Simple Method of Scalping any pair on 5 min chart , specially GBP/JPY - by Imran Sait

price is very close to 60 EMA which has acted as resistance and red lag is pointing down, trend is bearish so no long trades

So lag 2 is saying not a safe trade for a long postion to scalp sense we r sitting near the 60ema.

So this is a false signal the alert sounded then?

Could i still make a trade for a few pips off of lag 1 indication?

gbp/jpy moves very fast, so unless the indicators are in agreement. its unwise to take any trade

Iam long on gbpjpy @ 237.25

And hopefully re-birth!

Being a successful forex trader for the past two years I'd like to pass on to the newbies (and otherwise) some very important issues dealing with the psychology of trading forex or any other investment markets.

I apologize for it's length (actually I could have gone on a lot longer) and I love the Laquerre system and especially the support that has been given in this thread. It is MY sincere desire that this post will assist traders in their educational experience in a positive manner, and encourage all to eliminate the psychological traps and snares that leads to the downfall and elimination of so many traders and their accounts.

Trading financial markets is one of the very few human endeavors which is highly and intrinsically descriptive of the immediate effect upon reality of individual minds and their interrelationship with the global mind of the individuals who form a market.


In order to become an effective trader, one needs to understand some basics of mind's effect upon reality and to have a prescient ability towards a group of minds interacting with that same reality.


The major invisible life-principle to remember when embarking upon a trading venture is as follows: YOU ALWAYS CREATE WHAT YOU FEAR AND ARE ANXIOUS ABOUT. Anxiety-type fear is the most creative force of the universe. Unless the fear is so great that one ACTS against it. Ex: fear in the back of your mind diseases (anxiety) and they are yours, fear slightly situations and you will experience them, loss of money and it is yours, accidents, weight problems, violence, dis-ease, sexual dysfunction, bad luck etc. . . .

There is no surer way of living an accelerated gamut of extreme human emotions and varied intense life experiences in a short time-frame than by trading financial instruments. This is particularly true of forex, the futures, derivative markets, stocks trading on margin, options, and day trading. Leverage or short time ranges, magnifies everything. It shortens perceptual time, exalts emotions, magnifies fears and hopes. It is a battlefield of the mind for the courageous ones who want to test the mastery they have over themselves. A trader cannot but face the naked truth about oneself beyond the appearances he/she tries to project. It is a very humbling and often painful experience. A great mental and spiritual school.

I hear all of my technically oriented friends frowning at the prior statements: "All of this prior verbiage refers to fundamental traders or traders that trade by the seat-of-their-pants!" "They lack the cold unemotional discipline that is at the core of computerized or charting based decisions." " As technical traders, we are impervious to emotions since our trading is not based on them." I answer: " Yes, you are not trading based on emotional decisions, but are you immune to the effects of emotions upon your trading results?"


Let us study a typical trader's foray into Forex or Stocks trading. Mr./Mrs. Knows-it -little has taken courses, read books and eventually understood that in order to be a consistent and effective trader he/she must muster the help of a cold non-emotional machine such as a computer that will put its tremendous data processing power at his/her service so that the computer makes the buy/sell decisions for him/her. Good-bye emotional destructive influences! His/her seasoned advisor, Mr./Mrs. Knows-it-all, recommends to Mr./Mrs. Knows it-little the most consistently effective trading systems. Welcome to the Holy Grail!


Mr./Mrs. Knows-it-little has well done his/her homework as far as choosing the "best" technical trading system available for sale out there. He/she has tracked the best technical traders and their systems as reported under stringent scrutiny by independent agencies (that often trade on-line imaginary accounts ) . Gone to many seminars listening to the “Master gurus of trading. ” Mr./Mrs. Knows-it-little double checks the data. Has it confirmed. And voila! He/she is ready to enter the foray and leave hopefully a mark of his great talent at making money grow on this beautiful tree of free enterprise. A future trading legend, perhaps?


Mr./Mrs. Know-it -little, upon the advice of many of his/her advisors and trading books, starts testing his/her super-duper trading system that often uses the most advanced mathematical pattern recognition algorithm or artificial intelligence techniques by first trading the system on-line but not with real money. He/she paper trades it and checks its validity for a couple of weeks or months. Miracle! The system delivers as predicted: over 70% accuracy - a high reward/risk ratio and perfect entry/exit points etc.... What a shame that he/she has not yet traded it with real money! What lost opportunities!


So, full of expectations, our trader decides to do the big jump and start trading. He/she calls a broker, and starts real-trading on-line. He/she is very cognizant of the fact that he/she has to be disciplined. He/she always listens to the trading signals generated by the system. He/she never overrides the system even if a trade does nor feel right. He/she never panics in the face or repeated losses, and trusts in the superiority of a cold mechanized approach.


At first, bingo! The system performs as expected, given a little slippage here and there, and profits accumulate. Wonderful thoughts creep in: “At that rate of exponential money growth, retirement is close! Why not trade from a yacht using satellite connections ? “ "Some losses do occur, but they are part of the nature of the beast. Something to be expected 30% of the time." So far, so good. Everything goes as planned. “What a shame I did not start trading from an earlier age!”


And then comes the unexpected. A string of repeated losses. Odd isn’t it?! Mr./Mrs. Knows-it-somehow (promoted!) is puzzled, uncomfortable and slightly anxious with the amount lost. "A fluke, that’s what it is!” “The system is destabilized because of this and that, and will soon get back to its old good predictive self.” “Nothing to really worry about.” “We are tough and disciplined out here!"

The next couple of trade signals arrive. Mr./Mrs. Knows-that-he-can-lose is ready to trade, but supreme injustice from heavens: he/she goes again into a repeated losing situation. First come some gains, then losses, losses, and as fear mounts, more losses, bigger losses! Anxiety and frustrations mount, losses accumulate. Greater fear ensues. The account is shrinking now rapidly. The system seems to have done something that it NEVER DID in the last 20 years of back testing. WHY NOW? WHY ME? And the great cycle of fear starts its implacable dance of forging reality.

Mr./Mrs. Knows-it-all (promoted again!) is now blaming slippage and bad execution of his trades. He/she resents his/her broker. And when this alone does not explain all of it, he/she turns his wrath against the system’s designer. He/she blames the veracity and quality of the back-testing. He/she threatens retribution. He/she might then even decide to try his/her hand at designing his/her own system based on “ own ideas” that he/she thinks might revolutionize the technical analysis field. Or he/she takes the easy way out and looks for another well-touted miracle trading system, often traded by a C.T.A . . or stocks fund manager. That is if Mr. knows-that-it-is-the-system’s-fault has enough resources left to continue trading!


And you know what? The same scenario is repeated again and again. But this time, in an accelerated fashion. Downhill goes the account!


Are you afraid to "pull the trigger" on trades? Have you suddenly had a rapid religious conversion and engaged in a mental dialog and a quite sudden close relationship with "God" as your are asking for His help and promise the Divinity "whatever" if He were nice enough to make you this 'little favor" of turning the general market in your favor, as a trade turns ferociously against you? You usually initially enter a trade because of pure greed and the "fear of missing a golden opportunity," and then shift into a stubborn mode in refusing to exit it, as Mr./Mrs. Ego is refusing to accept being wrong and "knows" (hopes) that the market will come back his/her way!


Are you suffering from "crying-over-spilled-milk syndrome" when you feel that had you listen and taken this or that trade and not done what you actually did you would be swimming in a sea of liquid gold? Are you feeling that you must constantly watch the markets, and seize every single opportunity, while you are slowly deteriorating into a nervous physical wreck! Are you mumbling to yourself and others:" If I only had done this, listen to that etc. . !" Are you ingesting mind distorting feel-good pills? Are you perhaps flooding your brain circuitry with alcohol to become less emotional about the markets and reality?


Some psychological "professional guru" comes and tells you that your problem is a "fear of success." In other words, you are desperately trying subconsciously to "hurt" yourself. You "hate" yourself because of past programming (usually from childhood comments made to you by parents, siblings, friends, and educators); you are a masochist-trying-to-shoot-yourself- in-the-foot. Solution: Regression cognitive therapy, behavior modification, and other gimmicks. You must find some Zen-like elusive "zone." So, you play victim for a while, revisit the bad memories, and paradoxically end up energizing them even more, as you bring them up to the forefront of your conscious awareness. Now you finally know why you behave in the way you do. Maybe even a past-life event is at the crux of all this negative feeling? You are told to repeat and write ad-nauseatum suggestions to the effect that you are the best thing ever created under the sun, and that you "love yourself to death." You pay the "specialist" his/her hefty fee. And you go back in the trading arena with the "bulls" and "bears." Ole!


And oh, surprise again: One more streak of bad luck! And the old demons of fear/anxiety come haunting you again. Because in reality, nobody is afraid of happiness, success, love, recognition. We all strive on it. Nevertheless, many of you have so often had the rug pulled from under you just at the moment when you are about to taste success that you fear a repeat situation. And all the negative comments received by others enhances your fear/anxiety of failure. That fear is magnified, and compounded. You feel the world is watching you and really gauges your abilities with minute scrutiny. You do not want to hear derogatory comments again, they impact on you fragile self-esteem.


And then the grand finale: The burnout syndrome. You quit, full of deep emotional scars - hopefully, if you are lucky, with some funds left and a quasi-intact family. And you have become one of the many casualties of the fear (losses) -desire (greed) mismanaged viscous circle, due to a lack of understanding of HOW POWERFUL YOUR THOUGHTS REALLY ARE AND HOW TO MANAGE THEM in order to create positive realities...


And in fact it wasn't really your fault. You really fell for the accepted lie of the last three decades that states that all you have to do to trade successfully is either rely on someone's else opinion or buy and use some wonderful infallible mechanical technical trading system either using the latest in computer intelligence and/or some mystical secret of the universe (discovered natural pattern of the markets put in by the "gods" usually with an ancient Greek or Egyptian ratio flavor!) You would not allow a computer to diagnose the state of your mental or physical health in that manner and require a human physician, but you allow blindly a machine to do the same in diagnosing alone the state of markets (global psychological expressions of greed/fear) health and direction! You believe this needs to be done with as little human input as possible, in the name of human psychological discipline and of "sticking" to the trading signals received!


If this has not yet happened to you, I know that you know many individuals to whom similar events have and are happening. What is at play here? Can anyone ever make money in a sustained way in these markets. With leverage close to 100% as in some forex or derivative markets, the potential for gains and commensurate losses should be enormous.

Forex is a zero-sum game. No money is really created. Money is only redistributed, transferred, among participants. For each individual happily holding a winning contract there is an distraught individual holding the same contract and losing the same amount. Stocks, by contrast can monetize a whole economy, on paper alone. No need to print paper money and risk inflation. We all become "stock-paper" wealthy.-alike real-estate wealthy. What a productive and wonderful way to balance government and corporate deficits, or to create artificial heaven and risk then experiencing after real hell here on the earth plane, as the cycle of life goes into the reverse balancing mode!

After all, if one were to flip a coin and make Forex trading decisions based on it, he/she would have a 50% chance of being right. And if he/she increases his/her odds by using sophisticated technical analysis, his/her higher odds should propel him/her in a stratosphere of gains. If 50% of all contracts lose at any time and 50% gain, the leverage factor causes, at one point or another, a great amount of fear to each trader. Fear feeds on past fears. People tend to be more conditioned by past memories of fearful events than by past memories of positive ones. Hence, most traders eventually become financial casualties of their anxieties/fears, and subsequently there is subsequently the need to bring in new pools of fresh trusting participants who have not yet known market fear and are willing to interject new money in. Let us not even mention the in-between entities, brokers, lawyers, regulators, managers, analysts who live and feed on this pool of money and receive their intermediaries fees, no matter what the markets do.

What I am trying to convey is as follows. It is not that fear of losses causes one to choose losing trades, but that akin to quantum physics, the mechanics of fear-consciousness cause trades to become losing trades no matter what methodology, timing of trade, etc..., is used. Emotions literally impact upon life-realities and change them. Forex and stocks trading are but a grandstand proof of it because of the intensity of the emotions experienced and their immediate situational feedback (impact).


The implications are stupendous, and only few will ever ponder and/or understand them. We are by far more powerful and creative in creating realities than most of us would ever dare to believe. Mastering such an understanding makes a profound impact upon the total gestalt of an individual.
Very wealthy individuals or characters who have little inclinations to fear anything because of either a very basic lack of general awareness or a great cushion of assets, often do better at Forex and Stocks trading, because their fear factor is mitigated. Is that unfair? Maybe yes, but we are all here to learn how thought create, and this learning is what the experience of life is all about.

Think positively, and positive happenings are drawn to you. Think negatively, and negative happenings are drawn to you. We all know this. E-motions are the creative motions (forces) of you reality.

Easily said. However, how does that apply to trading, for instance?

Remember this principle : YOU ONLY TRADE YOUR BELIEF SYSTEM. NOTHING ELSE. Believe strongly in success and you become a success. Believe somehow in failure and you will fail. And so it is in all of life's endeavors..

Hi Shocker2,

If you change your LISPA1 to use filter (UseLaguerre2Filter=true), then many wrong signals will be filtered, including the one you are asking. But some good opportunities will be lost also (always there is a trade off!). Please check it and let us know by posting in the LISPA thread, so that we can improve the LISPA.

chandra

I dont have a lisa1 indicator on my screen. How do i get it on there? Also how do i change these settings?

Hi Shocker2,

I think you have the LISPA1 Indicator (the red and Blue big arrows should be from that Indicator I think). If you do not have, you can download the compiled version and simply attach it to any chart. see the link for the file:
http://www.forexfactory.com/showthread.php?t=51635

About changing the settings, please check your PM.

chandra

but which SL and TP?

SL is 50 pips from the time the lag-2 moves above 0.15 i.e when the entry for long is made and vice versa for short trades

First TP is 150 pips and Second TP is 250 pips from entry price

Can I also get the info for changing the settings? Thanks!

Imran, And in M15, the best chance is in the alignments of lag?
See chart, blue vertical line.

lags when in alignment can net lots of pips and it worth the wait, even on 5min, it can net somewhere between 100-150 pips on g/jpy and 50-80 pips on other currencies

Hi again! Got clock and other stuff working, thanks chandra. But now new problem occured. I'm unable to modify the preset settings in LISPA. Could you pls reveal how to change these.

Hi Imran,

Here is the chart as promised. I saw a perfect set up (as GJ was consolidating) occur on the 5m chart. Both Lags were up and lag 1 started down. Lag 2 was pinned up on top so I figured it might be a little bit before this beast moves forward to a break to the downside. One word of caution: notice the tight channel/range, price bouncing off of the 60ema and the pivot- you could have waited for lag 2 confirmation if you were unsure of the lag 1 signal. I also DID verify this with the 15m chart. I rode it down to 238.01. I could have taken another 100 pips had I continued to monitor lag 2 on both time frames, but I was tired and why be greedy, greed ruins accounts. I would also like to say a Big Thank You to Imran for sharing this with us and being kind and patient enough with all the questions that are asked. May God bless him and his Family.

RIght now at 4:50pm EST GMT time. GBPJPY trade has moved up 40 pip. I have pics of 1min, 5m, 15m charts... Y didnt the 5min cahrt show a long postion? AM I in the wrong and was I supposed to look at the 15m or 1m chart?

Hi ....

I ll try 1h Tf instead of 5 min. but whenever I set 1h a hundered of signal arrows appears (blue and red) and I cant see bars clearly on chart.I ll use lispa indicator but first I have to remove default signal arrows.Do you have idea to wipe them away...

You guys have a very fine thread here. Permit me a few observations.

As you probably know, GBP/JPY moves with the equity markets, specifically the S&P 500. When the S&P is live it trades with that and at other times it trades with the S&P futures (currently the SPZ7 contract for December).

The idea then is you want to know whether the futs are pointing up or down in the overnight hours and you want to be aware of significant news. Then you can decide if you want to trade with the trend and/or try to catch the inevitable pull-backs.

I see that Imran is short from 237.6 and he's looking for the lower 236's. I don't believe you'll get that tonight and i'll tell you why.

Any news that affects the equity markets will affect the pair-and the other JPY crosses too. Profit reports (and what corps. say about the future) are always important because they obviously can affect the equity markets and that's even more true in this profit season especially in this time of economic stress.

Yahoo and Intel reported after markets closed:

Oct. 16 (Bloomberg) -- Intel Corp., the world's largest semiconductor maker, said profit rose 43 percent on higher demand for personal computers in Europe and Asia. The company forecast sales that beat estimates, sending the shares higher. Demand in emerging markets such as China bolstered PC sales, allowing the company to forecast a higher profit margin in the fourth quarter.

Oct. 16 (Bloomberg) -- Yahoo! Inc., owner of the most- visited U.S. Web site, reported third-quarter profit and sales that beat analysts' estimates, signaling that acquisitions and new advertising software may be spurring growth. ``It's about reigniting growth,'' said Clay Moran, an analyst at Stanford Group Co. in Boca Raton, Florida. He rates the shares ``hold'' and doesn't own them. ``Maybe we're seeing the beginning of Yahoo coming back to life.''

IBM had a very good profit report too.

On top of this, traders are going to start digesting Bernanke's speech from last night and they are going to see that the fed stands ready to do whatever is necesssary to promote stable growth and prices-and that means they will reduce rates again as soon as it's needed since they are growing comfortable with where inflation is and where it looks to be going.

So I would be extremely surprised to see G/J very much into the 236's tonight. Still, you never know exactly so the futs can be used as a guide.

As far as tomorrow, the CPI is being released and should that print as the fed would prefer your lags will be pointing to longs on G/J. (As long as something else doesn't come out looking terrible).

The lags look very good for entry on the trend, but it's what's happening in the financial world that turns the lags for the longer term trends.

Hello Traders,

We just had a great short move on the Gbp/Jpy in todays trading session. I've attached a chart that highlights how powerful a trading system that we have here, thanks to Imran and all the wonderful contributors we have on this thread.

This is a 15M chart only because I couldn't get all the data I wanted to show you on the 5M screen shot but none the less all the indicators and analysis would have applied on the 5M chart.

Things started to happen just prior to the opening of the Euro Session. We had a signal when Lag1 crossed down through Lag2 dropping below 0.85 and price on this chart started dropping below middle bolinger band. Another confirmation for me was negative divergence on my RSI indicator showing price was going to fall. FX Ninja likes to use MACD to see Divergence and I use RSI. I think using one of these indicators is a good idea just for the purpose of finding divergence to show a possible change of direction in price.

Gbp/Jpy never could get above it's Daily Pivot point and from there it fell like a rock after the Euro/London session opened. The price plunged non stop right down to Daily S3 and started to retrace [Pivot Points Are Powerful]

How far will it retrace? This is where FX Ninja's method of expertise comes into play!! His famous A,B,C,D points he's looking for give us a big clue.

Using your fib tool draw a fib line from yesterdays high @ 239.79 [Daily Pivot] to the low just below Daily S3. That's your A & B points[swing high & swing low] After a big move price will retrace or correct itself to a Hot Zone area, which is usually between 38.2 & 61.8% retracement. If you're trading the retracement that's a good area for a take profit target. After a big move down, checking the 1M chart for Lag signals would be good to catch the retracement confirmed by the 5M chart.

After the big move down we retraced just over 50% of the move. That's Point C. Now where? Go to your MT4 platform, click on insert, go down to fibonacci and select expansion. Now draw your fib expansion over top of your first fib retracement lines you drew. You'll see lines appear below the 0% level of your first fib. lines you drew. I believe the default readings of the expansion levels are 61.8 ,100 , and 161.8%. After the 50% retracement we had we see price is heading down again so our target would be the B point or Daily S3, and if it falls below that, our target would be one of the expansion levels we calculated point D. As you can see on my chart price continued it's down move to 61.8% fib expansion [Point D ] Now as I'm typing price is consolidating between S2 & S3.

Imran I believe has a short trade on still and one of his targets is 235.70 which if you look at the attached chart is right in the 100% fib expansion area of 235.75 Pretty cool huh? Will price go there? That remains to be seen.

I hope this post will help some of you better understand how we can trade this wonderful system that Imran has laid out for us along with understanding our use of these indicators. There are many good tips for trading in this thread by very good traders like FX Ninja and others. Take advantage of this and we'll all help each oher to succeed.

Thank You For Your Time !! ....T-Wolf

Nice observations Thunderwolf and Newstradefx!!

solution for positive Corp. profits /possible bounce - either take profit or hold a little bit for breakeven. i favor a bounce but who really knows 100% ?
mkt is consolidating...