Leading indicator & Scalping Method

Hey everyone, (first off.. dont be shy to leave a comment.. opinions wanted!)

Going to go over using a leading indicator to scalp some pips!

Our leading indicator (a full stochastic) WHAT!?! let me explain...


Ok,
My initial setup is 2 time frames 5M and 1M
(example given as long.. reverse for short)(also see post #17 after reading this for better entry)

just need a full stochastic (5,3,3) on both time frames..

Entry Steps:

1. Look at 5 minute chart stochastic for over sold signal, or buy signal leaving the oversold area

2. look to the 1 minute chart full stochastic and find a buy signal (doesnt matter where it is (but avoid overbought area)

3. place trade and grab 3 pips!

do you see why its leading? .. heres simple examples..

the 5 minute turning over giving a buy signal would be lagging.. its showing momentum from a few minutes ago and your buying on a lagging signal.. but! we didn't wait for that lagging signal we used 1 minute to give us a leading signal so we bought when momentum was truly building on the 5 minute chart...



Purpose of this thread:

 

1. I would like to see if other have same success
2. Test this method with other indicators
3. and possibly we can build a solid system together.

Overall this method appears to give a high probability edge over scalping pips allowing you to get in and out fast with high momentum as its happening.

Thanks,
Ryan


PS: (see post #17 after reading this for better entry)

heres two charts to give example.. you can see if I tried scalping on 5 min chart I would have been waiting a while for pips..

its not about grabbing lots of pips but grabbing trades with high probability of success for constant gains

example is not exactly the best to show how it saves you from whipsaws but its a decent example..

this strategy works pretty well without even knowing price action for the entry..

but your gonna want to know price action for exit.. I usually have an emergency 5 pip exit (no its not bad risk to reward... atleast in my opinion)

5 pip stop loss is emergency.. if it suddenly jumps past this I want out for that price..

but if it moves against me 3 or 4 pips as long as price action is still looking good and it can make it back I stay in.. otherwise if price is looking like its not gonna hit 3 pips profit I will get out with 1-2 pips profit.. somtimes a 1-2 pip loss

so price action is key to exits in my opinion


Its also good to point out having momentum of both 5 minute and 1 minute on your side is a powerful thing!

and also point out no greed here.. grab 3 pips a trade.. (5 pip emergency exit is 2% of account) making about 10-20 pips a day makes 4-8% profit a day

Cool idea. I just made 3 pips off my first try. Maybe it's a good sign. I wasn't really on with the 5m being oversold, but it worked out.

GREAT! I actually took the same trade.. and yes doesnt have to be on oversold.. just coming off the level works too..

5 minute shows: price action helps obviously.. price was failing to go lower..
momentum ending..

1 minute showed price succeeding going hire.. momentum succeeding going hire

we made 3 pips!

we had lead indicator from our 1 minute and kinda like a short trend momentum and super short term momentum in our favor to make some pips.

Ok..

you can see I enter here .. price made 3 pips but I only got 2..

it looked like it was failing so I took 2 pips and it made 3 pips shortly after.. but I wanted to get profit while still could.. rather than let it turn into losing..

Got 3 more pips on the next short, but I wonder how this will do in a trending market as it is good for ranging. Maybe the leading indicator will help with it.

I would recommend scalping during london and US hour for easier pips.. and I also look back and forth at 10 second chart to see if its gonna make my 3 pips..

but thats just me.. its kind of a non mechanical system..

well you can always couple this with some trend lines off 5 minute.. trade with trend.. i usually go both ways with and against trend.. and it work good during trend from my experience

but yeah make it your own method.. let me know what you do tho if you find something good!

I'll make one more long tonight.. I see it setting up... but then Im over for the night since were messing in not the best times. (like I said I favor london/US)

walking my buy order down the high of every minute tick...

Ok got 3 more. Almost got stopped out though. If only we could do this all the time. You know mellow ranging like this maybe just what this method wants. US session we'll have to see.

another 3 pips

(oh.. by the way ignore my ADX.. im not using for this method)

see Jmag.. i walk my buy order over top of highs and avoided getting in a little to early.. didn't have to worry during the hammer dip or anything..

about .5 pip leeway over high

Good idea with the limit order. I look forward to trading this more manana.

[quote]You know mellow ranging like this maybe just what this method wants.[quote]

you might be right.. its a mix between having more strength to throw you those 3 pips.. or less volatile for easy pips..

if you do some fiddling let me know where you stand as to best time to trade.. I'm still favoring london/US but not going to give up on Asia

Ok, US session, got 3 pips. 4 for 4 trades now. I really should just quit for the day.

3 pips this morning...

some obvious things would be as scalpers to avoid news releases...

and your on a roll JMAG! (like I said 10-20 pips can be 4-8% profit if we set our 5 pip emergency exit to 2%)
and remember 5 pip is only emergency.. I usually reposition above mini swing highes and such it really depends.. I just want a 5 pip stoploss on chart when I first plot the trade for comfort.

keep it up.


PS: I wont be trading much today.. have important meeting.. tommorrow I will post some results tho!

Ok.. heres the update.. I am making so much easier pips now with this method..

(example as long)

look at the 5 minute for momentum in oversold.. or leaving oversold(about to turn up)

now look at 1 minute.. trying to see when stochastic is in good place that will turn up.. and you want to actual price on 1 minute to be making higher lows and higher highes..

now go to 10 Seconds.. you want your stochastic anywhere under 50.. then start putting your buy limit order over every high of the 10 second chart..

I made 3 pips.. with no pull back against my position.. and in about 20 seconds I had my 3 pips..

you can now avoid almost all pull back against you and see profit faster.. if the 10 second stochastic turns against you or 10 sec starts making lower lows and lower highs.. it might be time to exit with 1-2 pips profit.

(this is kinda how I been trading it all along.. i've been using 10 sec chart every trade from the bat for exits.. but now for entries its awesome)

Summary: When you see 1 minute is making higher highs.. if simultaneously the 10sec stochostic is below the 50 turning up jump in.. otherwise wait for 10 sec to pull back below 50.. once below 50 have buy order over prevous 10sec high.. and youll get it at a better price, quicker profit.. etc. 3 pips

see images below


FINAL NOTE: eventually you get a good feel for things and you dont need such "mechanical entries" you'll know.. ok its gonna do this next.. without needing to meet every description perfectly...

how long u been trading like this with success?

I have been doing this the last month.. (and I'd like everyones help to assist with testing hense my post )I'm still trading small lots.. only about .2% risk of my total account.. I started with pennies and have been working up.. it keeps working and I keep improving the method and slowly increasing my lot sizes..

I get 10-20 pips a day and thats mostly part time.. by part time I mean I trade when I have a moment here and there during the day.. if I took every entry I suppose I would get more pips

its good to note that if I work by way up to 2% max risk.. I will be making 4-8% profit on my account a day.. thats why I am very interested in this current method.. its got some really intense reward if statistics continue to be favorable.

I like how the method lets us pick the best times to trade... we just wait for the best scalps with highest probability of success..

mostly probability of success is attributed to high momentum and grabbing that high momentum as its happening (and not when our lagging 5 minute indicator says it is..).. ultimately we really use our other lower TF for leading indication of where momentum is on the short term trend (aka 5 minute)


right now I am just sitting through all the sideways action. (oh yeah and I personally don't care if short trend is going down.. I'll take longs on the pull back of the short trend since thats where the momentum is on the short trend... you might disagree.. thats fine just take trades with trend then.. you'll do good!)


any thoughts?