tested it, I suspect your 'price confirmation' entry strategy (above) is a more significant variation than the tweaks to the BB parameters...

Enjoying this thread...
Karl. Enjoyed your post very much. Seems you put some work in your research.

Did you ever play around with tick charts at all ? When you were experimenting with this. If so any thoughts ?

Kind regards.

Goose4..
This method is definitely stronger when you have the MAs moving in your favor. I was looking at some charts just now for further learning and noticed the two circles below would've been valid entries, but as you can see the 120 MAs are turning the other way so the entries aren't the very strongest.

Yes, they would've paid off in the end but in hindsight everyone is a genius.
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Hi Jenx

Chanced upon this thread you started yesterday and had an interesting read and some learning.

I never really into indicators myself and had been scalping most of the time through price action, but so far no consistent result which it's solely myself to blame as I would turn them into runner win or lost.

Patience is key and I am going to try out your setting. Thanks for sharing
Quoting IamFED
Hi Jenx Chanced upon this thread you started yesterday and had an interesting read and some learning. I never really into indicators myself and had been scalping most of the time through price action, but so far no consistent result which it's solely myself to blame as I would turn them into runner win or lost. Patience is key and I am going to try out your setting. Thanks for sharing
Hi
Tried that. Only when you try bare PA scalping do you realise how many false patterns get thrown up, pinbars, inside/outside closes, shooting stars, hanging man, etc!
PA is important but you need a datum point for it to take place at, whether that be a set up like this, S/R or pivot points.

Good luck
Where price is now, it has been before, and will be again.
Quoting Jenx
{quote} Hi Tried that. Only when you try bare PA scalping do you realise how many false patterns get thrown up, pinbars, inside/outside closes, shooting stars, hanging man, etc! PA is important but you need a datum point for it to take place at, whether that be a set up like this, S/R or pivot points. Good luck
Thanks for the clarification, Jenx.

I trade with naked chart, the most with Trend Lines and Support / Resistance Lines. Now with additional 5 lines (BB and SMMA), its getting confusing and crowded here on my chart, haha... Gonna take a while to get accustom.

Nevertheless, whatever strategy or setup you may have, at the end of the day its still in the mind of the beholder... and I am currently still working hard on this one... For too many a time... a scalping trade end up becoming an intraday position. I ought to chop my hand man...

But then some how or rather, we just have to keep learning day by day, trade by trade...
Quoting Ivanyo
This method is definitely stronger when you have the MAs moving in your favor. I was looking at some charts just now for further learning and noticed the two circles below would've been valid entries, but as you can see the 120 MAs are turning the other way so the entries aren't the very strongest. Yes, they would've paid off in the end but in hindsight everyone is a genius. {image}
All MA's will 'turn the other way' when the price is moving towards them because they're calculated by the price itself. It hasn't crossed them so they'll still curve upward. On a lower timeframe there are a lot more breakouts and grinds in the direction of a MA (Hence 'the trend is your friend'. There are only a few specific exceptions to this under certain circumstances in a highly volatile market.
"The fun is in the hunt. Not the kill."
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