Scalping - boon or bane?

Hello PrymeTyme!

My focus are to deliver the scalping & non-scalping communitiy trade examples in live, not misleading the interested traders at this board here by following a scalping strategy like a hard rule, which never can give you right entry and exits all the time, which didn't mean that basic knowledge about scalping strategies should be irrelevant. I like to analyse in multiple time frames Daily, H4, H1, M30, M15, M5 and M1 before I take the risk over in scalping trades. My focus are increasingly the overlapping candles at different time frames. This concept I will explain in life situation here and there, so that followers could get a feeling when to use it and when it's better to stay out of it.

Wait,...wait once again &...wait over again for an entry option which could deliver better probabilities of making a profit then other market situation, describe this market situation and publish it on this thread here could be my motivation of being here.

What I'm trying to say is, ...I will give more examples:

The "M5-Two-Way-Confirmation" could be an excellent strategy by discriminating a lot of false entries, before going into some M1 trades. It's worth much more when comparing with higher time frames.

M5-Two-Way-Confirmation-Strategy
http://www.forexfactory.com/showthread.php?t=297304

also this one

"Multiplex"
http://www.forexfactory.com/showthread.php?t=301618

and take a look further here, please:

Sicko-Scalp-Machine
http://www.forexfactory.com/showthread.php?t=281532

Hope it helps!

Kindest regards
FXcube

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mq4-indis

Hi FXcube!

so all in all u wait for confluences on higher TFs.. in order to execute scalps wich therefore have more odds to work out , based on higher TF analysis..!?!
good.. and most likely it doesent matter which scalping method one uses as long as he keeps the higher TF analysis in mind ? ie. where to look out for high probability trades?.. if so , thats the way to go.. keep it up ..!

cheers

here is a simple solution on how to approach scalping...


first determine where we are at the bigger picture (context) trending , ranging @ extremes.. etc...

i go from weekly to daily to hourly to 5/1min.. trade entry and management is done on M1..
based on where we are at, what the market reactions are.. ie. selling or buying pressure.. and how the market reacts
after the entry .. management is based on , how does the play works out ? in our favour ? yes or no ?.. if yes ,stay in if not, get out ! simple...

Weekly EU (weekly looks weak , broken DL, broken MP..)


Daily (daily looks weak too, still in a downward channel)


H1 (H1 where we see stopping signs of the downward movement based on shortening of the downward thrust , and somewaht range forming , but even more so we see a indecision in the making "orange")


5min (short scenario) ( we are sitting at the upper limit of the indecision , and therefore at an extreme.. one could play a short scenario if the demandline gets broken and trade alower high (retracement) (((REVERSAL))))


5min (long scenario) ( on the other hand.. if we break out of that indecision one could play the first retracement for a long entry) ((((BREAKOUT))))


etc.. etc...

to sum it up ..

get the context , look where we are trading @ , and plan your trades based on that.. there is only two things that can happen.. either a reversal!
or a Breakout .. on a breakout wait for a plullback ... playing a breakout aggressevily.. however is up to u... and your testet plan..


with reversal i dont mean continue of a trend... that would be a simple retracement/continuation.....

btw. a retr. can happen within a single bar aswell... .. remember price is in a continous flow.. it doesent care about bar intervalls..

SCALPING ON THE m5 .

Hi FxCube,
I've drunk couple of beers, but I'll try to answer to all your sentences.
The truth is that the SL will differ in many trades, but still you have to risk the same percentage amount of your account (keep the MM working). eg when you are catching the pullbacks of an uptrend and trading them in expectations of high risk:reward ratio, you will have determined a price level, where the bears will be hidden. The SL will be set up on this level, and when a price will be declining, U will simple have the pending order right below this level. You are a scalper, you need to be flexible as much as possible.
The 'whipsawing' is getting out of position the unexperienced scalpers, those who can simply not determine the most important price levels, which will bring them up or down. Those scalpers (like me) would simply trade the mess on the chart, trying to catch some garbage for few pips. That's what should not be done really. As one of my friend (scalper) says, you really need to take over 1k+ scalping trades and spend over 10k hours of trading, NEED the edge and fresh open mind.
Nothing offensive really but the ''strategies'' which you are posting here will really not give you an edge in your trading, you will just suffer on the side of failure and loss with them.
Hope this what I've written makes a little bit sense, but still in doubt it's more confusing then exlpaining something Sry those czech beers
Best regards, Daniel

Here my practiced recently using BB and several MA ,so for the next candle if the next candle still extreme wait 1 more candle into the Low BB and then enter Buy .
Until crossed MA 5 low (pink) then Take Profit.

Yes that's it, PrymeTime!
You've to decide on a voluntary basis of your analysis if you go into the trade or stay out and wait any longer!
I deliver here only my analysis in life situations here and there and other traders are cordially invited to publish their ideas at this board here, like you have point out your view awesome in your way! In my view the analysis from Daily, over H4, H1 to M30, M15, M5 to M1 give me also important inputs of my degree of accepted risk tolerance which could change acrosss the prevalent market situations.
Excellent, your work here!
FXcube

I am sure scalping can work if you are in tune with the momentum of the market. I prefer price myself but like any activity, I am sure there are some fine readers of momentum out there.

#47

Thank's for your answer, danos.
Remember, the only reason indicators are used is to assist the trader in predicting price movements. They have no other use & they must be used in conjunction with price charts & in most circumstances, a different type of indicator. In other words, they must be only a part of the trading rules in any trading system and trading plan.
If it is so for you then it might be better that you avoid these concepts and don't make the trial anymore for adapting it to your needs which fits best for you.
Kindest regards
FXcube

Momentum indicators work best in ranging markets. They tend to give false signals during breakouts & trends – especially when using hourly or shorter timeframe charts. Experiment with the parameters for various oscillators – remember, lower parameter numbers & shorter chart timeframes will give quick responses to price changes but with many false signals.

Momentum oscillators measure the rate of change of price movements (or the speed of price changes). Because FX volume cannot be easily measured, momentum indicators serve a valuable purpose in that they reflect market interest – as does volume in other instruments.

e.g., see more here, please: http://forex-strategies-revealed.com/forex-indicators

Kindest regards
FXcube

http://en.wikipedia.org/wiki/Momentu...al_analysis%29

Momentum (technical analysis)
From Wikipedia, the free encyclopedia
For other uses of "Momentum", see Momentum (disambiguation).

Momentum and rate of change (ROC) are simple technical analysis indicators showing the difference between today's closing price and the close N days ago. Momentum is the absolute difference in stock, commodity:

http://upload.wikimedia.org/math/0/d...df75fbea22.png

Rate of change scales by the old close, so as to represent the increase as a fraction,

http://upload.wikimedia.org/math/b/3...2860626c6b.png

"Momentum" in general refers to prices continuing to trend. The momentum and ROC indicators show trend by remaining positive while an uptrend is sustained, or negative while a downtrend is sustained.
A crossing up through zero may be used as a signal to buy, or a crossing down through zero as a signal to sell. How high (or how low when negative) the indicators get shows how strong the trend is.
The way momentum shows an absolute change means it shows for instance a $3 rise over 20 days, whereas ROC might show that as 0.25 for a 25% rise over the same period. One can choose between looking at a move in dollar terms, relative point terms, or proportional terms. The zero crossings are the same in each, of course, but the highs or lows showing strength are on the respective different bases.
The conventional interpretation is to use momentum as a trend-following indicator. This means that when the indicator peaks and begins to descend, it can be considered a sell signal. The opposite conditions can be interpreted when the indicator bottoms out and begins to rise.[1]

SMA
Momentum is the change in an N-day simple moving average (SMA) between yesterday and today, with a scale factor N+1, i.e.

http://upload.wikimedia.org/math/1/d...c06f0c20ed.png

This is the slope or steepness of the SMA line, like a derivative. This relationship is not much discussed generally, but it's of interest in understanding the signals from the indicator.
When momentum crosses up through zero it corresponds to a trough in the SMA, and when it crosses down through zero it's a peak. How high (or low) momentum gets represents how steeply the SMA is rising (or falling).

The TRIX indicator is similarly based on changes in a moving average (a triple exponential in that case).
References

1. AsiaPacFinance.com Trading Indicator Glossary

http://www.investopedia.com/articles.../03/070203.asp

Momentum And The Relative Strength Index
By Investopedia Staff

Related Searches: Delta Phenomenon, How To Combine Fibonacci And RSI For Trading Ideas?, AUD/USD Technical Analysis Aussie Ready To Rebound?
Every book dealing with the subject of technical analysis devotes at least a couple of chapters discussing both momentum and relative strength index (RSI).

For those of you not familiar with price momentum and the RSI, you need to know that J. Welles Wilder first wrote about the subject in the classic "New Concepts In Trading Systems."

See: Technical Analysis

To understand how these two indicators can be used together, we must first, for a moment, review each of them. Momentum is the measurement of the speed or velocity of price changes. In "Technical Analysis Of The Financial Markets," John J. Murphy explains:
"Market momentum is measured by continually taking price differences for a fixed time interval. To construct a 10-day momentum line, simply subtract the closing price 10 days ago from the last closing price. This positive or negative value is then plotted around a zero line. The formula for momentum is:

M = V - Vx

V is the latest price, and Vx is the closing price x number of days ago."

Momentum measures the rate of the rise or fall in stock prices. From the standpoint of trending, momentum is a very useful indicator of strength or weakness in the issue's price. History has shown us that momentum is far more useful during rising markets than during falling markets; the fact that markets rise more often than they fall is the reason for this. In other words, bull markets tend to last longer than bear markets. (To learn more, see Banking Profits In Bull And Bear Markets.)

For relative strength, determining the true value of an oscillator depends on the understanding of overbought or oversold positions. There has always been a little confusion over the difference between relative strength, which measures two separate and different entities by means of a ratio line, and the RSI, which indicates to the trader whether or not an issue's price action is created by those over-buying or over-selling it. The well-known formula for the relative strength index is as follows:

RSI = 100 -100
http://i.investopedia.com/inv/general/pixel.gif
1 + RS
RS = Average of x days\' up closes / Average of x days\' down closes

At the bottom of the chart, the RSI, on a scale of 0 to 100, indicates that the overbought position is at 70 and the oversold position is at 30. A trader with today's simple-to-use software may choose to reset the indicators' parameters to 80 and 20. This helps the trader to be sure when making the decision to buy or sell an issue, and not pull the trigger too fast. (See Speed Resistance Lines.)

The RSI works best when compared to short-term moving-average crossovers. Using a 10-day moving average with a 25-day moving average, you may find that the crossovers indicating a shift in direction will occur very closely to the times when the RSI is either in the 30/70 or 20/80 range, the times when it is showing either distinct overbought or oversold readings. Simply put, the RSI forecasts sooner than almost anything else an upcoming reversal of a trend, either up or down.

A Demonstration
Both indicators are very reliable on their own, but what would happen if we decided to put the two of them together? The result offers even better timing with our entry and exit points. Let's have a look.

In the first chart of Home Depot (NYSE:HD), we have inserted a momentum indicator with a 12-day period. In the second chart, we compare Home Depot during the same time frame and lay a RSI indicator across the bottom of the space. The RSI in this example is also a 12-day period.

The first look at Home Depot shows momentum rising over the zero line in the first week of December 2002. We have shown this on the chart with blue up arrows. This entry signal is not long lived as the momentum turns a week later and heads south in a hurry to finish the year at about the $22 level, shown with red down arrows. The next entry level is not seen until the first week in February of 2003, again shown with blue up arrows. For the most part, the momentum does not fall below the zero line with any conviction from that week on until the week of June 23. During this period of time, the stock price moves from the $21 level to today's close of $32.47.

http://i.investopedia.com/inv/articl...art1_small.gif
Chart Created with Tradestation

The second look at Home Depot, which shows the RSI indicator, has a slightly different look from the momentum chart above. First off, there is a weak entry point in early January and then a few weeks later a somewhat stronger entry point, which for the most part continues throughout the winter and on into the spring of 2003. You can see that, after the blue up arrows (entry points) we have drawn in the early part of the year, there are three sets of red down arrows (exit points) during mid-March, again during the second week in May and again in the third week of June.

It is important to recognize that many traders view the RSI value of 50 to be a support and resistance benchmark. If an issue has a difficult time breaking through the 50-value level, the resistance may be too high at that particular time, and the price action may fall off again until there is enough volume to break through and continue on to new levels. An issue falling in price may find support at the 50 value and bounce off this level again to continue an upward rise in price action. (For more information, see Support and Resistance Reversals.)

http://i.investopedia.com/inv/articl...art2_small.gif
Chart Created with Tradestation

The Bottom Line
This study of Home Depot demonstrates an interesting look that traders should consider when using oscillators for entry and exit points. In the second chart of Home Depot, the weak entry point in early January is not even reflecting a buy signal in the first chart, which uses momentum. In conclusion, disregard the entry signal. However, the second entry signal issued a few weeks later by the RSI is confirmed a week later with a strong buy signal from the momentum indicator rising above the zero line.

Another important note is that even though there are three exit signals shown on the RSI chart of Home Depot, the momentum does confirm sell signals, and the stock continues to rise with short-lived pullbacks. The sell signal on the RSI chart during the third week of June is confirmed with the momentum indicator falling off sharply at the same time and dropping below the zero line.

Double confirmation of entry and exit points gives the trader a better understanding of whether or not they are getting in or out at the right time. And timing is everything is this game.

If you're gonna scalp, I would suggest in and out in minutes. Any longer and you would need to get your head around price as that is where the action is.

Oh yes, sure! No doubt.
...& by way of exception when trying to take the M5-train at a stroke, (e.g. to the next pivotal or so) in that case exclusively with a trailing stops.
FXcube

Undoubtedly, someone with momentum at the level of pure skill may well achieve that. Alas, I am not and tend to use price to capture the days sentiment.

Cube

I think scalping can be done and if mastered can make small money into big money and fast, I have not mastered yet and I am learning from a Bob Volman. No sure if I will master it. Why? I think it does not suit my personality, it brings a lot of stress and frustration into myself.......and that is effecting my trading.... My scalping account atm is small and that is fine for me...

I trade as a living and my money is coming from swing trading, viewing the daily and entering into a smaller TF.... My personality needs time, space, needs to be detached from trading, like that I can feel the real flow of the market, staying complete engage into it but not being overwhelmed.....To trade well I need to live well and apparently staying glued to the screen for hours is not very well feeding my essence.

I will still scalp and I will post some trades on this thread if you like...

This is one of my trade:
http://www.forexfactory.com/showthre...33#post7670033

Dear FxCube,
if you are doing nice with indicators, then keep them on your chart. I would just say, if you are using indicators such as MAs, BB and the same others which just take few last candles (depending on your period), add something, substract it and give you some output value, will simply not give you anything unique and you will be on the side of dump money. Look, almost everybody is using indicators, almost everybody is loosing money... Is not there any connection between these both sentences?
Look at the other side, the bank, big funds traders can see the order flow, we can simply not be better, becuse we can't see the other people's stops, entries and take profits. ONLY thing how you can consistently earn money is to better than the other scalpers here is this thread, you need to better than me, than rotunda, than traider, than MrNow etc. I would be satisfied with one simply answer by you. Can you better (while using these strategies you posting) than the the others? Simply not. everybody needs his own edge, that's what is all about.
Best regards,
Daniel