Scalping tops and bottoms with incredible accuracy

I would like to gather together a few fellow traders who trade in the style I'm currently trading in. Since the euro fell into shambles I have been unable to trade my previously profitable M5 price action strategy and had to develop a new method to scalp the uncertain currency on a lower time frame.

I always hear from other traders that we have to go with the trend, to follow the big moves and forget about trying to pick tops and bottoms. The vast majority of traders say this. Well, the vast majority of traders are not profitable. Listening to them in the past never got me anywhere wheras thinking for myself and going against what the masses and the brokers instructors tell me has been the way I've made money.

I want to talk about scalping small profits out of short term price reversals. I'm not looking for a strategy as I am doing fine at the moment already. But I would like to see if any of you also pick tops and bottoms on the short term timeframes and why you think most traders say to avoid this style.

I find I am able to scalp 10 pips from tops and bottoms with a very high win rate in either trending conditions or ranging conditions on the M1 timeframe. I use a fixed stop of -9 pips, leaving me down -10.7 for each loss and up +9.3 for each win. A slightly worse than 1:1 RR. My win rate is very high though and that is what makes this so profitable.

If there is a solid trend I mainly look for trades in the direction of the trend. If there is a range I take either side. Ranges are my favourite market condition to trade. I stop for news and market opens. And I trade from 6am -12pm EST. I use an RSI, a stoch and simple price action analysis to determine entries and I usually exit for 10 pips, sometimes less if I get signs that the move is weakening off and the trade is no longer valid. I won't go into the exact details of the trading strategy as this thread is not for that, plus I have spent many thousands of hours to get here and I really believe that with this method, dedicated screen time is key.

I didn't use to believe picking tops and bottoms was a valid method but after a few years of watching the M1 charts for an average of 12 hours per day I am able to enter within just a few pips of the reversal most of the time. For a so called random market there is a great deal of predictablility with this style of trading.

I would love to hear thoughts from traders using similar styles as well as from traders who believe picking tops and bottoms is not profitable.

Price is Everything

Good Luck with the thread.

You have brought up a very interesting topic! I also use to think like this since I am trading a strategy which is also against every rule you can read in books - I also like to call tops and bottoms

In order to get deeper into the topic, it would be helpful if you would post some charts with example trades. Also it could be interesting to know whether you are a full time trader, how long you are trading this and how profitable your approach has been so far.

Hi TraderJF,

I am a full time trader, yes. I used to be located in Europe and trade the London session right through to half way into the NY session. Now I am in North America and can only trade from 6am EST because getting up at 2 or 3am wasn't working for my home life at all.

I have been using my current method of scalping tops and bottoms for short profits for 4 months with success. It is a recent strategy switch because the Euro has not been so familiar since all the trouble began and also I'm now in a different time zone and would miss many of the good entries with my old trading method. Back then I was trading breakouts and standard price action setups on the M5 timeframe which was quite profitable. But I have always been a scalper and would scalp all day while waiting for my M5 setups. It is only since I started picking tops and bottoms that my scalping has broken through break even territory into profit. It is a much simpler technique but it requires a tremendious amount of screen time to get a feel of what price action does before short term reversals.

This is a screen shot of the trades I took a day or two ago.

I would like to hear about your methods too.

It seems to be that all the standard chat about how to trade we are bombarded with by everyone on forex factory and all the training courses provided by brokers are not up to much. If most people listen to that and most people fail, doesn't that tell us something? Perhaps.

I go against almost everything I've been told to do by these 'teachers' and I have never been more profitable. It is my opinion that anyone teaching how to trade cannot make a livable profit themselves and so their methods will not work. Training courses for me are a useful collection of methods that do not work. So if you are trading a method that you can't find anywhere on the internet and it goes against the usual thinking talked about on the forums, there's a good chance it probably works.

"............after a few years of watching the M1 charts for an average of 12 hours per day"

That may have something to do with being able to predict price reaction at certain levels.
Yeah......I'm on board with that.

Hi Roofx,

thank you for your detailed answer!

You wrote:
As far as I can see from the chart, there are no entry and exit points marked up. Would you mind explaining an example trade with entry and exit point in detail?


Currently I am experimenting with a quick scalping technique in EUR/USD in a 15-second chart. The basic Idea is to trade turning points after a move of some significance. The best way is to trade this is in direction of a strong trend where the turning points occur after a retracement. This leads to high probability trades. As I do not like to sit out a move against me I usually go for only a few pips (3 - 5) with R:R of about 1:1. The drawback of this approach is that it requires a high hit rate because otherwise spread and commissions will eat all the profits.

Below is a chart example of what I tried a few hours ago. First I was mistakenly assuming that the initial down move will reverse because of some resistance I saw in 15-Minute, so I tried to place some long trades first. As these were not profitable or only barely profitable, I switched to short. Of course, after the fact I would have preferred to simply go short and hold onto this position :-)

The entries are marked on my chart with dashed lines. Exits are simply 10 pips profit or 9 pip stop. I used these fixed numbers unless I get a sign price isn't going to hit my target and I will exit with around 5 pips if possible.

I would love to shrink my tp and sl down to 3-5 pips and take more trades but the transaction costs just don't allow this for me as my hit rate would need to be close to 90% and I just cannot be that accurate with a 1:1 (approx) RR.

In an ideal world I'd have a total transaction cost of 0.5 pips or less and scalp 5 pips from small reversals and take dozens of trades per day. I like to be active and would rather take 50 small trades per day than one bigger trade. But for now I am very happy with looking for 10 pips 5-10 times per day.

Today was a great day. 6 wins, 1 loss. I love days like today!

I hope other people who trade in the same way will pitch in here and share your opinions.

TraderJF - What are your transaction costs per trade on EU? If they are low enough you could maybe work a 7 pip TP system. I think 3-5 pips TP is very very difficult to succeed with. I tried similar years ago and after a long time of trying to get inverse RR with 90% hit rate to work, I gave up and accepted that 1:1 with pretty high win rate is the best I can do. Transaction costs (spread + comission) is the killer for these small TP methods.

Yes! This is exactly it. Significant moves (on the M1 chart that can be 20-30 pips) with a nice smooth angle up or down is what I look for, or else price to come to a significant recent support/resistence line. Ranging days are the best.

Sometimes I wonder if the good traders are flooding the internet and bookshelves with ideas that don't work in order to keep most people losing and keep liquidity high so the winners can keep winning. Take my broker for example. They put a tremendous amount of effort into providing training courses of how to trade. I have never seen any of their methods really work. But they seem convincing. But why would they want all of their clients to suddenly start making millions? They wouldn't. So do they flood us with lots of convincing ideas that seem like they could work but ultimately don't so that we lose plenty of money? If the instructors' methods really work, why are they sitting at a desk with a boss and fixed lunch breaks for a fixed salary when they could be making hundreds of thousands per year trading these methods from home or for a big bank?


Keep out of the Trading Systems forum and keep it simple. Ignore what 98% of people say you should do and just study what price does in certain circumstances. It repeats itself again and again and short moves can be predicted with at least a 7 out of 10 success rate. And 7 out of 10 is good enough for anyone.


Why look for the rare few big moves in this unstable economic environment when you can take lots of small ones. The market will continue to move enough to grab 10 pips here and there for a long time to come, regardless of the economic instability. But those nice 100 pip M5 breakouts are getting less reliable on the eurusd.

I tried your trading system in the Europe session. 4 winners no losers, for 28 pips today. I would post a chart but don't know where to start.

Pip grower

You have not been told or shown how he picks the entries,so how can you have traded his system?

Hello all,

sharing my experience with you.

For over 3months i do the same, EURUSD, 1Min Chart, 2pip SL, move to BE EA script, and then move SL to take some profit or let profit run.

Until now, i lose, little by little. Should take more profit and not let a good trade go to BE. Working on this

Cheers!

OK how many trades per day?

Cheers!

I work during trading, so .. it's kind of lame, something like 30 trades every day when i watch the market.

Hey Roofx! Do you, or other people from this topic mind watching a video I created within 10 minutes regarding this method of trading? The video has been made today and is showing previous entries that could have been taken.



Unfortunately the quality of the video is very bad and my pronunciation of english as well so after you and a few others have seen it I will remove it. ( White trendlines barely seen due quality )

I'm just wondering if this kind of trading comes close to the style you describes. I'm using this method (1m TF) for about 2 weeks now so there's much more to learn. I use no indicators except for a pin marker in order to spot / create easier trendlines.

I try to trade engulfment clusters right on confluence areas with trendline and s/r. Are you familiar with this kind of trading? How are you spotting PA setups? I like to know your view since you are doing this for a decent time.. thanks

Hi Robert,

Your english is very good, don't worry. Your method is a bit different than mine but I see what you are looking for. I look more at horizontal levels and usually ignore diagonal ones for the most part. Also adding an oscillator helps get more accurate reversal areas. Today EURUSD wasn't quite as rangey as I like it so I didn't take as many trades and finished up with 12.2 pips for the day. In nindsight there were more trades on the table but I wasn't feeling as confident as usual and played it really safe.

Thanks for the reply. I´m still wondering tho, what in price action triggers you to go long or short, specific engulfment/patterns? Or do you simply enter when price hits specific s/r + osc showing div or overbought/oversold?

This is how I have been trading for the past 6 months live and have been making good profit from it! I just recently, for a better visual combined the RSI and STOCH into the same window really nice!

Hope to be a part of this and I love finding others who trade the same way!

Horizontal support and resistence lines. Add on a 14 RSI (very useful!) and wait for those turning points. For example right now I am short EURUSD at 1.3079 looking for 10 pips. See chart.

And now I'm out with +10

It's the bounces and stalls you need to look for. RSI touching 70 or 30 and either a touch of a decent and recent S/R line or price showing signs of stalling in an area that ISN'T a decent and recent S/R line. OR both conditions together is ideal.