Vaidas corner (scalping, long investing, indicators)

Hi. All. I don't want to post a lot in various topics. But it should be good for other newbies too.

My problems.

1. Indicators. I looked on history that works, that not. I chosen that works. But indicators ,,repair'' themselfes, so they really are not accurate. About 80 percent trades when goes wrong when trading short term 1m-5m. Should I reverse indicator meanings? ( all explanation in books about indicators often are false or opposite 100 percent)

2.Long investing. I try after few bad trades to move stop loss to break even and try to catch very long move. Very rare it happens.

3. What should leverage I use? I used to 1:200, but my max drawdown is always 0,5 percent. It gives me 40 pips bad move posiibility.

4. When there are no news, I try to find channels between support resistance and try to catch move. How I should put stop loss and take profit?

Lets start with the obvious. It is difficult, especially when you are starting out, to find that niche time frame that suits you best. Expect it to take some time however I will offer this advice and that is to work from a high time frame down. Often low time frame (scalping) requires you to be on the pulse, active and ready for those moves/set ups. Start from a daily point each day, mark up some key areas and then be patient around those areas for some signals to confirm your thoughts.

Indicators - More or less useless, especially (personal thoughts here) on small time frames. Often they will get in the way and cloud what you can already see. They lag and therefore on a small time frame it is too late for the confirmation of a move but that is my personal opinion, you may make them work for you.

Long Investing - Moving your SL to BE will kill you quicker through your emotional investment. There is nothing more damaging with long term foresight and trading signals that may take days or weeks to manifest that to move a SL to Break even when you start seeing green. It is also true for not having the strength to pull a trade for a loss before a SL if the trade is not behaving as you where planning for. Long term means long term, pick a target, give it some time to work out and only when you are clear start looking for SL movement points. Large R/R is extremely emotional and time consuming and very few people manage it well in the beginning.

Leverage is misunderstood. You can still trade the same with 400:1 as with 50:1. The 400:1 just allows you to maximise your risk to epic proportions which means 1 of 2 things, a major reward or sensational blow up, the latter is usually the case. If your trading with between 1-3% it matters little, unless you have a plethora of open trades in which case the higher leverage will allow for more trades.

Channel trading can be successful and I do use an ATR to determine a safe Stop Loss distances depending on the behaviour around channel limits. In my opinion, SL is independent of each trade. More volatile times will require a larger SL as opposed to some quieter times. A couple of 1000 trades later and you will start to get the idea.

Welcome aboard the emotional roller-coaster that is trading. Have fun, trade safe and look for longevity over instant riches.

RT

Well, i have problem, i really like to overtrade, i feel like working. And Then trading quikly, emotional stress is small.

Well then you have found your niche. If that is what you prefer then go ahead and tackle it. There are plenty of ways to scalp and they can contain indictors or not, price action, news and/or any combination.

If you are scalping I would recommend pairs that have low spreads, EUR/USD, USD/JPY, EUR/GBP etc and if you are starting off I would explicitly pick 1 pair (2 at most) and get to know its behaviour around certain times. I would still however mark areas of high traffic, flip zones for S/R and other areas that matter. They will be useful in determining some short term bias depending on the behaviour that is displays around those areas.

So to answer your questions in relation to scalping.

Leverage should not be too much of an issue. Your position sizes could be bigger with higher leverage considering SL values will be small but I trade with 20:1 and still can get a considerable size if I am turning up the risk if I am in a scalping zone.

Indicators. The only one I really use is the ATR which I use to help determine SL distance on the trigger candle/bar. Other than that it is standard lines for breakouts, S/R zones etc

Long term investing. I do not know of anyone personally that scalps with a long term horizon. Usually you may get some 5 or 10:1 scalps that run based on some higher TF analysis and great timing but beyond that it is very very limited. The thing to be aware of is scalping usually involves trading both ways on some days so playing around long term trades with some brokers can be difficult (depending on the FIFO ruling)

Channel Trading, wedges and other breakout methods can work well on small TFs. Just be aware of trouble areas and be prepared to close trades.

Wish you all the best

RT

Thanks for ATR. I sometimes use 3 trend indicators, which have to show same situation on my setups before I enter. This I think be useful

Seconding all the pointers listed above and yes, Indicators in general do not fare better under smaller time frames. And are you doing a dry run, for both strategies and indicators?

I beg your pardon, I am pretty confused about the leverage.

Ill make this easy for you and me.

Whats the difference between 100:1 and 50:1?

Which one will risk more of my account?

The higher the leverage, more the risk..
Hope that helps