GBP/USD hourly fib scalp ideas

V-M Hybrid Scalp this morning. Between 30 and 40 pips depending how a stop is used.

It's definitely ok. We might end up creating a new hybrid-di-hybrid-Volatile-Momentum-H1-H4-V8-6Cylinder-UltraAggressive-Conservative scalp method by looking at everything so much with all the ongoing ideas.

I'm always still learning even when I go back over my old notes and see how my views have changed with what I've learned since then so the more I do that the more I learn while answering questions. And learning from other new ideas.

LOL, i like the sound of that!

I will try to do more V-M scalp back testing on the weekend because I think I like how it's shaping up. I looked at the October M5 charts again and noticed once a break out comes, there is barely any retracement - sometimes there is none, but if there is, it only goes barely to 38.2% retracement and goes back to continue to the extensions. If this observation holds in more months of testing it could mean a fixed stop of 50% and then discretional management.

Knowing that retracement is usually only up to 38.2% and that same 38.2% extension is an easy target to reach, we have a risk:reward of 1:1 - good news.

I don't know if it's better to take fixed targets or trail stops yet. I'd like to gather several months of H1 and M5 examples in one document and scroll through. And also gain confidence that I know how to properly identify these trade setups and I'm not just cherry picking subconsciously.

H4 Volatile Scalp
+55 or so easily gained.

A downward momentum began with a significantly sized candle, then a pullback/consolidation occurred within a controlled movement, and suddenly a volatile candle blasting in a continuation, closing strong and clearing any surrounding price action.

Trading the break of that volatile candle short, the trade is still technically in play but it's already come with 2 pips of the 38.2% modest target. Good enough for me.

Hi Thexder,
I took a similar trade, but with slightly larger Fib off the 1Hr chart. Didn't do so well as you, only 30 pips
I entered early rather like Bo & Issy (close outside of the 23.6) but it didn't reach my 38.2% (and I was initially shooting for the full 61.8%) - so I exited before it retraced back inside the 0% and before EOD.

This scalping method need to be run manually or an auto execution (EA)

It's manual for me but an EA could be used with the volatile methods if some EA friendly rules were devised to detect when a momentum or volatile move occurs (comparing the last several candles to each other for their flow and body vs wick sizes, percentage distance of the close vs the extreme price of the candle, etc)

I'm curious how the Sunday action goes since the 4 hour move is still considered to have not exactly reached the target yet. I don't think I'd ever hold over the weekend but if it continues to the target after a 2 day gap it's interesting to note.

Updated V-M document with another month of testing. I estimate an easy 400 pips for November 07 with fixed 38.2% targets including taking a few losses.

Overall I think this method is producing 30% less returns than the very first 07 scalp method but this one may be easier to follow overall. And combining the two methods would of course give returns from both methods of at least a few hundred a month each.

It's not that much extra work to combine techniques when you're stuck in front of the screen for at least 1 of the methods anyway - so why not increase the return for the effort put in?

After analyzing the lower time frame during trades I have one recommended method of stop management.

When the break out comes, initially set a 61.8% stop as a fallback plan, then watch M5 behavior for some insight while the trade develops. The more room between break out and target, the more defined price action can become in that travel. If a dip or rally pullback can clearly form in a profit or break even area before making it to 38.2% extension, consider moving the stop there to be safe. Otherwise if it's more chaotic or if the dips/rallies are forming within a losing price area, hold out for a while. The better move might be to use an hourly candle trail.

The 38.2% extension is usually reached within 1 or 2 candles after the break out candle. If an hourly candle closes without reaching the target, it should be safe to move the stop behind the hourly candles. If the stop is taken out at that point the trade is likely bad or else not strong enough to meet targets any time soon, it could take a lot of sideways movement and waiting and hoping.

If a fixed target order isn't placed and stop trailing is used, once the candles reach 38.2% extension anything can happen so consider trailing the stop behind individual M5 bars now instead of dips/rallies. Sometimes this can lead to catching a big move rather than fixed targets. If the stop isn't tightened up by now the profits can also just as easily escape.

In this example the red line is where a stop would be moved once that rally has occurred and then formed a new low beyond the blue line previous low. In breaking the blue line the 38.2% target is also reached so now it's time to trail the stop on individual M5 bars and the stop occurs on the circled candle, close to the target and allowing the potential to grow if the opportunity existed this time.

Hey Thexder,

Just finished testing Sep 2007. Total pips 507 , with one bad week, which gave me -82 pips.
Not bad, added a few little tweaks but more or less the same, trailing behind 1 min swings. Attached is all my trades taken in this time. I am now going on to Oct 2007 as you said you would like to see how it did, will let you know in a couple of days.

Steve

Good work. Seems like everything is still on track holding up long term with the observations, that's about 30% more than V-M saw for that month and continues to provide between 100 - 150 a week average with M1 trail even with a losing week as I've seen before.

If we combined all the scalps we could probably pull in up to 1000 for that month.

Here is the results from Oct 2007, and i ended up with 370 pips. I have not posted all the statistics as i discovered that my setup for the Gbp/Usd currency had been wrong so it was miscalculating the profit so you can ignore the other profit stats in the last 2 trade results documents. It is correct for win/loss ratio etc just incorrect for profit. As long as we know the pips and that i am trading 1 standard lot its not hard to work out.
Anyway, looked over your October trade results Thexder, and we do seem to have quite a lot of our fibs drawn in the same place. I think some of our initial fibs just before London opens can be a bit different but you seem to start earlier than me and quite often i will wait a little or leave a fib that is already being worked and wait for price to settle. Also, this is a slightly different strat than the one you posted and we can take smaller fibs from a range within the 1min chart sometimes.
One other thing i am going to start to monitor is the padding needed either side of the trade. I am currently allowing 2 pips, so if i take a long, then its the price + spread + 2 pips padding. Also the stop has 2 pips padding so this means that for each trade you are down 2 pips more than by simply using 1 pips padding. If you complete 40 trades in one month for example, then this is a total of 80 pips you are losing, which is a lot. So i need to see whether this is viable, and how many times this extra pip on each side actually saves you.

Steve.

Ok, i just went over my Oct trades and i would have gained an extra 9 pips if i had used 1 pip padding. That was a very boring exercise, lol, and i cannot be bothered to go back over Aug and Sep at the moment but i will continue to monitor this.
At the moment, i think it is worth the extra padding for that saving as it gives a little extra room for broker differences.

I'm making rough notes on new ways to analyze the first break out scalp direction of a session instead of blindly taking the first range break. I don't know if it will be any better than brute force, maybe some bad ones would be avoided while good ones are missed as usual but I think it might help pull the trigger.

It's sort of like going with the longer term trend but not exactly. More like the longer term momentum. By zooming out the hourly to show a few days, in addition to seeing if things are moving up down or sideways there are patterns that can be noticed. For example if the last 5 days were moving up but the end of the most recent day had a sudden sharp drop, even if the day still closed higher the current momentum and sentiment is a down move. Then by watching the next Asia, if things just go undefined and sideways, spikey rather than moving with a momentum one way or the other, I might be inclined to "believe" in a short break working more than a long break at that point despite the 5 day up trend with higher lows and higher highs daily.

Other patterns can be seen that span the previous day and the Asian session like stair cases or coils despite the overall trend movements. If I see a coil starting at the end of one day and leading into the next day (may not be obvious until zoomed out, may just look like a good swing range during asia up close) I might do better by avoiding the first break out - possibly miss a move but coils often break one way and then go for the real break. A brute force scalp would get whipsawed. If there's a clear staircase of up or down followed by sideways and repeated throughout a day and then the current Asia is part of the sideways step, it may look like a bunch of idle candles up close but zoomed out I'd probably see that I should expect either a long or short to specifically work more likely as the first scalp break out while the pattern is still there.

I looked at half a month like this and saw it tends to give insight about the first break out of the next session but I need to look at more and refine the analysis.

Will be interested to see how that pans out. Quite often i take a trade almost knowing that it won't work out with this method but the way i look at it is, by the time it does not work out there is usually time to bring the stop in tighter, very rarely do you get hit for the first initial stop loss.
However, i have also noticed breaks, which i have taken but i would not have taken if i was not using this strat and some of them have been great trades, so i think it is swings and roundabouts most of the time but evaluating various approaches is always healthy.
If i can test a year, i think i will be pretty happy knowing that even if i take a trade that i think won't work, and it doesn't, eventually there will be one like that which does work out, and overall you remain profitable.
Even if i netted half the pips i am during back testing, i would be happy as the system seems to be pretty consistent and has a nice upward sloping equity curve.

Now that I've slept on it I looked briefly at a chart and something else stood out for a better entry possibly with a V-M scalp. When it's a volatile break out on the hourly that I'm seeing in progress, it's possible (not tested fully) that dropping down to M5 and looking for a 60 pip required range at that time can allow better entry. If I see 60 pips of M5 bars rushing in a constant direction, maybe it is spanning 2 or 3 M5 bars, then a pullback, time to pull a fib and take the break rather than waiting for an hourly close that may go another 10 or 20 beyond M5 break out, and you're actually getting in late and chasing it. Hourly is still the core gauge (not just any M5 60 pip burst) but the lower time frame seems to always provide that Xray insight. It kind of makes sense to do it like this, rather than getting in during a move in progress because that hourly method doesn't look for an hourly pullback, it does trade-chase, so fine tuning on a different pullback is wise.

Here's two V-M setups from today. The hourly chart had a sudden surge of 60 pips on a single hourly candle short and long which broke free of a recent consolidation, which according to the rules would allow an entry on the next hourly candle if the close was still strong and not just a spike.

Looking at M5 the first setup wouldn't be very affected, there's still a possible short triggered and then a 38.2% pullback before continuing, but the long setup could be entered much earlier on M5 than H1 and the price action is very ideal, not just a random surge and some sideways mess. M5 allows going long above 1.9806 while the hourly entry would be above 1.9824.

Either way, observing the price action of these 2 setups confirms again that the risk:reward is still at least 1:1 with 38.2% target and expected retracement, even though initial stops are wider just in case, at 61.8% until they can be moved closer. In the short trade the 1:1 came into play during retracement and in the second trade there was no retracement if entered on M5.

Since we can only attach 7 documents to a message and the first post is getting maxed out, I am beginning to merge things.

I took the H4 volatile document and made it a misc scalp document with the new purely M5 scalp I just invented an hour ago. I call it 60 minus 38 plus 38 because it looks for a solid 60 pip move on M5, observes a pullback not much more than 38.2%, then targets 38.2% after break out. 1:1 risk reward etc.

If I can formulate any thoughts on that previous session momentum break out bias I wrote about I'll be adding it to that misc document.

I feel like a short story author this week.