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Simple Old Scalping Strategy

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  • Will this strategy work ?
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  • #1
  • First Post: Mar 28, 2012 5:25am Mar 28, 2012 5:25am
hello everyone,

Forex Market is a coin.
Trading Forex market is like flipping a coin.
Either winning or losing, both will have 50% probablity.
One good thing in forex, which is not in coin flip is

1.If you lose, then you lose.
2.But if you win, you can increase your winning potential by riding on winning side.(not possible in coin flip)

So the strategy is

1.Place buy order with 1:1 R:R.(for ex 6pip:6pip)
2.There is no tp but there will be stoploss. You can ask then how the hell is 1:1. There is 1:!. Move stop loss to 2 pip(for ex) below the trade when trade reaches the calculated 1:1.
3.If we are on the winning side trail the stoploss in 6pip difference. For the first time when it reaches 6 pip profit move to 4pip ie., 2pip below the current price.
4.If we are on losing side accept the loss.
5.Now place the sell trade if we are on losing side and place buy trade again if we are on winning side.

Thats all

Give all your suggestions, criticisms, and all those things.
Please spend some time on this.
Please help newbie(its me) to get something from forex market.

Thank you very much for spending time on this thread.
Thank you very much in advance if you post reply over to this thread.

With warm regards
ananthhh
  • #2
  • Mar 28, 2012 3:35pm Mar 28, 2012 3:35pm
If you are watching the currency market during an important economic news release, then you have witnessed how much the market can move. If the report is not at or very near what the economists have predicted - BOOM, the market takes off.

Now, if you have some idea which way the market will move when the release happens and you have a good (not perfect) idea which direction the market will move - would that be a good opportunity for a "scalp" trade or 2?

In your start up thread, you believe that trading is a flip of a coin - it could go one way 50% of the time and another way 50% of the time. Who knows?

Here I wish to present another theory - suppose the traders, due to their self-interest, figure that if the economic news report is bad for the economy of that particular country, they should probably get rid of that currency. Not that they always will, but the odds say they will - who wants to bet on a losing currency?

Does this make any sense to you?

ssnvet
  • #3
  • Mar 28, 2012 3:46pm Mar 28, 2012 3:46pm
Quoting ssnvet
If you are watching the currency market during an important economic news release, then you have witnessed how much the market can move. If the report is not at or very near what the economists have predicted - BOOM, the market takes off.

Now, if you have some idea which way the market will move when the release happens and you have a good (not perfect) idea which direction the market will move - would that be a good opportunity for a "scalp" trade or 2?

In your start up thread, you believe that trading is a flip of a coin - it could go one...
This makes no sense at all and is actually outright dangerous talk. Try it and see why.
  • #4
  • Mar 28, 2012 5:23pm Mar 28, 2012 5:23pm
Quoting ssnvet
If you are watching the currency market during an important economic news release, then you have witnessed how much the market can move. If the report is not at or very near what the economists have predicted - BOOM, the market takes off.

Now, if you have some idea which way the market will move when the release happens and you have a good (not perfect) idea which direction the market will move - would that be a good opportunity for a "scalp" trade or 2?

In your start up thread, you believe that trading is a flip of a coin - it could go one...
I had a similar idea when i first started, I wasn't aware of one thing. The market is so volatile that your sl levels will not materialized simply because the price will jump over them. Very dangerous in a live account fun to watch on demo.

As for the thread I think your idea was here before and steve also did an ea out of it.
  • #5
  • Mar 29, 2012 1:57am Mar 29, 2012 1:57am
I am not in favor of comparison forex trading with flipping a coin. If forex trading, you are free to use any trading strategy, time frame , indicator and other trading techniques to make profit or maximize it. But in flipping a coin nothing in your hand. All things depends on luck.
  • #6
  • Mar 29, 2012 11:49am Mar 29, 2012 11:49am
I do agree with Tarusmark27 member, I would not flip a coin in order to decide to trade during any type of setup, or, flip a coin to exit a trade.

And, Hugh Briss member is correct in his reply that trading the economic news reports is dangerous - I feel that FOREX trading is dangerous since all decisions that a trader makes are made upon their experience with the trading system they are using.

Believe it or not, even an experienced trader is playing the “odds” based upon his knowledge of what the market “should” do with the present circumstances.

The market system can be the Fibonacci system, Trend Line system, or any other trading system. The trader is betting on the “odds”, just as a poker player bets on his cards and his knowledge of the cards showing.

I believe that certain scheduled economic news reports offer just as good or better opportunities for profitable “scalp” trading, than the present popular systems. If one studies certain reports, over a long period of time, a pattern makes itself apparent.

Let me illustrate an example:

On Wednesday, the 21st of January, 2011, the US released the Existing Homes Sales report. The release was at 10:00 AM ET.

The “forecast” was 5.04 million homes, an increase over the previous months report of 4.97 million home sales. Well the report came out at 4.42 million homes, a full 620K homes below the “forecast” - not very good for the US economy.

What do you think traders did - buy more US Dollars? Not this time - here is a chart:

Attached Image (click to enlarge)
Click to Enlarge Name: USD-CAD-12-21-11-8-00AM-edited.jpg Size: 96 KB


About 2 minutes after the report release, the traders were selling the USD and buying the Canadian Dollar. The 1st 2 minutes the USD was bought, but moved up only about 12 PIPS - in my opinion, it is not smart to enter a trade until the “broker spread” returns to a comfortable level, usually in a minute or 2.

After 2 minutes, traders were selling the USD, and did this for the next 39 minutes, a total of about 43 PIPS. How many “scalp” trades were here?

Does this make any sense?

ssnvet
  • #7
  • Mar 30, 2012 4:33am Mar 30, 2012 4:33am
Thanks for sharing. What is your success rate in using this strategy. It seems so simple but is it really a 50/50 chance?
  • #8
  • Apr 1, 2012 5:48am Apr 1, 2012 5:48am
If this system won't work during important economic news release as someone said.... well don't trade it during important economic news release. Perheps it could work in other times. Asian session for instance.

And if creating a good entry strategi this technic might very well be a good set up.
At least i think so... but i am not an experience trader so what do i know...
  • #9
  • Apr 1, 2012 9:55am Apr 1, 2012 9:55am
Incase the information I posted earlier needs a little more verification, here is another US report and a chart.

One of the better US News Reports is coming out tomorrow at 10:00 AM ET - the reason being, if the economists forecast is far enough off, it might be good enough for a good trade.

The ISM Manufacturing Purchasing Managers Index will be released along with 2 other news reports, Construction Spending and ISM Manufacturing Prices, these reports usually do not matter.

The last report which was good enough for a trade was on Monday the 1st of August, 2011.

The “forecast” then was 55.0 and the “actual” came out at 50.9 - which was not good for the US Dollar. The currency pair USD/JPY was the best moving currency pair that time.

The market moved down for nearly a full 12 minutes, about 47 PIPS - selling the USD and buying the Japanese Yen.

Here is the chart:

Attached Image (click to enlarge)
Click to Enlarge Name: USD-JPY-08-01-11-8-00AM-edited.jpg Size: 95 KB


If you are interested, watch the release of the USD ISM Manufacturing Purchasing Managers Index report at 10:00AM ET - I use the FOREX Factory calendar “actual pending” button to get a timely report.

If the “actual” report is off by 3 or more from the “forecast”, odds are there will be a significant market move.
  • #10
  • Apr 1, 2012 7:29pm Apr 1, 2012 7:29pm
Quoting ananthhh
hello everyone,

Forex Market is a coin.
Trading Forex market is like flipping a coin.
Either winning or losing, both will have 50% probablity.
One good thing in forex, which is not in coin flip is

1.If you lose, then you lose.
2.But if you win, you can increase your winning potential by riding on winning side.(not possible in coin flip)

So the strategy is

1.Place buy order with 1:1 R:R.(for ex 6pip:6pip)
2.There is no tp but there will be stoploss. You can ask then how the hell is 1:1. There is 1:!. Move stop loss to 2 pip(for ex) below...
If you buy and you win, how many times do you repeat the buy trade if it wins?

Thanks
  • #11
  • Apr 2, 2012 3:22pm Apr 2, 2012 3:22pm
Quoting samoa
Thanks for sharing. What is your success rate in using this strategy. It seems so simple but is it really a 50/50 chance?
It depends upon which news release and the currency pair being traded - I started experimenting with the system in 2009 and now take about 20 different news releases seriously.

I have kept fairly detailed records and have just recently began evaluating them. I know for certain at this time I have won more trades than have been lost - and there were more possible winning trades that I was reluctant to enter. You know about the "fear factor". I kept those records as well.
  • #12
  • Apr 15, 2012 10:40am Apr 15, 2012 10:40am
Another US new release that may be profitable to trade is the USD Core Retail Sales report and Retail Sales report coming out tomorrow, Monday the 16 of April at 8:30 AM ET (2012).

Since these 2 reports are most favorable for a trade when they are not in conflict - not often is there an opportunity. But, the Core report is often the strongest of the 2. Also, if an additional important US report is coming out at the same time, like the unemployment claims report, well, all bets are off.

Just to show you how good things can be when these reports are released and they are not in conflict, this is what happened on Thursday, the 12th of January of this year (2012). Even with additional conflicting news releases.

USD Core Retail Sales m/m 0.3% 0.2%
-0.2%_____0.3%_______ 0.3%

USD Retail Sales m/m 0.3% 0.2%
0.1%______ 0.3%________ 0.4%

USD Unemployment Claims 399K 373K 375K
CAD NHPI m/m 0.3% 0.2% 0.2%
EUR ECB Press Conference

With the “actual” more than 0.5% below the “forecast” for Core report and 0.2% for the Retail report, traders evidently took this as bad for the US economy and for the US Dollar, so they sold.

I was watching 7 difference USD related currency pairs and 5 sold the US Dollar within a short amount of time.

The 2 best performing currency pairs were the EUR/USD and the USD/CHF.

Her are charts of the 2 best responses.

http://www.forexfactory.com/attachme...1&d=1334503862

The EUR/USD moved down for about 2 minutes (buying the USD) about 21 PIPS - (wrong direction), the broker spread normally returns to normal within the 1st minute of the news release. Then it ranged for about 8 minutes, after that the market moved up for 32 minutes about 68 PIPS. So a fair “scalp” or 2 after about 10 minutes could be had.

http://www.forexfactory.com/attachme...1&d=1334503862

The market moved up for the 1st 8 minutes about 16 PIPS - (wrong direction), then moved down next 34 minutes (right direction), about 49 PIPS.
Possible good “scalps”.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: EUR-USD-01-12-12-6-30AM-edited.png Size: 37 KB
Click to Enlarge Name: USD-CHF-01-12-12-6-30AM-edited.jpg Size: 78 KB
  • #13
  • Apr 16, 2012 9:50am Apr 16, 2012 9:50am
Have a look at Ronald Raygun,s profile on making a profit from the coin flip method. (search for him here on FF) Trade management is the important part. Any trade that you take can turn against you, even with the best indicators and system as we cant predict the future.

What we all try to do is to bias the 50/50 by making educated guesses as to which way the market will move and then maximizing our profit by trade management.

The problem with all these types of systems is chop in that you can get out of phase with the trend and have a long sequence of losses that take too much time to recover. Roulette will confirm this in that you can get 14 reds in a row. ie statistics lie. Maybe over thousands of coin flips you get to 50% but in the short term it is nowhere near there.

This system can work but it needs a bias to get you going in the right direction for the entry, and then it becomes a money management system.

Will watch this with interest -- thanks for starting it.
  • #14
  • Apr 17, 2012 11:55am Apr 17, 2012 11:55am
Quoting GarethC
Have a look at Ronald Raygun,s profile on making a profit from the coin flip method. (search for him here on FF) Trade management is the important part. Any trade that you take can turn against you, even with the best indicators and system as we cant predict the future.

What we all try to do is to bias the 50/50 by making educated guesses as to which way the market will move and then maximizing our profit by trade management.

The problem with all these types of systems is chop in that you can get out of phase with the trend and have a long sequence...
Thanks for your reply GarethC

The bias?

Lets see, since you are using a gaming device has an example, I will do the same only with Black Jack.

If you have any casino experience at all, you may know something about “card counting” in relation to black jack.

The most popular book back in the 1960-70’s, was written by a professor at MIT, a Mr. Thorpe.

His first book was the product of his sitting at home with a deck of cards and dealing “21” hands and recording what came up. Now, I am not talking about a few hundred hands, thousands upon thousands of hands. Eventually a pattern developed.

Mr. Thorpe was able develop what was called a “basic strategy”, which is still used today, legally. It was the advanced card counting that the casinos had a problem with.

Back in those days “21” was played with a single deck and dealt to the bottom of that deck. Any player who was savvy enough to keep track of the high cards could take advantage of the house. And there were many players before Mr. Thorpe who understood that concept.

Back to scheduled economic news releases, as you know, some of those reports excite the traders. Excites them enough to trade in such a way as to either improve their financial situation, or preserve their situation. Some shy away from news reports.

I have been keeping track with videos and charts of certain news releases, along with different currency pairs, since 2009. And a pattern is evolving.

Just like playing “21” with a counting system, not always will the “odds” apply. Money management will save the trader here.

Money management is important, a professional poker play uses smart money management - FOREX trading requires smart money management.

ssnvet
  • #15
  • Apr 18, 2012 2:02am Apr 18, 2012 2:02am
Hi ssnvet

Agree with you on the Black Jack. If you play this randomly you will loose. Card counting and the system moved the odds from the casino to the player. (that's why there are multi-packs and an automatic card shuffler after every hand)

The solution is to find a similar shift in the odds for Forex. The spread immediately puts you at a disadvantage by moving the odds against you.

I find that from my trading that the entry is relatively simple. The problem is the exit. If you can optimize this you maximize profit.
  • #16
  • Apr 20, 2012 6:58am Apr 20, 2012 6:58am
Quoting GarethC
Hi ssnvet

Agree with you on the Black Jack. If you play this randomly you will loose. Card counting and the system moved the odds from the casino to the player. (that's why there are multi-packs and an automatic card shuffler after every hand)

The solution is to find a similar shift in the odds for Forex. The spread immediately puts you at a disadvantage by moving the odds against you.

I find that from my trading that the entry is relatively simple. The problem is the exit. If you can optimize this you maximize profit.
GarethC - right!

Spread can be a problem and a reliable exit strategy is important. And I believe the exit can be brought under control, somewhat, by considering the following:

The period when most traders are active.
The country releasing the report.
The popularity of the news report.
The popularity of the currency pair being traded.

What one needs to know is what are the odds for each of the above.

For example - when an important Australian news report is released, the market will move as predicted far better and longer then that of a US or British report. This also applies, not quite as often, when a New Zealand report is released. Of course, knowing which currency pairs perform the best helps.

ssnvet
  • #17
  • May 6, 2012 9:23am May 6, 2012 9:23am
Here is a European economic news report being released tomorrow, Monday the 7th of May, 2012.

The German Factory Orders Month over Month report at 6:00 AM ET has proven to be a good opportunity for a “scalp” trade or 2 - when conditions are right.

Tomorrows “forecast” is a 0.5 %, if the difference between the “actual” and the “forecast” is greater than 1.3%, either above or below, the market should have a substantial move.
  • #18
  • Last Post: May 10, 2012 9:49am May 10, 2012 9:49am
Canada is releasing the monthly Employment Change and Unemployment Rate tomorrow the 11th of May, 2012. If these come out either bad for Canada or good for Canada there should be a good market movement. Especially if the Employment Change is at least 20K.

If you plan a trade, I recommend staying away from the USD, the US is releasing the Producer Price Index report at the same time.

ssnvet
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