Profitable Scalping for the Retail Trader

Nice work Rooicol! Thanks for taking the time to do that...
I didn't even know that was possible. I'm 'digesting' those stats right now. Very interesting.

It's March 1st 8:00am EST and I still cannot view Oanda's Beta Account statement for February. It would have winning trade % and other things I don't keep track of manually. I'm still angry with them for disrupting the compatibility with Myfxbook.com.

As I said before, I'm going to start a new sub-account enabled with Meta Trader 4. I spent much screen time yesterday trying to get back to $800 even (about 8 hours with only 6 trades). I got close, $798.09. I have a few dollars in another account, so I am going to 'top' that with $1.91 to start the new account with $800. It's cheating a little because for the year so far... I am actually down 0.25% approximately.

Here's my spreadsheet for February-
(click to enlarge)

My March Madness….

Twenty-three trading days are available in March.
I’ve worked on my patience during February, and have almost completely recovered from my surgery in January.
(I was hospitalized for almost two weeks, and did not trade from Jan 7th through Feb 2nd.)

Average spread is 1.2 pips lately.

Let’s put in some ‘hours’ in March and see what we can do.

March Goals
Minimum 80 hours screen time
15% account draw down or less (from any profit peak to valley)
Maximum 5% account stop-loss for any day
No overnight positions.
　
Another Quick Summary of How I Trade
Trade stop-losses are variable between 8 and 15 pips which is dependent on position size and volatility.
15 SMA with a 60 SMA for a “dynamic” trend indicator…
I will trade with and against that trend.
I do watch the Nasdaq Comp, Dow Jones Industrial Average, and S&P500 futures while trading.
Sometimes there is correlation with EUR/USD( +-80%).

I no longer use Pivot Points on my charts.
I do mark “round” number levels in increments of 50 pips (1.3000, 1.3050, 1.3100...)
I feel that these are significant areas because they can be ‘psychological’ levels and options pricing is done at these levels. Many stop “runs” target these areas.

I will take any profit if I think momentum has stalled or my perception of the market state is incorrect.
Generally, I will take profits at 10 pips or less, and look for opportunity to re-enter.

I have a high win trade %, but generally my losers are larger than my winners.
Since September 1, 2010, I have had only 12 losing days (of +110 trading days).
Unfortunately, some have been VERY large.
(Three days in December 2010 destroyed September, October, and November’s trading profits)
(In January I had a draw down of 20% in one day.)
I clearly need to work on adhering to a Daily Stop-Loss.

I believe that short-term trading on the more liquid forex pairs can be VERY profitable.

I believe that with active short-term trading (many trades in a single day),
you can be profitable most days.
I’ve traded the 1 minute time frame almost exclusively for over a year (mainly EUR/USD).
I rarely chase price. I enter my trades on retracements or pullbacks against the trend.
Most of my trades are 3 minutes or less (+80%).

I use simple support and resistance along with what I “feel” are overbought/oversold situations with regards to the current trend.
Though I do look at the 1 Hour chart, my most examined for support/resistance are the 15 minute, 5 minute, and 1 minute time frames.
　
　
Because of Oanda and Myfxbook.com differences, I’ve started a new sub-account for March so that I can update and examine my trades as I did previously ( now using history from MetaTrader 4).
I still trade using the FxTrade Java platform (Oanda). I believe it is the fastest option available currently.

All my trades from 2010 are available on my Myfxbook.com page-
http://www.myfxbook.com/members/Intu
　
This new March 2011 account will be listed there as well as being viewable in real-time on my Forex Factory member page with Trade Explorer-
　
(psst…don’t tell anyone… but I am going to put up a ‘monster’ % return in March with acceptable draw down, initially thinking +50% with 15% or less peak-to-valley drawdown and no overnight risk)　

Hi,

Yeah the ForexFactory Trade explorer also works well. if you are going to use mt4 reports then you can paste them into the attached spreadsheet and it will give some other performances stats, like those duration charts i posted.

Good luck for March!

Rooi

INTU,

check this out. I just made this thread about a solution for you and I. We are both scalpers that perform well. We only need to limit the losses and cut off the drawdown. Scalpers have accuracy and we know immediately if our trade is invalid. If you can't control the emotions, let a robot do it for you.

Since the strategy is targeting such a small amount of pips you must have a set stopout. The accuracy of the strategy is what makes your equity curve grow. Deal with having a set stop out and overcome the choppy equity curve.

Discipline Trader

please comment

Yeah, I feel like I've been forced to use MetaTrader 4 (at least to track my stats). I've always been skeptical as they were the producers of the Virtual Dealer Plug-In and one of their 'main' .exe files is identified as a virus by my security software.

But...most of the world uses them now it seems.
I still use Oanda's Java interface, FxTrade, to enter my trades.

Thanks again Rooicol!

I'm taking a look right now, Ipndasno.

Your Myfxbook.com results across different accounts look great upon initial inspection!

Give me a little time, I'll comment on your thread.
Watching the markets right now also.

Before this entry, the Dow and S&P futures had turned negative from being positive all morning. EUR/USD had retreated some, but there was a buyer (or were buyers)... The S&P futures were down some 5-6 points from their peak (significant distance for today) and price makes an impossible move upward near recent resistance and about 15 pips from the daily high.

We were in a downtrend, and looking at resistance I thought my risk was about 3 pips...

Here is the trade-

I thought I solved all the problems concerning using Myfxbook.com with finally succumbing to using MT4 to update my trade history. I was wrong.

MT4 on Oanda's servers automatically repopulates the Comments field on the MetaTrader terminal with a FXtrade #(trade number).

Myfxbook.com uses an authentication code that you must put in the Comments of an MT4 open order away from the market, to verify your trading privileges.

As of now, (I emailed them) you cannot verify your trading privileges on Myfxbook.com using MT4 with an Oanda account. The track record is verifiable though. It's minor, but it irks me.

From my account statements for February...
I still have an inclination for going short instead of long.
My win% trade percentage is about the same as most of my profitable months.

Interestingly enough, I have shown some slight improvement with those recent trades. My avg win is slightly higher than my avg loss (fractions of a pip). This is the first month that has ever happened. (Even considering my most profitable months of last year).

I've always had slightly larger losers than winners with a win% that still produces a positive expectation. I'll admit... I have been more selective and patient than ever before, and I am making less trades overall.

Trade Explorer here on Forex Factory is fabulous, and once set-up it updates automatically, and I don't even have to log-in to MetaTrader (which I must do for Myfxbook.com)
They incorporated a ton of statistics of the Trade Report page, it's a fantastic product.


(from Oanda's February statement)

I've spent much time reading everything on this great forum of ours about
scalping and short time frame trading. Honestly, I didn't learn much about what DOES work, but I have learned a lot about what DOESN'T work.

I said my "peace" in that thread...my opinion... and moved on.
Honestly, I'm just trying to save people some time.
http://www.forexfactory.com/showpost...postcount=1536

The cornerstone of that system is a firm 7 pip stop-loss (presumably on EUR/USD). It is based upon a 5 pip 'real' stop + the spread.

The profit target is a MINIMUM of 10 pips but can be a million if you have the discipline to get them.

These numbers don't work, I assure you. I'm not saying a stop-loss of x pips and a profit target of 1.5x pips will not work. I'm saying 7 pips in particular is too small. Based upon my time with EUR/USD, on 1 min and 5 min time frames, you would need a minimum of 15 pips stop-loss for a MINIMUM profit target of 10 pips. Even with that, you would be marginally profitable (not much).

With a wider stop, I think it's better (1:1.5 R/R) - perhaps 20 pip stop-loss and 30 pip TP.
With 7 pips, they will "eat you alive".

Why?

Dealers can move price against the trend for a short period of time, and they do it all the time, in their best interest.

Even my trade example 2 posts ago from today, shows that.
I'm sure it has happened to you, and it certainly has happened to me.

Everything lines up, the currency is down, the equity markets are down, the trend is down, the news is bad...

You enter at what you think is the perfect spot, and it GOES UP. Not much, but with a tight stop you have to get out.

The dealers do that on purpose, they may not want the currency to "break down" right then, they may have buy orders that they can execute higher in the next few minutes if volume is low and they can keep price up just a few minutes longer. They know it's going to fall apart soon...just like you perceived.

The difference is sometimes they can make it "fall apart" when THEY are ready... right after you BUY it back and others buy it also. Some short covering profit-takers, some stop-losses executed, and some order book people buying it outright Long. Then of course, just like you predicted...
it falls and never sees your price again.

Five months ago when Oanda's spread would change to 1.2 or higher, I usually wouldn't trade at all. That was my signal that liquidity was "drying up" or volatility was increasing, etc.

Many of my best (profitable) months, I could just wait for hours or until the next day to get my ideal conditions (0.9 pip spread).

Since December, the market has changed, and the 0.9 pip spread is a rarity. I was thinking a lot about this in February.

My default position size for this account at $800 equity was really meant to be 20,000 units (.2 lots). I did get some of those size trades in February and in the few days of January that I traded.

I am still nervous when I see the 1.2 spread, but I'm working on it.
Part of that is taking an opportunity if it presents itself at a smaller size.
So far in March, my trades have been 10,000 units. These first two days we've had 1.2 spreads and Bernanke testimony.

If we get back to 0.9 or 1 pip spreads and the volatility feels 'normal', I'll be back at 20,000 units (no averaging, one entry) for my trades.

If the markets are wild or the spreads are high, I will still look for good trades, but enter 10,000 units with an option of another if I feel good about the trade.

Rooicol, who has contributed to this thread earlier, mentioned to me about favorable trade conditions at GoMarkets (good spreads) with rebate programs available. Unfortunately, GoMarkets has stopped accepting US customers since the financial regulation changes last October. Our American politicians really messed things up for US traders.

Agreed. What's next? Ugh.

We had a 1 pip spread on EUR/USD today, unfortunately the US afternoon session was pretty slow. It has been that way lately.

With this new sub-account for March results going forward, I have had 10 trades so far. If you examine my stats on Myfxbook.com or Trade Explorer you will notice there is no stop-loss entered with the trade.

I thought about this at length during work tonight.
My stop-losses are variable. Sometimes I know a trade may not work because I got a great price near resistance (within pips) and that resistance fails quickly. At those times, I lose less than 8 pips.

There are volatile times (especially during stop-runs near London's close) with require more room. These are within an 8-15 pip area.

Perhaps 1 in 50 or 1 in 100 trades, require 20 pips. I believe in my position but for the short term, I get squeezed hard. Many of these I would be better off scaling out of half the position at 15 pips and take a partial loss.
Then entering back in at a higher price, (treating it as a new trade) and trading it back down again. I had one 27 pip loss in February.

I don't intend to have that happen again in March. It wastes too much time. When price moves far away from you, the momentum is harder to change.

When in any trade, I sit with my finger "on the button". From my experiences, I have come to believe a fixed tight stop-loss will lead to failure. In my previous thread (and posts) I have tried 5 pips, 7 pips, 8 pips, 9 pips.... there is no single answer for every situation. Volatility changes, liquidity changes, markets change.

But...
I need to have an emergency stop-loss on every trade. Oanda could "go down", war could break out, the European Union could collapse, Justin Bieber could get hit by a car... disasters can happen.

I lost +70 pips in 7 minutes in December because I didn't have a stop-loss on a trade and some news "hit the wire".

So...my emergency stop-loss on all my trades will be 30 pips. I never intend to have that be hit.
I'll be surprised to take even a 20 pip loss in March...I have some mental stops/plans to avoid that... already in place.

If you examine my trades, please don't think "omg he uses a 30 pip stop-loss... of course he has a high win%".
I enter and exit all my trades manually with market orders.
It is my emergency stop to avoid disaster.

Hello Intu,

My compliments on your efforts towards transparency in your journal

But don't you think it's a bit much to ask people who trade for a living to disclose their taxable income in a public forum, while all you are doing is playing with pocket change?

...not to mention using your own example to self-righteously criticise people's efforts to help others without asking for anything in return, while your own thread so far seems not to have helped many people to turn their trading around?

I have seen your writings as well, specifically "Islander and Medici Trade the European open".

NiceGuy wrote this in the first post of his thread-
...and yet he presents a system/method which I believe is inherently flawed. Many posts and hours have gone by, and yet not one of the many contributors or followers have offered ANYTHING about results.

I had asked for 100 trades? Maybe too many... but with all the excitement and posts in that thread...
not one person said, "Hey Intu, I just started but here is my last 20 trades". Nothing.

If I were lucky enough to be at a party with Mark Douglas (Trading in the Zone), Bruce Kovner, and Paul Tudor Jones... I would spend all my time talking to Kovner and Jones. I wouldn't even look in Douglas' direction.
Though Douglas writes well and it 'feels' good, Kovner and Jones have actually performed in the markets.
They have made billions. Trading is a performance activity.

My threads will never be popular.
My only goal is to post a small glimmer of hope to those who search for it.
It is what I searched for when I came to Forex Factory over a year and a half ago.

My own quotes from Oct./Nov. 2009-

Can't you at least say something like "This is how I've understood it, and it doesn't make sense to me. Have I missed something?" before throwing cocksure statements around that in their omniscience invalidate the experience of the many thread followers who have found NG's posts valuable?

Please forgive me for pointing out that that's rude and inconsiderate. You or I may have grounds for thinking a lot of people are deluded, but it serves nothing else than our own egos to tell them so, unless we do all we can to help them see the light. Our arrogance certainly doesn't do that.

And personally I think you have missed something.

The basic tenet is a (5 pip + spread) Stop-Loss.

No matter how much he discusses entry techniques,
No matter how many guru-esque stories he tells,
No matter how great his intentions are...

With the recent nature of EUR/USD within the past 4 months,
he is destroying 'newbie' accounts left and right by proposing this stop-loss on the 5 minute time frame.

I respectfully left his thread, made my apologies about bringing negativity to his thread,
and have discussed my opinions in my OWN thread.


Let's move on...

I truly agree with you on that.

He has good intentions, but getting newbies excited for a while, does not really help anyone.
Plus if you look carefully, there are two traders who our catching pips from the air. They our not using his system at all. I know exactly what one of them is using, but why, why wud someone find enjoyment in deceiving others. Is beyond me, especially when there is no financial incentive.
But after a few weeks newbies our beginning to realize, they cant achieve the same results that specific traders our.
Simply because they our using something different, but plotting there results on a chart with Mr niceguys template on it.Ahhhh they our such nice guys

Hiya UKCool, thanks for visiting the thread...
I appreciate the support.

Hey Intu, just wanted to drop in and say -- good trading so far in March.

Quick question -- what are your initial reactions with the Oanda MT4/MyFXBook connection? Is everything working perfect (with the exception of the Comment issue you mentioned)??

So am I understanding correctly that once you set this up, you don't even have to open MT4 for anything? Just trade as usual with fxTrade platform?

What about nonstandard units that don't have a pip/ette equivalent? Are they missing altogether and are you forced to take rigid units when trading with fxTrade, for the sole purpose of allowing those trades to "appear" through the MT4/MyFXBook connection?

Sorry to ask so many questions but I'm really interested in getting this back online with my own trading if it is a simple fix. I don't want to use MT4 for trading though.

Also, just a quick tidbit -- you probably already know this -- but the quickest way I know to get the total units available to my account is to click the Buy/Sell icon -- it will popup an order window and the max units are listed in there (based on your acct leverage).

Regarding spreads... yeah it sucks to see higher spreads but so far my experience has been that they only jack it up when PA gets truly crazy. It has been higher than 0.9 lately but it tends to be stable during the time I am trading (for the most part). I figure spreads are a necessary evil and there is nothing I can do about them. I just trade as usual and I don't adjust my targets or stop levels based on this. It's hard enough to reinforce good-form trades without having to take spread into account.