30 Days to Profitable EUR/USD Scalping....

I'm using 200 period Bollinger Bands with deviations of 1,2,3, and 4.
I am also placing pivot points on my charts (PP, R1, R2, R3, S1, S2, S3).
Lastly, I am drawing lines at "psych" levels of 1.xx00s and 1.xx50s, (zeros and fifties).

I'm trying to enter at Bollinger Band levels, as these are short term extremes. I use these as possible support or resistance. Pivot Points are viewed more as EXIT points. This is where price may be heading. There is generally much of volatility around pivots and "psych" levels, that is why you do not want to enter there.

I want to scalp. I'd like my losses to be at most 5 pips and average winner at 2.5 pips. Yes, I'm defying conventional wisdom on many points. Winners are smaller than losers, and I'm trading very short timeframes often against the trend (1 minute TF). Targeting setups and price action that give me a high winning trade percentage, hopefully +70%.

Candle formations, indicators, overbought/oversold levels, moving average crossovers are all "junk" as far as I'm concerned for the 1 minute timeframe. Perhaps you can make them work, but I've spent time watching every tick... they are history with little predictive value. On longer timeframes, they probably have value.

If you are thinking about scalping and starting a small account like this one, consider that after a month or so, you may have results similar to mine. I hope that by sharing my experiences I can save someone else some time and struggle on their path to forex "riches".

Hi Intu.....you should have a look at Hoss's system on here. He achieves very good results on his contrarian scalping on M1 charts.Think you will find good opportunity there.

Yeah I have attempted to trade like Hoss put forth in his thread... honestly, the difficulties came with the RSI and finding divergences. I think I need more practice with it or more guidance.
Thanks for the suggestion...

For others who have not read about Hoss' work, this is the thread Siboy is referring to I believe.
It is definitely worth a read.

http://www.forexfactory.com/showthread.php?t=156633

Just a small update and reminder for myself...
March ended down 30%, Account at $751.50 down 25% overall.
Tough month, I have had 6 winning days in row, though very small, leading to March 31.

I'm still using 200 period BBs and deviations of 1,2,3, and 4.
I have added Parabolic SAR (.02, .20) to my 1 min charts and it has helped keep me on the right side of the market usually. I still chart pivot points and xx.00 and xx.50 levels. Let's see how the April EUR/USD action pans out.

141 trades in March.

This first chart is the 5 min chart for the US Trading day, April 1st. Basically, a solid uptrend is established. I'm going to share the "dialog" I had with myself after sitting down at 12:00 PM watching the EUR/USD.

Examining the chart, we see the upward thrust at around 11:50am. Following, you can see the area I marked where it trades "around" 1.3570 for 30 minutes. I also marked the "local low" just below 1.3565.

Because we have a strong up day, I'm mainly thinking about where I can buy EUR/USD "cheap" or at a good value. Right before 12:40pm, we have another spike up. Would you try to buy that run up? Remember, it's the afternoon US session. Probably not, perhaps the dealer(s) has accumulated some Euros at our "equilibrium" level and are selling them higher. I wanted to accumulate with the dealer at good value.

We trade up and back down to that 1.3570 area again. OK, so now, we have a strong up day, and we've seen the EUR/USD test the recent high.

The "signal" bar comes soon. Looking back, the candle doesn't look special. But, in "real time" the range of that signal candle was formed in about 4 seconds. That was unusual compared to all the other candles in the last 45 minutes. What the dealer was most likely doing was one or two things.

1) "Hit" some few bids to create an "extreme" price just for a few moments where he can complete a small sell order (a customer is selling to him) and purchase the EUR/USD below 1.3565 because he knows it trades well higher.

2) "Hits" some few bids, bringing price close to that "local low", so he can shakeout some longs and get them to sell to him, because he knows he can trade it higher.

The keys to the trade are a) overall uptrend b) recent strength c) and a period of stability at a certain price.


I took the trade near the local low, with a stop loss of course. Either it will break down, or bounce. Was I certain? No, but you see this price action often. It is how traders get "shaken" out of their trades. I was trying to buy at good value.

That's some of the "feel" traders try to describe after trading their particular pairs for some time. In retrospect, the candle doesn't look special nor is there a particular pattern. In "real time" and perhaps on a 10 second or 30 second chart it looks more exceptional.

Originally I was impressed by your profile. Thought you know a lot about scalping. Looks like from your vast back ground in equities, futures- forex will be easy for you. But, I think past knowledge and experience has become hindrance to you in forex scalping.

To me scalping is easy, trying long term trade with big sl is problem for me. Only thing I shall say, try to trade at mkt openings make sure wait for new 3h or 4 h chart, then 60m and 30m chart all in same direction; wait for breakout (mkt shows her hand) then trade the first pullback. But, I believe you already know that.

Maybe you are making fool of us and you are a great trader, just like those market makers .

Thanks for the ideas, I'll give them some thought.
Yeah, I have alot of experience but it doesn't make me a great forex trader Things were much easier before decimalization of NASDAQ stock prices, and stocks have Volume which makes tape reading easier.

Thanks, and good luck to you!

This is on the very short time frames, and it is a setup I look for often.
Tight stop, probably about 4-5 pips....mostly I try to get the trade to go in my favor within 2-3 minutes.

This setup totally disregards the overall trend or longer term trend. It is a quick scalp.

Basically, on the short term, a dealer(s) finds some buying interest in a temporarily declining price (perhaps in his order book). There is a quick, fake move lower....perhaps a few moments of stabilization...(where the dealer is buying)... then back to the area of interest or support or temporary buyer.

How do we know it's not a real breakdown? We don't, it's a probability trade. Put in your stop and scalp what you can. I had a couple losing trades today finally, but nothing over 3 pips.

I've just come off a 15 profitable trade streak. Yes, some were very small winners and a few were larger. This is the kind of dealer action I can "read" in the US afternoon sessions. It has yielded some high probability trades with very little movement against me on any trade.

On April 12th, I tried trading USD/JPY again. Analyzing my trades for the past months, even my other accounts, it’s quite apparent I do well in slower markets. Solely trading EUR/USD, I have a much higher winning trade % after London markets close (US afternoons). Stated in this journal previously, the volatility in the mornings is too high for my tight stop scalping method.
　
I tried USD/JPY but the feel of the “volume” was quite thin, very hard to read.

So, I’m back to the idea of volatility based stops and position sizing in a very simple format. US Morning sessions, 7500 units, approx 8 pip stop +spread…US Afternoon sessions, 20,000 units, approx 4 pip stop +spread. I created a custom start date view of my account on MyFxbook, mostly scalping from April 1st with some imperfections. I just wanted to take a look at my win% with short-term small scalps.

I did take a look at volume from MB Trading’s ECN and tried to use it with charts but it wasn’t too much help. I thought with some volume “insight” I could get some clues concerning price action. The facts that we have to live with are that there is no central volume and we cannot see the dealers order books. It is painful for me coming from an equities background to realize that. But… the dealers can’t see any central volume nor can they see any other dealer’s order book either.

Though I now use 55 a period Bollinger Band as a "wake-up" call, NOT a direct trade indicator, I've removed it from these charts. Sitting and staring at price for awhile, you get "dazed" and sometimes you need a reminder that this moment is an extreme to what you've seen in the past hour or so and might be significant.

I've removed those BB deviations that I used before... permanently. I realized last week that I stopped looking at them, usually looking through them to pivots, real resistance levels, and price.

The parabolic SAR still remains with the standard settings (.02, .2). I use it in a completely unconventional way.

For example, near support when I think there is a buyer, I use it to gauge my pullback for long entries. When the price goes against the PSAR blue dots (signaling a supposed trend change) for about 4-5 pips, I look to buy with a tight stop near support. This chart was from today, near the central pivot point (removed it from chart for clarity). These are quick scalps with very little adverse price movement for small profits.

I apologize, this is similar to my posts #66 and #69.

I'm trying to describe and record my scalping methods to share and to remind myself of what I do correctly. These trades are high probability for some profit within minutes. If I have to take movement against me of more than 3 pips and I don't stop-out of the trade manually, I treat it like a loser and scalp for any small profit quickly. If it doesn't go against me more than 2 pips or goes in my favor immediately (which happens)... I try to hold them longer.
I'll be the first to admit, I give up many pips because I do not hold them longer.

Volatility is crazy this afternoon, I traded smaller sizes. S&P downgraded Greece's and Portugal's ratings.

I’ve spent about 50 hours trading in April. That is an approximate figure derived from my spreadsheet notes. It includes preparation time the evening before trading (drawing pivot points, “psych” levels, examining previous/other sessions for support and resistance).
Honestly, it’s a little high because I’ve included the rare times that I was in a trade (when holding a winner for a couple of hours) but not at the keyboard. “True” screen-time, glued to the keyboard with my finger on the button, minus breaks, is about 75% of that.

A note about “The Trend”:
Some of my most difficult days in March were created by looking at a higher TF trend and using it to establish a bias for my lower TF trades. I would look at the 5 minute trend, then bias my 1 min TF trades. My scalping, often for 1 or 2 pips profit, can totally disregard any supposed trend. Such small profits can be produced from volatility around support and resistance, dealer fake-outs, or someone “sneezing” at the NYSE.
So, I defy two axioms, my winning trades are generally smaller than my losers and “the trend” has less meaning to me than support and resistance, exhaustion, and “psychological” levels.

Trading attracts many bright minds, some of them extraordinarily brilliant. Many of these bright minds are also very competitive. Unfortunately, I think this hinders many people. I don’t think trading requires high intellect. Understanding basic concepts (risk, reward, probabilities) is vital. It is the performance to exploit your “edge” which is difficult.

Ego, the desire to be “right“, and over-analysis / prediction can cause faulty performance.

Unpredictable, irrational, and totally crazy things can happen in Forex. No amount of technical analysis will save you from them. Though we want to beat the “dealers” and other traders and win this “game”, my best trades come from going with the “flow” and have less of a competitive feel. They are also less stressful.

Reading some of the popular books, Trading in the Zone, Trade your Way to Financial Freedom, or Emotion Free Trading, may present some ideas that you hadn’t considered. Sadly, they really won’t mentally prepare you for all the stress, fear, or anger you will have when you lose 10 trades in a row. You must experience that in real-time and THEN perform properly.

Here is a chart I screen-captured on April 7th. It is a reminder of how we can be surprised at any time.

I spend much time online, browsing and reading. Watching very little TV, it is often my evening entertainment. I also trade from that same desk. Is it possible that my mindset is too relaxed and I could be too easily distracted because so much of my free time is spent at the same place? Perhaps.
In May I hope to spend more hours per day scalping on average. The goal is obviously a larger percentage gain for this account. To be fresh, alert, and in the “work” mindset when at the computer, I intend to limit my recreational online time. Hopefully, a little more exercise and maybe even some TV time will take it’s place.

As a scalper, try NOT to read the news during the day. You don't need the bias on your thinking. After the close, take a look. It may show why price acted the way it did.

I would place my money on a trader on Forex Factory who has been trading for at least 6 months versus most Forex Analysts/Writers.

So many stop levels have been blown apart this week with this news, followed by price reversals.

Read news/analysis after the close, they may introduce support levels or areas of price interest you haven't seen. That is about all I look for.

I haven't traded since Tuesday of this week (skipped Wednesday and today). I'm going to take tomorrow off as well, seeing as it is Friday and the last trading day of the month. Having some trouble sleeping, I'm going to use this time to get back to normal.

So, let’s look at the results for April…

113 Trades
62% winning trades
+ 10.10% monthly gain

avg win 3.45 pips --- avg loss 4.43 pips
best trade +39 pips --- worst trade -18 pips

positive $ days 11 --- negative $ days 7
avg positive day 7.25 pips --- avg negative day -4.2 pips

My return is positive and the best I’ve accomplished on a Forex account over a period of one month. I had a handful of +10% per month returns scalping larger Futures accounts in 2008. These were not currency related but mainly e-mini contracts of the S&P, Dow, and Nasdaq. I’d really like to put in 5 hours a day with “level headed” scalping. So far, it’s been mostly the US afternoon sessions for me.

I think I could create greater returns perhaps in the range of 40-50% per month scalping. I would need to be at the keyboard active 4-5 hours per day. This is where it becomes a nasty four-letter word - “WORK”. I’ve mentioned it before, but still wary of the morning session’s volatility, I need to trade from about 9am till about 2pm EST. After adjusting my position size and stops for the volatility, I just have to put in the time.

I have my basic setups and practice which helps keep my mental state positive and healthy.

Since March of last year, I have made over 1100 Forex trades (more than 70% EUR/USD) across multiple accounts, almost all on short time frames.

Having an evening job which allows me to trade during the daytime all week, I need to wake-up earlier and make the commitment to use my free time to WORK at Forex. Being a trader requires discipline, and being your own boss requires even more.

　

The goals for May are pretty clear. Be available to take trades from 9AM-2PM EST. Smaller position size for 9AM-12:30pm, larger position size for 12:30-2PM (or after).

I can't find the post from Dialist years ago. It was after he put up a +30% or +40% month. He talked of how much time he spent living and breathing Forex that month, and also of how it would be very hard to replicate.

My target is about 5 hours per day with 15 minutes prep time the night before.
It totals about 26 hours per week. For the small scalp account tied to this thread, even at +40% (~$400), it equates to about $4 per hour.
Why go through that "grind"? Because trading scales well as your account grows. You can give yourself a raise next month if profitable.

People here on FF have already put up amazing monthly returns. Xaron, M.A.C.Doug, and others have had some very high profit months. They have also had some difficulties.

I'd like to grow this small account. Hopefully profitable through a six month period. I'd also like regular withdrawals, perhaps 1/2 the profits. I think it's important to take something out. It is some small protection against difficult times, to protect your gains. Any of us is susceptible to a "drawdown", it is inherently part of trading.

Today's volatility is fairly high and I've stopped trading this afternoon.

Let's talk about my big drawdown in May.
The first and second trading days of the month I put in almost full days.
Same ideas, looking for exhaustion patterns on the 1 min TF to trade for quick scalps. My exact profits for May 3 and May 4 were $1.00 and $1.92 exactly. Halfway through the third day, I was fairly close to flat P/L also.

About 12:45pm in the afternoon with some volatility, I was short the Euro and had to take almost a 15 pip loss on a strong, quick spike (about $30).

I was upset and angered over this inexplicable spike. I had worked hard for two and half days, and now in minutes I had lost 10 times what I made on Monday and Tuesday.

The market seemed so strong at this moment, so I reversed and went long. No stop-loss....watched it for a few minutes. Basically, I had decided that if this market was so strong it wasn't going down, and I was going to hold this trade. I literally turned off the computer and "let it ride".

Checking in about 35 min later, I had bought the last peak of the day, the US equities markets reversed and i was out 60 pips.

Later that night, about 1:00am, pre - London, I made a bet for some kind of European Central Bank intervention, we had seen the Euro decline so much these previous weeks. That trade was a 100 pip loser about 7 hours later at 8:45am. I stopped trading for the day. The "Flash Crash" happened later this same day where the markets were crazy and made headlines. Basically, a 35% hit for the month, bringing the total account value to 50% of its starting value.

Revenge trading has given me problems before. See post #22.

Honestly though, I was fatigued from watching the markets so much. Seeing so much movement and not being able to capitalize on it.

Watching PA, looking for exhaustion patterns for 5 hours, is not pleasant.
It's very demanding. I knew this was part of the problem.

I was tinkering with ....shhh.....wait....don't say it.....indicators, there I said it, "Indicators". I stumbled upon something that seemed to present trades that were similar in PA to mine. It doesn't give me the exact same trades, but it highlights trades that act the same way to my "exhaustion" scalps.

I did some visual backtesting with the small bit of data I had. I've traded it for 4 days now. Adjusting and "tweaking" for volatility because these past days have been ridiculous. It is a totally mechanical entry, with a discretionary exit (momentum mostly). That makes it very difficult to tell if the entry actually has an "edge". Time will tell, only 47 trades so far.

For now my methods are still counter-trend, short scalps, 4 minutes or less. Stop-losses are not supposed to be variable, but position size is according to volatility. I'll admit I've made some mistakes here, but these are wild days. I truly am trying to err on the side of caution.

These recent systematic entry trades can be seen here.
http://www.myfxbook.com/members/KJKr...lp-trial/31412

Given my revenge trading disaster, I've decided to NOT add more funds to this account. I like my new systematic entry, it takes much stress and fatigue away. I don't have to sit with my finger "on the button" all day.
Perhaps it will be profitable.

Unfortunately, the time I spend trading with the account at this level will not be a very lucrative proposition even if I produce higher returns.

I'm going to put in the time anyways, and keep the track record that I have started in February.