C4 Scalping

This thread is started as a tribute to my friend "Paulus", whose considerable contributions to the FF community have stirred the creative thinking of so many traders. Also, my deepest apologies for somewhat 'hijacking' your EUR/GBP thread. As in the past, please feel free to post any and all ideas you deem relevant to trading at your leisure. You are of course welcome here anytime and in any capacity.


This trading plan is designed as a high strike rate, minimal market exposure, account goal oriented approach to scalping in the Forex market. After a month long journey through the usual 'indicator envy' hell associated to almost all new trading system threads, the indicators attached offer (imho) new and current thread followers their best opportunity to succeed.

This thread is 100% trading plan oriented. As such, it is asked and expected that postings and comments be kept strictly to the subject matter at hand. While I can appreciate the fact that it has become rather lengthy in a short period of time, it is still your responsibility to read through the materials enclosed, do your own due diligence beforehand, and decide if this type of methodology fits your trading style and goals.



C4 Scalping...


This methodology (scalping) is definitely not rocket science. You do not need a PhD. nor any other advanced educational degree to succeed in trading this style! Further, you do not need to be proficient in identifying S/R, placing pivot points or working with Gann Fans or Fibonacci retracements. Lastly, you do not eight separate indicators all telling you the same thing.

What you do need is the time to actually sit and watch a computer terminal for a few hours, an uninterrupted work environment that allows you to focus on the task at hand, and the ability to recognize a very simple trade setup when one presents itself based on the unfolding PA looking you right in the eye. You also need the ability to point a mouse at your order box and press 'Buy" or "Sell" when a decent signal appears. Above all else, you need to be comfortable with and understand the concept of 'Probability Theory' trading. There is ample information available on the internet free of charge to you that will help you gain enlightenment on this concept. The book 'Trading In The Zone' by Mark Douglas is an excellent read if you feel inclined.

Both C4 and Nitro (described later) are best suited to those with some experience in the industry. Similar to applying to become rated as an EO (Explosive Ordinance) in the military, you should have developed and displayed some manner of discipline beforehand to give others a general feel of confidence that your are not a risk to yourself or others. However, the FF is not restrictive. As such, anyone can apply!

This thread is dedicated to 'scalping' and you need to be present at your post! We do not look to swing trade or position trade EVER!

Always remember that trading the Forex has an inherent risk involved. Never trade funds you cannot afford to lose.


Ok, let's get started!

As the name infers, scalping is explosive and demands you pay attention. PA moves quickly at times. Failure to focus when handling explosives can be fatal. Failure to focus when trading a scalping methodology can also be fatal, to your trading account!


Gear Up...

You do not need a burdensome amount of gear or tools here. The following will do quite nicely.

1 - Get a decent broker with a clear, concise charting package.

2 - Open four (4) 5M charts and place them on your screen as a group. I suggest the following pairs. EU, GU, EY and AU. You can change them later as you deem prudent, but those are the ones you need to start with. MAKE SURE THEY ARE 5M CHARTS!!!

Make the charts color schemes any manner which appeal to you. Forget about asking for a template! Do some really basic work here. Remember, you are the one that is going to be looking at them so make them easy on your eyes. Think about the scheme a bit and know that the more VIBRANT and charting scheme is, the more psychologically detrimental it becomes to you. Make them nice, clean and soothing.


Tools...

You need only three (3) indicators, a PRIMER, a CHARGE, or 'explosive' as you will, and a DETONATOR. Last, you need an IGNITOR (mouse) to set off your charge. Thus the name C4 Scalping. Make sure the following are in your tool bag.

PRIMER...

1 - SM 'Scalper' candles (settings are 2,1,1,1 under the inputs tab and work the colors tab to your liking).
This is the only primer you need.

CHARGE (C4)...

1 - MA in color w/ Applied Price (settings are 10,3,6 under the inputs tab and set the colors as you wish).
This is the only explosive device you need.

DETONATOR (Plunger)...

1 - The 'DXTrade' Information C4/Nitro Meter (leave at default settings)
This is the only activator you need.

IGNITOR (mouse)...

These are all the tools you will need in your gear bag.


Get Your Primer...

Take the 'primer' from your gear bag and place it on your chart. OK, that was pretty easy.

Set Your Charge ...

Take the 'charge' from your gear bag and VERY carefully place it on your chart in conjunction with your primer. Nice work!

Wire Your Detonator ...

Take your 'detonator' from your gear bag and place it on your chart. There, everything is in place.


OK, the hard part is done. Let's have a wee bit of fun here.

Take a look at the attached chart labeled EURUSD.

PA acts as a virtual freight train. It rolls up a hill, down a hill and sometimes on relatively flat terrain. As such, common sense would dictate that if we can derail the train on either a upward or downward hill (mini-trend) we can do a bit more damage than on flat terrain. On flat terrain, we are far more susceptible to being discovered via consolidation. We want a bit of gravity working in our favor if possible.

As shown, we have our 'primer' (SM Scalper Candles) and our 'charge' (MA color) wired to our 'detonator'. As PA (train) moves along, it takes a random path whereby it changes direction. This action (PA) thereby energizes your primer by having it change color from 'white' to 'black' or 'black' to 'white' depending on direction.
We have condition one (1) complete.

Very quickly, as PA continues in the same direction, it reaches a level whereby our 'charge' changes color (from 'yellow' to 'blue', or 'yellow' to 'red' depending on train direction) and thereby becomes HOT!!!!!!
We have condition two (2) complete.

Last, we need to know that PA has some apparent momentum that can be detected by our detonator. Once this occurs, our detonator is ready for activation. Take a quick glance at the meter (detonator).
Make sure it has a least 2 green 'bombs' for a buy and 2 red' bombs' for a sell. You have to do the rest of the thinking on your own!!!!!!!!!!!
We have condition three (3) complete.

Now what?

Yep, ALL of you know what is needed to do next to complete the mission.

HIT THE IGNITOR !!!.. (commonly referred to as a mouse) and BOOM! Hopefully the PIPS ARE FLYING!! (If you ever get the opportunity to actually set off a reasonably large explosive ordinance device 'safely', go for it!! It is quite invigorating).

There you have it. Pretty darn easy when you train yourself to recognize potential trades using the bare minimum high quality tools available to you to get the job done. That is C4 Scalping in a nutshell.

I already mentioned that this is not rocket science. That is readily apparent now to anyone. Lets go ahead and set forth the parameters you use to trade the methodology.

Step one - Watch for SW Scalper Candle color change.

Step two - Watch for MA color coded change.

Step three - Make sure you have two (2) green bombs for a buy and two (2) red bombs for a sell on your DX meter.

Step four - Initiate the trade (Buy or Sell).

Trading Goals...

1 - +5 pips (net). This is a very important level. Do not try to exceed it.

2 - SL is discretionary and is not set in stone!! I have found that the color change of the MA color w/ applied price serves well. Also, a change in the Trix color is a sure bet to exit the trade.

Note: Trading this methodology is not going to give you a 1:1 R/R. Scalping is built on probability theory as mentioned. Further, PA will tend to repeat small intricate movements repeatedly. This is simply historical fact. As such, a scalping plan is based upon a decent win/loss percentage and very good MM. Just playing the odds and trying to stack them in your favor now and then.

3 - I trade this method (C4) at a set period of day. That is from 0400 to 0900 PST. This is the ONLY time I trade the Forex market with this plan. It has historically produced volatility sufficient enough to generate PA commensurate with trading this particular strategy. (Here is the GMT period converter for your convenience)
http://www.timeanddate.com/worldclock/converter.html (http://www.timeanddate.com/worldclock/converter.html)

Any other times traded and you are own your own!!!!!

As the plan is based on a high hit rate operation, you should seek only enough trades to allow you to reach +2/-4% to account balance daily. My personal preference is to trade multiple lots and garnish a modest amount of pips, usually around 20-25 or so daily. I do everything possible to identify high probability trading setups and diminish market exposure.

You should focus efforts on attaining these goals alone until you have gained proficiency in trading the plan setups and methodology.
(ref: post #1306 for a better accounting as to these targets)

How you choose to trade is personal decision YOU have to make. It is up to you to decide when to 'hit the igniter' and enter a trade. This is not 100% mechanical and there is a discretionary aspect to consider. You will have to 'think real hard about this'.

(A small excerpt or two on 'discretionary' aspects of the plan are found on page 428, posting #'s 6409 and 6416)

Ultimately, you will find this plan ridiculously simplistic in design. The more you work at it, the easier it will become. Sadly or joyously 'simplicity is the single hardest trading concept to wrap your mind around'.

Will be around pretty often to answer questions should you have any. But perform your due diligence first and read the material. Remember, scalping is quick so try to not clutter up your charts with indicators. You simply will not have the time with fast moving PA to look at very much. You need a primer and trigger, plus a bit of faith in the plan.

Best of luck trading!

Regards.


Notice!!!!

Please be advised that trading is a personal choice and consideration should be given to thread followers and patrons at all times. As such, I reserve the right provided me by FF as thread operator to ban any individual from posting in the thread as I deem appropriate.

This authority is not taken lightly. All who wish to post meaningful and subject oriented commentary are welcome to do so. However, the thread is set forth as a targeted effort to trade a specific methodology. Any effort to disrupt the level of focus needed to learn, retain and apply the trading plan materials presented within this thread will not be tolerated.


Updated on August 21, 2009.


****** Notice******


C4 Training is complete!

As such, the graduating class has moved to the next phase of training. That is called Nitro Scalping - The C4 Progression. The new thread for this will be initially opened on Sunday, August 30, 2009.

The materials presented here for C4 will stay intact for as long as the thread remains active with interest. I will monitor activity as best I can. If and when the thread begins decay from a lack of further interest I will simply close such.

Do not simply dismiss C4 as no longer being a viable trading plan. It will stand on its own with many other trading plans, has terrific built in versatility and can be traded on any TF with any trading style (scalp, swing or position).

Beginning on page 155 in this thread, you will notice the rapid transition from C4 into Nitro begin. If C4 seems to better suit your trading style, then stop at that point in the thread. You will have enough information within the first 155 pages to take quite a while to cover. The indicators attached to this page are my recommendation to trade with. Feel free to use what you wish. We have already been engulfed by the indicator envy phase of a thread, so I know I personally will not discuss any new submissions you may think plausible. As mentioned, use what you are comfortable with.

As for the Nitro enthusiasts, page 155 of this thread and beyond will give you everything you need to get up to speed on trading this particular plan. It is highly suggested that you do your due diligence beforehand and read the material. Especially if you plan to follow Nitro actively in the new thread. If you feel you need to back-test, forward test, check out your favorite indicator or review trading philosophy with regards to TP/SL levels, R/R, PE or any of the like, then read the material here beforehand and make your decision.

This has been a VERY good month for a thread such as this. A few growing pains and some of the usual FF issues have already been dealt with. I am pleased with the efforts of many and feel this is the best time to move forward with the methodology a bit further.

Regards.

Way cool!! Happy to be here
Look forward to some major pip-takin'!

Hello Edge,

Fantastic. Finally we have a thread.

I would like to warn any person who comes in from left field with some suggestions, coding this and that, you will be in for a real treat from Edge.

Lets trade what we have here, put up the charts, as per the rules stated above, and take it from there.

Monday, bring it on....http://www.forexfactory.com/images/icons/dollar.gif

Cheers,
K.

Hello Edge,

thanks for the new thread. I will be a steady reader.

Perhaps you should try to keep it clean of "badass" posts like they were posted at Paul's thread.

I am using your system for my M5 Trades and it works very nice.

Will post some screenshots later.

Wish u all the best,

tex

Way to go, Edge. Great start.

Looks interesting. But may I say that scalping, in my humblest opinion, can be much simpler than that. Of course, I'll be looking forward to your results. Thanks for sharing.

Many pips to all,

Let's see now. One post on FF, and he says scalping can be much easier. Hmmmm. It started much earlier than I had expected. Knowing Edge, I know the post will merely amuse him.

A +++

Hi Paradoxical,

Don't worry, I am new on here and I don't know Edge. I am just someone who has been scalping for a while now and his approash, while looks interestingk, seems a bit compicated (to me) that is all I wanted to say. But I am relly looking forward to more details from him.

Peace,

Hello Edge....

Thank you very much for posting your scalping method, looks pretty clean and simple!
I dont know why but I can't match up with your indicators at the bottom! I've downloaded all of them but they do look quite different than yours:
Isn't it possible to post your template..that would help me so much.


Thank you very much...

Edge,

The thread looks great! Thank you for all your hard work.

rptrader

My advice for this strategy and any other scalping strategy is to look at probabilities. Consider realistic statistics before blindly jumping in. I think its important to state this right at the start of the thread, so people know what they're looking at and what to expect. If at any time you find that something isn't working, the spreadsheet will give you an idea why.

So glad you started this thread. I've been ready everything you've been writing on the other thread with great interest. Have had some success following your methods. Look forward to more.

Thanks.

good on you for starting a thread.....

OK. I'll take back what I said. Just that there's so many contrarians. If you'd look at the posts Edge has made on the other site, I believe you'll come to the conclusion that the man knows whereof he speaks. I seriously doubt there's a simpler way. However, I'm sure Edge, and everyone else, would be interested in any improvements or contributions that you or anyone else has to offer.

This is going to see odd to some people, but this is mostly in response to the probability spreadsheet. What people forget (and for the record I trade live), is one does not need to take into account the spread when looking at profits, Why? This is simple businesses math here, profits only come into play once debt is paid, when you make a trade your already in debt 2 pips, your take profit is 10 pips and will not trigger until the price action has moved 12 pips, which equals 10 pips profit. I know on my account the moment I hit buy/sell I am in the hole .20 cents, $2, or $20, when I set my take profit level of 10 pips my account is credited the full 1$, $10, or $100 not those figures minus the spread. Why do people insist on asking if these profits include the spread, of course they do it is how forex retail brokers work. Now this is not the case when someone is with a broker that takes commissions instead of being paid via the spread and in these cases one must deduct the commissions from their profits. Sorry for the rant but I think some people are being misled when they feel they need to deduct the spread from their potential profits when setting their take profit levels.

Glad to see this thread started.

Is it my addled mind, or half blind eyesight, that caused me to miss the EU chart with the trendmagic that was referenced?

Ace, looks to me like you counted the spread twice in the 80/20 reference on your sheet.

I just finished editing that boo boo. My bad.

And to DETrader, you are correct on the probabilities spreadsheet. I will strive to show probability theory trading well beyond that of just trading on a win/loss ratio. It is a bit more entailed than that.

Also, as I have mentioned on another thread, I woulds really enjoy seeing traders develop their mindset more attuned to the 'less is more' concept.

Nothing more than going after less pips with more lots. Once we get a tract record here of simple wins v losses, we will quickly see the following:

1. 'IF' we can manage 65% at a +10/-10 level trading 1 lot then,

2. We can do even better at +8/-10 level trading 2 lots and,

3. We can really make progress at +6/-10 level trading 4 lots and,

4. We become virtually lethal at a +3/-10 level trading 6 lots.

Looks ridiculous on the surface to even attempt to trade at such a poor R/R doesn't it? Remember, there are other factors to consider.

What time of day are we trading? What is PA doing? How deep are the trading swings oscillating in each pair? How quickly can we reach account preset goals thereby limiting further our market exposure?

Ask this question of yourself as a trader:

"If I am trading a plan that I am really comfortable with, would I rather trade 1 lot for 10 pips or 10 lots for 1 pip?".

Conventional wisdom dictates that the former is the logical play, scalping and probability theory based on the PA during a certain time of day MIGHT indicate the latter to be the most prudent trading plan. This is just one of the possible discoveries that may be achieved that starts to alter the normal thought processes traders are bound to. We shall see.

Regards.

Hi,

Good scalping system.
Does the smtrix indicator repaints.

Thanks.

Good continuation of a nice and simple trading method.

D.